Kristen Keats of Breakaway Bookkeeping and Sherwood Tax & Accounting shares the best practices she's learned from using outsourcing in her own practice.
Transcription:
Dan Hood (00:02):
Welcome to On the Air with Accounting Today, I'm editor-in-chief Dan Hood. As the war for talent grinds on and as client work continues to pile up, more and more firms are looking to alternatives. One of the main alternatives that they're considering is outsourcing work, whether that's within the US or beyond its borders.
Here to talk about her firm's experience with outsourcing and offshoring is Kristen Keats. She's the founder and owner of Breakaway Bookkeeping and Advising, as well as Sherwood Tax and Accounting in Oregon, and a co-founder of Cadencia. And we're going to hear more about Cadencia in a little bit more detail. I should mention that Kristen is going to be talking about all this very subject to Accounting Today's Firm Growth Forum, this May 8 to 10. So we're looking forward to a really deep dive then. But in the meantime, we're going to call it a limited version because it's not really that, but it's the audio only version. That's what we're getting today. Kristen, thanks for joining us.
Kristen Keats (00:44):
Thank you for having me. Excited to be here.
Dan Hood (00:46):
This is a super timely talk topic, Adam. One. I know a lot of firms are interested. Maybe we can start by talking a little bit about your practices and the kind of work you do for clients.
Kristen Keats (00:54):
Sure. Right. Like you mentioned, I started a bookkeeping and advisory firm, but for the last two years I've really been focused on the tax side. I acquired a tax firm in 2020, and so that's really where all of my mental bandwidth is being taken up right now. I've been a CPA for over 20 years and mainly tax focused. And so yeah, that's where, and I'm sure your audience can relate the drive for talent is ever growing.
Dan Hood (01:25):
Excellent. Alright, so what led you to consider outsourcing some of the work you're doing?
Kristen Keats (01:30):
So it started a few years ago, actually. I had always either worked for myself or worked at smaller firms. I started out in the big firms, but for the most part, most of my career has been spent at smaller firms. But then about six years ago, I went to work for a regional firm that had an office in India, that they had a team that they worked with in India. And at that time, I was already starting to feel the pinch of not having enough bandwidth to get all the work done. And that was really life changing for me to work with that team that was well trained, that they had the capacity to do the work, and it was really life changing to have access to that. So that was actually kind of part of the driver. It was a main driver in me founding breakaway because I thought this shouldn't be available only to large firms. This should be something that's really available to anybody at any size of practice.
Dan Hood (02:22):
And it's worth mentioning when you say I'm talking about outsourcing is if it's this brand new alternative. But it's been around for a long time. The accounting profession, particularly as you say, the larger firms have had outsourcing and outposts in India for 25 years or so or more. But as you say, it's not been available to most firms out there.
Kristen Keats (02:41):
Absolutely. And it's a scary thing. It's an intimidating thing to try to figure out on your own when you're a sole prop or a small firm.
Dan Hood (02:48):
It's one thing for Ernst Young KPMG to say, yeah, let's go start a a thousand person business in an entirely foreign country. A little bit more, bit different for a small tax practice. So now how do you go go about finding outsourcing partnership? When you started looking, what were your criteria for that?
Kristen Keats (03:05):
So my criteria for that was me personally, I really needed to have something that was values aligned with me. I mean, I have to say, I probably was a little bit spoiled with working with the firm that I did because I actually got to visit the team twice while I worked there. And that was huge for me because I wanted to make sure, are they okay? Are they getting the training that they need? I didn't want it to be a sweatshop. So actually my partner, RO and I, we actually are co-owners and an India entity as well. That was kind of an offshoot of that company that we had worked with before. So we knew our partners, we knew how they treated the team, we know that their values aligned. So that was really important to me. And to be able to have a direct line of communication with that team was really important.
Dan Hood (03:55):
Cause you're trusting them with some fairly important stuff, right?
Kristen Keats (03:58):
Absolutely. Right.
Dan Hood (03:59):
Maybe we could detail some of that. What specific work are you having handled outside the country?
Kristen Keats (04:05):
Sure. So on the breakaway side, we have all of the bookkeeping supports work, so bank reconciliations and just typical all the bookkeeping things. On the Sherwood tax side, same thing, bookkeeping. We have a team, I have a team of two folks in Guadalajara, Mexico that that's all they do is the financial statements of bookkeeping. And then I have one staff person, she started out as, she actually started out as an admin and she's kind of climbed the ladder. She then worked into payroll, bookkeeping and now is helping out on business tax returns and some personal tax returns too. And then I have a admin person who does project management. So they really run the gamut of all kinds of support for the firm. Yeah,
Dan Hood (04:49):
Yeah. And is that the Guadalajara? Is that cia?
