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How CPAs Can Partner with Software Vendors

Jan 11th 2019
Owner QA Business
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How to partner with vendors
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How to partner with vendors

The symbiotic relationship between accounting and technology promises to enhance client/advisor relationships, drive efficiency within businesses and firms alike and provide newfound vigor to those accountants and bookkeepers who want to take control of their freedom-focused future.

Combining accounting knowledge with technology solutions is a skill in demand across the globe. Pivotal to getting the combination correct is carefully choosing the right software vendors to partner with and picking them for the right reasons. The aim of this article is twofold: I want to help you ask the right questions when partnering with vendors, and I want to ensure you avoid some of the pitfalls others have endured in the past.

How to Successfully Partner with Software Vendors

In my experience and observations (over 25 years in the making), there are three key areas that, when understood and managed well, result in the most effective and enduring advisor/vendor relationships;

  1. The interview
  2. Respect for independence
  3. Appropriate incentives

The Quality of the Answers is Determined by the Quality of the Questions

Business partnerships are much like relationships: It’s important to get the foundation right! The more you can discover and understand about the company and personal backstories of those who created and are running it, the better. After all, you are vetting this relationship before introducing your client to the vendor.

Firstly, it’s vital to ensure there is cultural alignment and shared values that are congruent with you and your business. You are looking for a vendor who is going to back you up so you can support your client; you’re seeking a long-term relationship.

So, what are some of the key questions and considerations that will help make your decision?

  • Have you met the founder/CEO?
  • Why did they create the business?
  • What is the problem they are solving?
  • Does the solution have broad applications/relevance to your client base?
  • Is their product good and getting better?
  • Can you offer feedback to influence future software development and enhancements?
  • Does their business model make sense? Is it sustainable?
  • Do you feel like you will be a respected partner no matter your sales results?
  • Have you spoken to at least three existing partners and customers of the vendor?
  • Does the partner model allow for revenue sharing opportunities?

When in doubt, stay on the client side of the desk. No single software solution will handle all needs for all clients (although the emergence of the apps ecosystem may extend the useful life of core accounting engine solutions). Always be prepared to have proactive conversations with clients about their current and future software needs no matter your allegiance to a particular vendor solution.

Declaring Your Independence

Clients are looking for leadership (from you) when it comes to recommending and supporting their small business accounting/technology needs, and vendors are looking at you as a viable channel to market for their software solutions.

At times, you may feel like you’re under pressure to make recommendations you may not otherwise feel ready to make, leading you to stall. While this is noble, it’s not actually helping the client. Other firms simply adopt the strategy that “one size fits all” when it comes to recommending software. While this may be a legitimate approach to a niche client base, it could be a high-risk strategy if the client perceives that you are simply recommending what “you know” and not necessarily what best suits their needs.

So, what should you do? The short answer is to commit to becoming a Software Advisory Specialist (or tapping into such a resource) in which the needs of the client are first assessed and before your chosen (multi-vendor) tech stack is consulted for a possible solution. The challenge to guard your independence requires effort accompanied by a process of how to determine the most appropriate solution.

If you’re not already geared up for this, you have a decision to make (ideally before you recommend your first software to clients). Here are your three choices:

  1. Build: Commit to building a software advisory division of the firm (maybe you are its first hire)
  2. Buddy: Engage with external specialists (independent and non-competitive consultants) you refer clients to for the review, setup, training and support of their business software needs
  3. Buy: Acquire talent already doing this work and offer this service from within the firm (perhaps as a separate entity so as to keep things clearly demarcated from existing compliance services)

Some points that may also help you find your North Star:

  • The small business is your client and the software vendors your customers, a subtle but important distinguishing factor.
  • There is nothing wrong with being a channel to market, unless you don’t know you are one! 
  • You don’t need to be agnostic when it comes to recommending software, but you must be client focused.
  • Your business is not selling software, it’s servicing client needs; however, the more clients you service, the more software you will end up recommending and installing.
  • Increased knowledge of the available solutions within the accounting technology industry will hopefully enhance your objectivity and support your independence.
  • Implement the 3:2:1 Rule when recommending software: Be aware of three vendor solutions in the one category (e.g. accounting, payroll, CRM etc.), learn at least two of them (i.e. become an accredited partner/advisor) and master at least one of them.

Incentivization: Models, Margins & Marketing

Various models exist to incentivize advisors to recommend software to their clients, such as free in-house-use software subscriptions, wholesale margins, ongoing commissions or rebates and influencer events.

In any business partnership where money is involved, it’s important to get expectations right from the outset, as sustainability hinges on this. Always read the terms and conditions of all partnership agreements (I must admit, I haven’t always done this in the past). You may be surprised at what you see regarding expectations, remuneration and even termination.

Of contention is the shared revenue model, where the advisor shares in some portion of the ongoing revenue generated by the software subscription paid by the client. Like any distributor relationship, a shared margin is common practice; however, always ensure this is something you are able to accept in line with your professional guidelines.

It’s also a good policy to ensure the client is aware of this benefit. The concern is this revenue could be seen to encourage you to recommend specific software. At all times, it is vital the best interest of the client is paramount to any suggestion. If you ever find yourself considering the amount you may receive for the recommendation ahead of the clients’ interests, this is a clear sign that your independence is under threat and you should take the necessary actions to remedy the situation.

Once you have established a vendor partnership, it important for each party to continue to develop and strengthen the relationship with the overarching view to better serve the end client.

3 Things Software Vendors Can Bring to the Partnership

  • Product Innovation
  • Genuine and Enduring Partner Models
  • Manners (Always Respect and Appreciate the Independent Professional)

3 Things Accounting Professionals Can Bring to the Partnership

  • Empathy (understanding the commercial reality of the vendor)
  • Insights (participate in feedback loop for product enhancements that will benefit the client)
  • Manners (always respect and appreciate the efforts of the vendor and their team)

Now is the perfect time to make a commitment to this emerging subset of the accounting profession. My dream is that accountants/bookkeepers/consultants can work close together with software vendors to significantly enhance the companies and lives of small business clients around the world.

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