Online Accounting: Front-line to Bottom Line, with Jack Fox

Online Accounting: Front-line to Bottom Line, with Jack Fox, M.B.A., author of Building a Profitable Online Accounting Practice

AccountingWEB Workshop presented 8/31/00

Session Moderator: Welcome everyone and thanks for joining us today. Today's guest is Jack Fox. Jack is an unforgettable speaker, retreat facilitator, practice development consultant, master of ceremonies and accomplished professional stand-up comedian.

Knowing that business is not a laughing matter, this results-producing author/consultant/seminar leader has assisted accountants and consultants in starting and building their very own successful businesses for more than twenty years. He is the author of, among other things, "Building a Profitable Online Accounting Practice.”

Jack is the Executive Director of The Accounting Guild. This unique Internet based membership organization assists computer knowledgeable accountants to acquire and advise clients in establishing and maintaining accounting, recordkeeping, and other business systems.

Welcome, Jack!

Jack Fox: Hello, and Welcome Everybody

I’ll begin by paraphrasing former VP Dan Quayle or Yogi Berra, I believe that the growth in online accounting is irreversible...

But that can change.

To give the answers first to the question What Does It Take to become an online accounting success story?

First is marketing. Online marketing, partnering, educating your clients, coaching your clients and above all, building a client service-reliance based on compliance relationship with your clients. If providing a meaningful, value added relationship is not something you are capable and willing to do then I suggest you go into another field where quality care and service is not at all important.

Like healthcare

The significance of online accounting services is that the marketplace is now locked into slow connections by government controlled telecoms. Or telecom controlled government. The market is locked into existing software with no place else to go other than out. The software is not capable of an interface to move transactions online. The accounting profession is locked into certain attitudes that seem to be DOS based.

What is needed is higher reliability, lower maintenance, security issues based on the most part by fear and ignorance. The accountant must realize what the true value and necessity of the services they perform.

People do not buy drills...They buy holes
Clients do not buy tax returns. They buy peace of mind and freedom from IRS harassment.
Clients do not buy financial statements...They buy lines of credit from suppliers and their bank.
Clients do no buy payroll services. They buy the freedom of record keeping and sending out hundreds of W-2s at year-end.

The accountant is looking for enhanced client practice profitability. Primarily they are looking for more clients. Online accounting can provide a means of improving Performance, Productivity, Lower Prices and Higher Profits

Jack Fox: The Gartner Co predicts that 60% of ASPs will fail by 2001. There are 500 ASPs in the market today. Just today, a new ASP who is in business 2 months announced a new CPA program

Pam Drewry: What is an ASP?

Sara Hale: Application Service Provider

Jack Fox: Good Question. Application Solutions Provider, Accounting Software Provider, Poisonous snake that bit Cleopatra on the Nile. The ASPs promised to meet client demand for a broader range of financial services. Move the accountant to provide higher-value services. Change the technology landscape. Can you imagine what they'll be able to do in another few months? Service bureaus, running client serve applications by Lawson, SAP, mySap, Your Sap (I wonder about some acronyms).

Sara Hale: What does the ASP of today lack in their product?

Jack Fox: The major component lacking in ASP programs is the client relationship between the accountant and the client. They provide a good "back room" for the CPA and that is really it.

Sara Hale: How important is the service component to today's providers?

Jack Fox: I think Service is the single most important aspect.

The US Dept of Commerce says that the market for accounting service will reach $105 billion by 2002. They never can tell you what something is now, Only the future.

The US Census Bureau reports 106,031 accounting firms and 110,835 offices. There are approximately 430,000 CPAs in the US and 310,000 are members of the AICPA. There are even more accountants, accounting professionals and tax preparers. This is the important statistic: There are approximately 21 million small businesses according to the Small Business Administration. Do some math and you see that most businesses do not use a professional accountant. Otherwise, the average accounting practice would have (even at half) in excess of 100,000 clients.

Accountants Strategies:

The most prevalent accounting application online is the use of e-mail. The strategy of the ASPs is to become a portal to the vast horde of un-accountanted businesses The CPA/Accountant (I use the term interchangeably because I can) is now the portal or gate-keeper if accounting was an HMO.

The selling-relince based on compliance, low-cost--high-function accounting services is what the ASPs are selling. To many, and I stress not all, ASPs the accountant is seen as a market segment and enabler through which the ASP can subsume the key client accountant relationship. The strategic mission for the accountant is to become the leading provider of Internet-based, outsourced business applications.

