Effectively Managing Change

The axiom used to be that change is constant. But in today’s world, change is not constant, it is accelerating. There is a great You Tube video you can find by typing “Did You Know” that illustrates how fast change is accelerating in our new century. If you don’t know what You Tube is, you may already be left behind. The video illustrates the quantum shifts in the world today, including demographic changes, technology changes, and economic shifts.

As accountants, we tend to hang on to processes that work for as long as possible. There are good reasons to hang on to what works, instead of embracing new processes and technology, such as:

1. Managing Change Can Be Time Consuming- as accountants we sell our time, and we are all busy-maybe even too busy, and taking time out to specifically manage change can create questions of ROI.
2. Managing Change Can Be Painful- especially if you don’t carefully plan the implementation, or adequately provide for the right amount of training for staff and do a formal calculation of the savings and benefit realized from the change. As we get older, re-tooling is more challenging. Unless we adopt a mindset of continuous change.
3. Managing Change Can Be Costly- just ask a firm who has gone thru a tax software conversion. The first season you won’t complete as many returns as you prepared the prior year when you deeply understood the program. Firms often underestimate the cost and time required to adequately manage significant changes.

But effectively managing change is absolutely necessary to compete and survive in our accounting industry today. Standing still is only an option if your firm is on a glide path to retirement and dissolution.

All that said, effectively managing change Can Be Tremendously Rewarding! Learning something new, becoming more productive, is intrinsically valuable and energizing. And defining a better workflow that is more productive, is also more profitable.


Change Management Recommendations
Some firms manage change better than others. Let’s take a look at some best practices.

1. Identifying a champion of the change greatly increases the likelihood of success. Partner advocacy is key to a successful and much more rapid implementation of change. Getting shared vision up front about the reason for the change makes it easier to agree and determine success at the end.
2. Incremental change is easier to manage. Having a paperless office is a nice ideal, but also very threatening to partners who have dedicated their lives to shuffling papers. On the other hand, making an initial commitment to print file copies of tax returns this season to PDF instead of the paper file, doesn’t disrupt their current habits, while putting the firm on a path to paperless and greater productivity over time.
3. Proper planning and training are keys to successful execution. Accounting firms tend to be partnerships of multiple small businesses with each partner having his or her own way of doing things. Referring to #1 about getting sponsorship includes planning to train and include everyone in the new process. It may not be on day 1, and the change may be cascaded wider as the new process is tested and confirmed, but ultimately, we need everyone invested and participating in the new process.

Finally, think evolution, not revolution. Learn what works and evolve. Being able to manage change in your own firm is a great practice lesson before you begin managing change in your client’s business.

Automating Tax Workpapers

As accountants, we have a deep-seeded need to have our workpapers organized, tied down, and consistent across every engagement. Some of that is driven by our nature (does your spouse use descriptors like neat-freak, anal-retentive, rigid?) and some if it is driven by the regulatory nature of our industry. And as much as we value that level of orderliness, most non-accountants do not value it, which makes billing for ‘workpaper time’ challenging.

Fortunately, technology has evolved to automate those tax workpapers in a neat, consistent way, which saves us hours of non-billable organization time.

Most firms are on the paperless journey, including scanning tax source documents to archive workpapers electronically. To super-charge your process, scan those documents at the beginning of the preparation process, instead of the end, and use a solution like Intuit’s Document eSort to automatically organize the documents.

Unorganized Workpapers:
Scanning source documents provides an electronic PDF that facilitates electronic storage, but can make it tedious to find the source document you need in a large PDF.


Versus Organized Workpapers:
Electronically organizing the workpapers labels the documents by type (W-2, 1099, etc) and payor, and automatically sorts the documents in the input order- making those PDF’s much more usable in the tax preparation process.



Here are the top 10 reasons practioners use Document eSort to automate workpaper organization:

1. Transfers the organization step from the preparer to technology, saving an average of 20 minutes per return
2. Reduces training time for new personnel and provides a bookmark map to enter the data into the tax return
3. Standardized workpapers for all clients
4. Consist workpapers across all preparers and staff
5. Faster data entry using an organized, bookmarked PDF
6. Faster review with organized PDF available at the point of need
7. Quickly access archived source documents and eliminate hunting down lost and mis-filed documents when clients call
8. Electronic storage is safer, easier to backup, and far more cost-effective to maintain than traditional paper storage
9. Work remotely and have access to the entire client file
10. Share the organized source file with clients to increase the value of the client deliverable.

Like anything worth doing, adopting new technology involves effort. Defining the office processes to support new technologies will require planning. In addition to scanning at the beginning of the process, you will want to equip preparers with multiple monitors and make sure you have a high quality, sheet fed scanner.

