Case Study: Facing Road Blocks in Automationby
Facing challenges and road blocks are some of life’s greatest teachers. Such is the goal with the case studies we plan to do as part of our Realities of the Automated Practice program.
It’s not that automating business functions is fraught with disaster but it shows how firms and clients truly move from comfortably working one way, to ways that while over time may be more efficient and cost effective can prove difficult along the way. Such are the realities of automation.
In our first case study we spoke to Mike Castle of New Jersey-based CPAs Bond Andiola & Company www.bac-cpa.com. They are a 10-person firm that up until about three years ago performed the vast majority of their accounting and other client work on legacy systems and used quite a bit of paper as well. That all changed when Castle decided to become a shareholder.
Challenge: To become a more modern and efficient firm and offer more client services
Background: Castle had himself worked with the main shareholder of the firm for years. For his chosen career path he considered starting his own firm and not working so many hours for someone else, missing out on his life with is family. He had extensive accounting experience working with KPMG and the back office of the NJ Devils, but wanted a change.
One day he called the shareholder of the firm that he knew to see if any of the firm’s clients were for sale. The shareholder had fallen ill and was going to step away from the firm, prompting Castle to consider buying in as a shareholder, but there needed to be some considerations first.
Process: “I knew when I bought in here I didn’t want to buy into an old-school firm, it had to be modern and more efficient,” said Castle, who had become familiar with some of the more automated, cloud-based accounting, payroll, and practice management systems.
“This was a little over two years ago, so from Day 1 we ripped out the desktop and went with more automated solutions. I knew it was something that worked for years, but the business was declining some and it just wasn’t the way I wanted to work and thought it could be better.”
He decided to start with accounting, which made up a large portion of the firm’s client work. It took a few weeks, but the firm was able to start moving files from the desktop system to the cloud accounting system using a conversion tool offered by the vendor. Within that time, he was able to check the accounts and customer list, set up users clients and new rates.
The firm also hired a bookkeeper and consultant who could work remotely, before then no one at the firm could work “off standard” hours. They continued that with someone Castle knew from KPMG who could also work remotely. They also moved offices too from traditional to a more open office space and continue to grow services and clients. This however was not without its challenges.
Hurdles/Issues: The firm had to make a lot of changes. They had some staff turnover, mostly those that simply would not buy in to the new direction or use of new tools. Others who stayed had took two years to go to the cloud accounting system the uses. There were other issues as well.
“When I started no one even knew how to make an appointment, now we’re in Microsoft Teams. Office365 has it all and it’s cheaper,” said Castle.
What stung most was losing two senior staffers and “a number of clients” but, Castle said they did not lose any revenue during that time as they were able to do more and bill more as a firm.
The firm also rolled out ACH so some clients converted to monthly payments, moving from hourly to monthly charges. “We still have people to put hours in, but we know who bills monthly and who does not and we track by job.” But this was not the biggest hurdle.
“I’d say staff acceptance was the hardest. We had a section of the firm doing stuff the old way and the new way for a little while, those who left never bought in in anyway,” said Castle.
Advice/Lessons Learned: “As you start looking through options, it’s easy to get paralyzed by number of third-party solutions and I had to make decision, things get pretty sticky once you start using it,” said Castle. “You need to look at what and why and how to roll it out, if you get too caught up in product and features it’s easy to get bogged down.”
Results: Better access to talent and a more remote firm. Castle noted that there were at least three people in the firm now that they would not have been able to hire two years ago because of how they worked. The firm also now has access to new types of clients.
“They don’t see us as compliance and tax preparers. Now they want us to look at their operations, how their business is running and how they can cut costs and budget,” said Castle. “We have very different client conversations. Sure we lost clients, but they are businesses that are winding down anyway. It’s a good year as you start talking to potential clients before the growth comes.”
Next Steps: Castle wants Bond Andiola to be more marketable to other firms. They also want to do les 1040 work and more outsourced accounting work, expanding offerings on coaching. All new clients are on the new payroll system too. They can click a button and do all of their payroll needs and the firm just gets them set up on it. They also get fees from the referrals on that.
In addition, the firm is looking to automate operations management for clients and looking at more add-ons for the broader business. not just the books.
NOTE: Are you finding you are having to do more work with less resources, particularly post-COVID? Join us and the inimitable Geni Whitehouse, CPA Thursday Sept. 10, 2020 2pm EDT for a FREE Webinar on getting on top of workloads, automation and a possible mention of Basset Hounds.