The Value Chain includes, Consulting, Configuration and Implementation, Data Center Infrastructure, Accounting Applications Management, Service Delivery and Management and Business Process Services.

Are there any questions I can take now before continuing?

Howard Bliss: Overcoming client objections to data offsite, etc.

Jack Fox: I believe the question of security is overblown. There are more serious threats to the data in your PC or server at your location from virus, fire, flood and incompetence.

Emily Daniel: while many of us will agree with your comment, our clients are very concerned about the security of their business data.

Jack Fox: An ASP has more state of the art security, back-up and firewalls than a practitioner can provide. Besides, aren't the bank's and IRS files offsite?

The evaluation criteria concerning the selection of an ASP is primarily is this vendor a valuable partner and a viable contender for the long term

Sara Hale: Doesn't it depend on if there is a dedicated server or shared servers?

Jack Fox: I am not a software or hardware expert. In the long run your security depends upon whether your ASP is a partner who will work with you and not take all your clients to share with themselves and their affiliates who provide all the other services you make a living from

Session Moderator: Isn't it the case that, like it or not, our clients are going to be facing decisions about using ASPs, so we might as well position ourselves to be there when they are ready, to help them over their concerns about security - maybe by giving them concrete examples of companies that have made the transition successfully.

Jack Fox: The key to economic security is learning efficient and effective marketing, sales methods and building valuable relationships with the clients you win. The other keys are training and knowledge. Providing it to your staff and imparting it to your clients

Sara Hale: Would it make your clients feel more at ease if it was a scanned image and they had all physical documents on their site?

Jack Fox: A multi-source revenue model is what you want your practice to look like. Many don't realize that Intuit makes more from selling consumable forms than from the software

Your success depends on your execution

Emily Daniel: In regards to marketing, I believe we all need to be prepared for the "new generation" of small business owners. These are the owners who will seek out accountants on line.

Jack Fox: The new generation of small business owners are our greatest potential source of clients. They want to know the why of the statements and not just the numbers. As Emily said, the small business owners will seek out accountants online

What you must do is "on-the-line" --in-their-face--marketing. Find their needs and fill them.

Maintaining Client Focus, Breadth of Solutions, Range of Services and above all, Client Satisfaction should be your Mantra.

Sara Hale: Many new growing internet companies want to do everything web-based, would you recommend to your clients an outsourced, web-based bookkeeping service?

Jack Fox: Sara, I would recommend meeting with the client, ascertain their needs and then suggest and implement what is best for them an Value Bill as per Ron Baker.

John Wiley & Sons will publish my new book, “Building A Profitable Online Accounting Business,” in December. It has close to 400 pages so I can't do it all here.

Pam Drewry: What other sources of information are available now?

Sara Hale: We want to ensure that CPAs do not see us as competition, but as a complement to their existing practice thus enabling them to provide higher value added services.

Jack Fox: Sara is with Virtual Growth and have a service called Virtual Accountant.

Sara Hale: Virtual Accountant was built for accountants by accountants, we are a web-based, bookkeeping service with powerful reporting capabilities and a team of bookkeepers dedicated to each client. The CPA is integral to our solution, we provide only the bookkeeping, "back office" while we still need to work with CPAs to provide higher level strategic advise to clients.

Pam Drewry: I agree, my clients are referred to me by my CPA...

Jack Fox: I have interviewed Stephen King (a different one) for my book and have met with their people. They are a fine company that is working to make the CPA an integral part of their program.

The universal complaint is that clients can perform transaction operations with software but lack any real understanding of foundational concepts for the entries. This is where I see the CPA filling a need and building a practice at the same time

Session Moderator: We have only a few minutes left - are there any final questions?

Jack Fox: I didn't have time for the Top 10 Trends in Online Accounting. Look for them on www.CPAvenue.com in about a week

Please get in contact with me at www.accountingguild.com for questions or comments

Session Moderator: Thank you all so much for joining us, and Thanks to Jack Fox for a VERY informative workshop!

Jack Fox: Thank you all for attending. Remember there can be no business without clients

Robb MacKinlay: Thanks Jack, where can I get hold of your books?

Jack Fox: Amazon and others have all my books. “Starting and Building Your Own Accounting Business 3E” is great, if I say so myself.

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