The benefit of this effort is increased productivity during your busiest time of year. And of course, satisfying your inner neat-freak.

Growing Small Business Consulting Services

According to a recent Intuit study, small business owners are increasingly looking to their accountants to provide broader business consulting services in this economic downturn. Is your practice prepared to expand beyond traditional tax and accounting services to deliver the business consulting services your clients need to compete in this market?

Clients need more help, but don’t always know how to ask, or believe that you as an accountant, can do more than just tax and financial statements. We often hear from small business clients that they think of their accountant as the guy for tax returns and financial statements, but not for other needs.

Outsourced CFO Services
This ugly economy presents an opportunity for you to re-position your services. Many small business clients are big enough to need a CFO, but too small to afford one. Accountants are in the perfect position to fill the role of an outsourced CFO. Leading firms who understand this are creating outsourced CFO practice units within their firms.

CFO Services are different than write-up or bookkeeping and should be a segregated practice unit with metrics for success and a managing director. Write-up is about recording history, while CFO Services focus on present operations and future plans. Positioned correctly, the outsourced CFO practice unit can deliver new revenue growth for the firm while supplementing the needs of small business clients who want to maintain accounting records at their location.

To get started, have current ProAdvisors become certified. The certification will keep your ProAdvisors current on changes, indicate to clients that your office is a QuickBooks expert and tells new clients that your firm can solve their QuickBooks and small business problems. We recommend you have a certified ProAdvisor in each office to identify opportunities and drive the practice unit.

Delivering Value for the Business
Spend time at the client’s location, like a CFO. Being in the client’s office is the best way to identify client pain points and opportunities for you to add value. To uncover opportunities, ask owners what they would like to know about their business, but don’t. Ask bookkeepers what their pains are. Practice building reports the clients can use, which is usually an iterative process.

Here are some examples of CFO Services your ProAdvisors can deliver that add value for clients:

1. Plan. Create a plan with financial objectives for the business. The budgeting tool in QuickBooks works very well to track progress against the plan. All business owners want their business to perform better, and most accounting firms are not involved enough in the process of developing a plan and holding clients accountable. Firms that help clients achieve goals are more valuable than firms who merely provide compliance work.
2. Use Classes. Classes and job costing are often under-utilized, but can provide important insights into product or customer profitability. Once you have a plan, classes help segment operating data so you can take corrective action. Look for opportunities to leverage them.
3. Owner Dashboard. Customize the owner’s dashboard to put the most important metrics in front of him (AR, AP, Revenue, etc).
4. Teach. Most clients are not accountants or QuickBooks experts- that’s why they need you. Watch them as they work and you can probably eliminate a few steps easily. Removing a frustration from the client’s daily process will enhance your value to the client, move the firm beyond the compliance-only perception and reinforce the value of additional engagements.
5. Automate the work. Teach clients to use Online Banking and debit card transactions to reduce transactional entry. Use QuickBooks Merchant Account Services to better reconcile credit card transactions and improve cash flows. Technology has enabled collection of payment at the point of service, even remotely. We recommend implementing MAS in your firm to become proficient in the process. Once you learn and can teach it, it can yield big time savings for clients.
6. Paperless workflow. Define a process and digital filing system to take your client’s operation paperless. Managing documents is an enormous burden that does not add value to the operations. Streamlining this burden can provide needed bandwidth for the owner to focus on the business operations, and accountants are natural organizers.
7. Operational bottlenecks. Document operational processes to reduce variability. Once documented, process improvements become much easier to implement. Accountants are good problem solvers and, as an outsider, you may be able to see problems the client doesn’t recognize because they are too close to the work. The Intuit Marketplace of third party developers has an abundance of solutions to solve operational problems.
8. Marketing. CFO’s help businesses grow and succeed, and owners often forget that marketing activities drive sales. QuickBooks offers a free website. Offer to launch the website and or help the business launch it, and where necessary, recommend other marketing expertise.

Finally, engage with other ProAdvisors who are delivering outsourced CFO services. They are a great resource for best practices to share with clients. The QuickBooks Community and Linked-In are a good place to start building your network.

Process + Technology = Productivity

Technology is an amazing thing. It enriches the way we play, the way we work, the way we communicate and even how we manage relationships. Accounting technology is no exception. Technology has transformed mail to email, paper filing to electronic filing, data entry to data download, and traditional workpapers to digital data.

But does technology make our firms more productive? Hold that thought.

Accounting firms are process driven organizations, not unlike assembly lines. We take inputs from clients, we process them, and we create new outputs. Profitability is a function of 1) the price we command for our services 2) the number of units we produce and 3) our productivity, or how efficiently our process operates.