Kristen Keats (04:52):
Yes. So in 2021, my partner Martin and I, we had worked with, like I said, the India team for a while. We found out about a team that was another CPA in Oregon actually, that had a team in Mexico and we're like, oh my gosh, that would be amazing because Mexico is so close. The culture is so similar to ours because I will say the tough thing about working with an India team is the time difference. I mean, to have a 12 hour time difference from the west coast, it's like somebody's waking up earlier, staying up late to talk to each other. Somebody happy with this. And the travel is, I mean, it's $10,000 if you want to travel to India. It's not an easy trip to make. So Mexico, it's like a four hour flight from Portland. It's really easy to do. So that's what really attracted us to that. And then we found out about Guadalajara. Interestingly enough, it's a sister city to Portland where we're located, and it's called the Silicon Valley of Mexico. It's a very tech forward, lots of universities, lots of accounting students, so the talent pool's really big there. So that's what drove us to look at Guatemala, Hara.
Dan Hood (05:55):
Gotcha. Well, now it's interesting. I didn't realize that Guha, because for India they talk about English. A lot of people speak English. There's a huge, and I'm always astonished at the number of CPAs in India, like local CPAs when you could take the test there and so on. And they're studied in a similar basis of accounting and all that sort of stuff. So that's great to know that there's similar levels of expertise available in Guadalajara.
Kristen Keats (06:19):
Yes. I mean, I always say accounting is almost a universal language. Once they learn the debits and credits, we can teach 'em the other stuff.
Dan Hood (06:25):
There you go. And so what you ended up with, is that what you thought you would end up with? Is that the work you're sending out and the places you're sending out to is sort of what you imagined or did any of it change while you were looking at the capabilities?
Kristen Keats (06:36):
Nothing's ever, like I imagine it life always has way of throwing curve balls at suit. But yeah, it has been interesting. I would say Mexico's definitely different than India. Some pros, some cons, a lot of pros. I mean, Mexico has just been surprising in the availability of the talent. The accounting skills are fantastic. They love our accounting system. They love QuickBooks because compared to, I guess what they use in Mexico, whatever their normal systems are, they think QuickBooks is so easy and they take to it really great. The thing that's been tougher is tax because for example, they don't do individual tax returns in Mexico. So even just conceptually, that idea is very foreign to them. So we've kind of had to baby step that more in that takes more training. So I would say that's maybe not as expected. So yeah, we just kind of adjusted and pivoted our training and our workflows for that.
Dan Hood (07:38):
Cool. All right. Well, I want to dive more into that because there's a lot of our audience. I'm sure we'll be interested in a lot more of the details of that. But we're going to first take a quick break and we're back with Kristen Keatts. We're talking about outsourcing. She's outsourcing to India and to Mexico. Now you have control of those entities that, am I understanding that right? So both ncia and in India, is that a thing you would recommend that people are looking to outsource, that they get that level of control? Or should they be able to be, again, assuming you can meet with the people you're talking with and make sure there's a cultural fit, do you need that level of control? I
Kristen Keats (08:13):
Don't believe you'd need that level of control once you got comfortable with who was running the company. And like I said, they line with your values and you could kind of trust their processes as far as the background checks and all that kind of things that one would expect. I say, yeah, it's not necessary to have that level of control. I know for caia, so our India entity we own with a lot of other partners, so we're kind of not as closely involved in that other than just being on the board. But in Mexico, obviously we're integrally involved and we see the team a couple times a year. We have an annual meeting, and we actually do encourage the clients to come definitely a year to the annual meeting, meet other clients because there's so much that can be gained from talking to other US firms and saying, how are you doing this? How are you solving for that? Getting our teams together and letting them have a resources with each other, because I think it's real easy to get siloed. And so a lot of times if I only have one tax person, they might feel like they're kind of all by themselves, but I could connect them with other folks on the Mexican team that are working on tax. They can create little communities for themselves too.