At Intuit, we spend a lot of time studying the tax and accounting process, or workflows, of accountants. Most firms think they have a good workflow, but as we probe further, almost none have it written down. As partners describe the process, there are lots of exceptions to the process, or workarounds for certain types of clients. At the end of the discussion, most firms agree there is significant room to improve their workflow and become more productive.

Want to become instantly more productive? Commit your workflow to writing. While tedious and seemingly pedantic, the benefits of writing down your workflow include:

• You will recognize steps to eliminate or combine, increasing productivity almost immediately.
• You can bring the exceptions into the defined workflow more effectively.
• The bottlenecks in the process become obvious and you can begin to design better workflows to alleviate the bottlenecks.
• The defined workflow becomes easier to train and share with everyone in the firm when it is in writing.
• As you evaluate new technologies and solutions, you can review your current workflow to understand what needs to change for the firm to realize the benefits of the new solution.

This is the time of year to review your workflow and decide what changes to make to improve productivity. Most firms look externally at technology solutions available to help them become more productive, instead of internally.

We have found that firms who take the time to update their process as well as their technology, realize the productivity gains they expect, but firms who simply adopt new technology without updating their process realize little or no increase in productivity. Updating the process includes making sure staff are appropriately trained. The firms who had the greatest productivity gains, not only took advantage of formal training, but they carefully walked through each step and defined keystroke shortcuts to minimize wasted effort. After all, reducing one or two keystroke per form entered can amount to a hundred keystrokes per return and tens of thousands during season. Process improvement, and productivity, is in the details.

The lesson? Technology upgrades combined with process changes can significantly improve productivity.

As part of your workflow evaluation process, here are some questions to consider:

• Where in our process are we experiencing bottlenecks and problems?
• How do we automate as much of the process as possible?
• What solutions are available to improve the process? What is the benefit we expect to achieve?
• What changes will we need to make to our existing workflow to accommodate the new technology?
• Do we need to upgrade other technologies, like hardware, to accommodate the new workflow?
• Do we have a defined process using the new solution? Does the vendor have a recommended workflow for the new solution?
• Who in the firm is in charge of making sure the solution is implemented and the workflow adjusted to realize the planned benefits?
• Who will go thru training on the new solution?
• When will we evaluate the results of the change and determine the level of success?
  

Don’t sell your firm short by going half way. When you upgrade your technology solutions, update your workflow process too, to realize the productivity gains that technology can deliver.

Only You Can Prevent Fraud

We’ll not really. But it worked for Smokey the Bear’s ‘Only You Can Prevent Wildfires’ campaign when I was a kid. When a giant grizzly bear pointed his finger at me and made it clear that Bambi’s life depended entirely on how careful I was with matches, I was scared straight. Many campfires later, I’m proud to say that I’ve never laid waste to Bambi’s homeland. So I thought I’d begin an awareness campaign of my own, starting with the profession that uses matches around small business.

To compound our deepening recession, billion dollar frauds are making headlines with unhealthy regularity. While I hope your clients haven’t been scammed by fraudsters like Stanford and Madoff, those headlines should be a reminder that theft happens on Main Street as well as Wall Street. If you look past the billion dollar headlines, you’ll find a recent WSJ article that hit much closer to home for us: fraud in our small business clients.

For most of our small business clients, a $25K - $50K fraud would put them out of business. Here are a few tips to keep your clients out of the courthouse and the poorhouse.

Awareness: Remind your clients about fraud at least a few times annually. Emailing them a WSJ article is one easy way to maintain awareness. An informed owner is the best defense.

Prevention: Basic internal controls, like the segregation of recording and authorizing transactions, go a long way. Your firm, or the owner, should regularly review bank statements and copies of cancelled checks for irregularities. Consider offering a service after tax season to review internal controls.

Insurance: Owners should consider bonding employees who have access to cash and company resources. What looks expensive today is a bargain after a loss.

Audit Trail: QuickBooks maintains an audit trail in the event you need to trace irregularities to a user- if you are enforcing user and password rules. For companies with more risk, consider upgrading to QuickBooks Enterprise Solutions which has stronger controls to segregate duties and help prevent fraud.

The current environment of fear and distrust presents an opportunity for you to step up and be the trusted advisor to your clients.

Be proactive about addressing fraud & prevention with your small business clients.

The More, the Merrier

Monitors that is. Adding a second or even third monitor to the workstations of your professional staff is probably the single best way to increase firm productivity. A recent NY Times article analyzing an NEC commissioned study “found people who used two 20-inch monitors were 44 percent more productive [than] people using a single 18-inch monitor.” Increasing productivity is directly correlated to increasing firm profitability.

Whenever I train accountants, I informally pulse the group about who is leveraging multiple monitors in their practices. Usually about 40% of the accountants are using at least 2 monitors. In the 2009 Benchmarking Paperless Office Best Practices, the Association for Accounting Administration found that 90% of its members were using multiple monitors, up from 69% the year before.