Dan Hood (09:25):
Well, this brings up my next question, which is I think a lot of accounting firms understand what it means to manage if you've got the staff in-house that you're working with, but what kind of management are required with this relationship in terms of, or how is it different from if you've just had the tax preparers in-house doing the work, we all know what that meant. Well, that's all changing. It's all changing with remote work now anyways, but well,
Kristen Keats (09:46):
Right, exactly. Calwood changed so much of that already for us, I think, and having to go remote. But I think what we really emphasize is we're continually trying to improve our processes, our documentation. We use Carbon for example, of our project management. And so we're always refining our workflows. We're always refining those task lists to be like, oh, well, we didn't think about that little step that we didn't. So I feel like your team is only going to be as good as your processes that you have in place. The other thing that we have implemented is we actually have a daily, like it's not standup, but a staff meeting where we are going through what's on everybody's plate, and that's the US and Mexico. So I talk to my team every single day. And so I think that's helpful too. I think there's a tendency sometimes, especially when I think about when I worked for that larger firm and we did all see each other in person or in the lunchroom, it's easy to forget that those folks exist in that other office. And so I think the more opportunities you can create to bring everybody together as a team, the more successful you'll be.
Dan Hood (10:51):
But I love that. I mean, the notion that this is a strong incentive to have clear, documented processes, workflows, so that even if you're not in the office with somebody, and even if they're not available for whatever reason, you can go refer to the documentation and say, how do I do this? Okay, now I know.
Kristen Keats (11:07):
Absolutely. We've created a library of loo videos, your little training videos. Anytime someone asks the question, I tell my other managers, I'm like, just flip your camera on, that's fine. Just put Loom on it and just record whatever you're doing to answer that question so that it lives somewhere else. So somebody else can benefit from that too.
Dan Hood (11:24):
Exactly. And people don't have come and bother you every single time they have that question. Right. It's recorded now. That's awesome. I hate to ask this, but I have to. What were any mistakes you made along the way that people could benefit from your suffering?
Kristen Keats (11:36):
Oh my gosh. So many mistakes. I mean, a lot of 'em, it's funny because it's not even necessarily, the mistakes that I made weren't necessarily even related to it being in a foreign country. It's just more related to I learned about good processes because I've made all the mistakes of not having good processes and then see where the holes are. I've learned that I need to be tougher on my recruiting and hiring because when we go and hire someone, even it's ultimately up to me, the client, to make a decision about who to hire and who to not. So I've learned a lot about hiring and recruiting and really getting specific about what our needs are and making sure that the candidates qualify for that. Yeah, we have learned some things about making sure that people's home internet is good if we're going to have it, because our team is remote down there too. We have an office. So the client can kind of choose if they want someone to be able to work remote or if they want 'em to come into the office. And then a lot of times they'll work, oh yeah, remote's great, and then someone doesn't have a good home internet connection, so we need to bet that stuff about first. That's
Dan Hood (12:48):
Fascinating. I mean, that's one of those things I would never have occurred to me to be like, you just sort of assume everyone's got it right. Which is also to fair not true in the United States either. There's, I've been plenty of places where the internet was not reliable, where I would've thought it was and would've told people, sure, you can reach me there, and then it turns out you can't. Awesome. I guess there is a lot more, I mean, we could spend a lot of time on this topic and have you play every single one of those videos that you were talking about so that we could listen to them. But I think we're going to skip a little bit of that. Hopefully. Again, people will see that at the Firm Growth forum and in early May. But for now, I want to ask you just what kind of advice would you give firms that are considering outsourcing? What should they be bearing in mind as they start looking at it?
Kristen Keats (13:32):
The advice that I give firms is to think real carefully about what the role is that you need to fill. Maybe even start paying attention to how you interact as a team now, and how that would be different if you had someone who was not in your physical space. Just really be intentional about creating that team because, and just keep in mind too, that these are human beings, that these are folks with hopes and dreams and they want growth and they want just like everybody else does. And so to make sure that you are treating them as part of your team just like everybody else with feedback and all the rest. I think where I see mistakes made is when you kind of forget that they exist and that's when you tend to be disappointed. So just like anyone else, communication is number one. Communication, feedback, training is super important.
Dan Hood (14:32):
Excellent. Well, as you say, we're learn. This is something we're learning for everybody, right? Through the course of the pandemic, we've realized that we can't just take it for granted that people will pick it up as they wander through the halls. Right? So that's great. Alright, Kristin Keet of Breakaway Bookkeeping and Advising and Sherwood Tax and Accounting and cia and several hundred other multinational entities around the world. This has been great. I appreciate it so much. Thank you.
Kristen Keats (14:53):
Thank you. I'm looking forward to the conference.
Dan Hood (14:56):
It should be good. We're looking forward to it as well. And I want to thank all of you for listening. This episode of On the Air was produced by Accounting Today with audio production by Kevin Parise. Rate or review us on your favorite podcast platform and see the rest of our content on accountingtoday.com. Thanks again to our guest and thank you for listening.