While the time savings I hear from accountants using multiple monitors ranges from 15 – 30%, they universally agree they would never go back to a single monitor configuration. I agree and here’s why:

First, our world is increasingly digital to digital and less analog to digital. Yes, we still enter a lot of data from paper, but more and more of our data is already in digital form when we receive it. Think of how much information you receive in emails, Excel files, trial balances and accounting files that you move to tax or other applications. Even if your office isn’t ‘paperless’ by industry definitions, your office, and all your data, is digital. The paper is just a backup. As we increasingly push digital data around our desktops, a second monitor effectively stands up what used to be paper (and is now email, Excel, PDF, Trial Balances, etc) next to the application on the primary monitor to which we are entering.

Second, as accountants we routinely multi-task with different clients, different engagements and different applications. I regularly use at least 8 concurrent applications. Count your own windows. The number of paths we can take to accomplish routine tasks is literally exponential, which is why we inadvertently get lost in the digital maze.

Simple tasks like responding to an email, requires that we switch applications to review the tax return, financials, or other data file, and then take action in a different application like updating missing data or calendaring an appointment, before we even reply to the email. My PC keeps track of separate threads much better than I do. If I don’t keep my email anchored where I can see it while I cycle through 3 or 4 applications to solve it, I quickly get lost and start working another unfinished task. A few hours later, I’ll find my unfinished email still open. Multiple monitors are like a compass and map, keeping us moving in a (relatively) straight line.

And finally, multiple monitors are just cool. They make tax and accounting more fun (what can I say- I’m an accountant), and tell the world your firm is progressive. Multi-monitors keep staff engaged, and contribute to attracting and retaining quality talent.

At a cost of about $300 / workstation to add a video card ($50) and monitor ($250), the ROI is first grade math. Add the cost of an IT professional if you aren’t handy with electronics. Like most things, size matters. The new minimum monitor standard is 22”, but prices have dropped to an affordable $200 - $250 for high quality 22” monitors.

“Should I just buy 1 really big monitor?” I hear this question occasionally and my stock answer is ‘no.’ While a few accountants prefer to tile windows on a single monitor, it is usually much easier to size an entire application on a single monitor and leave it there for easy reference. If you are continually sizing and moving windows around, you begin to dilute the productivity benefit.

If you aren’t in the club already, join the best-in-class accounting firms using multiple monitors to increase productivity, profitability and employee engagement.

Leadership Shines in Challenging Times

“During every minute of the flight, I was confident I could solve the next problem. My first officer, Jeff Skiles, and I did what airline pilots do: we followed our training, and our philosophy of life. We valued every life on that airplane and knew it was our responsibility to try to save each one, in spite of the sudden and complete failure of our aircraft. We never gave up. Having a plan enabled us to keep our hope alive.” Those were the words of Captain Sullenberger, aka Sully, in Newsweek as he reflected on the miraculous landing of a US Airways jet in the Hudson River.

Many of your clients are crashing in this economy and this is your opportunity to provide leadership and hope.

As accountants, we have tremendous expertise to share with business and household clients experiencing financial hardship. Here’s why:

1. We’ve been through similar experiences with other clients.
2. We’ve lived through other downturns.
3. We have a better grasp on the financial dynamics of income, expenses, debt, and assets.
4. We can be more objective about the decisions that need to be made.

Sully did what airline pilots do- he followed his training. As accountants, we are equipped for much more than preparing tax returns and financial statements.

Here are 3 things you can do, even during busy season, to help steer your clients through difficult times:

1. Listen. Ask how the economy has impacted them, what adjustments they are making, what they are most worried about. Fight the urge to have all the numbers tied down before assessing how clients are weathering the downturn. The fastest way to find out is simply ask.
2. Get Organized. The first response of many clients is denial. Simply understanding the financial situation can mitigate much of the fear factor and provide the foundation for a plan. If clients aren’t already keeping records, now is a great time to start. Intuit offers free and inexpensive versions of QuickBooks Online for businesses and a free version of Quicken Online for households. Both solutions will summarize bank and credit card transactions as well as automate much of the categorization until you get involved. I recommend an online solution so clients can get started quickly and you can engage remotely.
3. Coach. Once your client has records and a foundation (and April 15 has passed), you can begin coaching. Use the budgeting tool to develop a plan. Simply being involved, as their trusted advisor, will provide comfort and hope.

Sully went on to say, “perhaps in a similar fashion, people who are in their own personal crises—a pink slip, a foreclosure—can be reminded that no matter how dire the circumstance, or how little time you have to deal with it, further action is always possible. There's always a way out of even the tightest spot. You can survive.”

This is your opportunity to be a hero for your clients.