E-Business, Increasing Your Value to Your Clients

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E-Business, Increasing Your Value to Your Clients
Presented by Gregory S. Price
Shareholder/Director, Pannell Kerr Forster of Texas (PKF), P.C.
Contact Greg at [email protected]

Tuesday, August 21, 2001

Visit the AccountingWEB Workshop Calendar for upcoming sessions.


  • What is an E-Business?
  • Why Build an E-Business?
  • The Move to Online Services
  • The Road Ahead
  • E-Business, Increasing Your Value to Your Clients

You can read the complete transcript of this workshop.

The quick interactivity and anytime/anywhere availability of the Internet provided the first transformation of the way customers and suppliers communicate with their vendors. Over time, the Internet will transform business processes, offering instant product availability, a need for 24/7 live customer service, and generating new business at any time, day or night.

The Internet presents accountants with a once in a lifetime opportunity to change the way of doing business. For those who can replicate the success of the Internet, the rewards can be great. Accountants who allow their competitors to leap ahead of them in providing online services will undoubtedly find it more difficult to win clients, and their hold on the existing clients may begin to slip as the promise of efficiency outweighs years of loyalty in capital and information starved companies.

Workshop Transcript

Session Moderator: Welcome everyone, and thank you for joining us today! I am pleased to introduce Gregory Price, who will present a workshop on E-business, Increasing Your Value to Your Clients. Gregory Price is a Shareholder/Director of Pannell Kerr Forster of Texas (PKF), P.C., one the fastest growing locally owned and operated CPA firms in Houston, Texas.

Mr. Price is responsible for the Firm's Business Systems Consulting (BSC) group. The BSC group has been in operation for less than two years and has raised IT consulting revenues from less than $50,000 prior to its inception, to $450,000 in fiscal 2000. Fees are projected to exceed $1,000,000 in fiscal 2001.

Mr. Price, in conjunction with the Houston Business Journal, conceived and initiated Houston's first annual high-tech event, the FastTech 50 Awards, honoring 50 high-tech companies which have experienced the greatest percentage revenue growth for the two year period ended December 31, 2000.

He is also a frequent speaker and guest contributor to such publications as Accounting Technology, Accounting Today, and Practical Accountant. He previously presented a workshop for AccountingWEB entitled, "E-Business, What Every Accountant Needs to Know."

Prior to joining PKF, Mr. Price was a partner with a Big Five firm, having spent the first 20 years of his professional life working on over 1,000 clients of domestic and foreign origin with this organization. Mr. Price is licensed as a CPA in Texas and Louisiana. He also carries the following certifications: CITP, CISA, and CFE.

Session Moderator: Welcome, Gregory - thank you for joining us!

Gregory Price: I see we have Geni Whitehouse with us, which means we have a real expert with us.

Geni Whitehouse: That's what you think!

Gregory Price: To get a feel for the group let's see how many are already doing epractice activities. Is anyone doing anything right now?

An e-practice is nothing more than a traditional accounting practice conducted in new and more efficient ways. An e-practice is not a different discipline, nor a different set of services, nor a different form of accounting. The only significant difference is that an e-practice delivers some or all of its services to clients over the Internet.

The e-practice is a robust, all-encompassing concept. It is not restricted to a few isolated accounting functions or a scattered set of client types. Rather, it applies with equal power to all major accounting functions and essentially all types of clients. To illustrate, consider how an e-practice operates with respect to the four primary accounting functions: client write-up, audit, tax preparation, and the delivery of consulting services.

Session Moderator: All of you please feel free to jump in any time - and feel free to ask questions throughout the workshop.

Gregory Price: For small and midsize practices, client write-up is the most pervasive accounting function - and the most tedious. If you're lucky, clients enter their transactions into an electronic bookkeeping program like QuickBooks. If not, you receive piles of paper ledgers, invoices, and receipts. In any case, you generally have to re-format the data or re-enter it into your own electronic accounting system before you can even begin to generate and review financial statements. The downsides are obvious: duplication of effort, the potential for errors in transcription, and the inconvenient logistics of transporting the data back and forth. The upside: at least you don't have to worry about what to do with all of your free time, because there usually isn't any.

Gregory Price: Does anybody other than PKF use lots of paper?

Geni Whitehouse: Most of the firms I've worked with are still using it!

Gregory Price: Thanks Geni.

Gregory Price: In contrast, here's how an e-practice works. Clients enter their transactions and other financial data online, directly into a secure, Internet-based accounting system. The data and transactions are there for you to begin work immediately. No re-entering. No re-formatting. No transcription errors. And no physical transportation of receipts, paper, and ledgers. Rather than being forced to devote your time or that of your associates to data entry, you can begin generating financial statements - not to mention higher value billings for your firm - right away. At any time, clients, bankers and your associates can view reports and enter transactions in a secure, efficient fashion.

The future of our profession is going to involve clients and CPAs working together via the Internet in all sorts of ways.

The Audit Practice.

While audit and tax preparation are distinct functions, they bear many similarities. Both take place once a client's books and financial statements have been prepared for a given period. Both typically occur at discrete points in time rather than on an ongoing basis. And both involve laborious sifting through records that, in many cases, may not have been constructed in an orderly or complete fashion.

With traditional, paper-based accounting, audit and tax preparation works like this. After your initial discussions, you and your colleagues show up at your client's offices at periodic intervals and camp out for days or weeks at a time. The drill is familiar and includes cramped conference rooms and glares from employees who wish you'd just go away. You either need to haul all your tools with you or run the risk of not having the book or document you need to finish the job without another trip to the client site.

I once did an audit in the admitting office of a hospital. That was interesting.

Session Moderator: I did a series of audits in nursing homes where we nearly lived in the homes for weeks at a time - but it was felt that part of the benefit of being there was we got a much better feel for the operation.

Gregory Price: Operationally I can see benefit in being on site for a while, but the next year is probably old news. With an e-practice, client data is stored in a secure Internet data center, so most audit and tax preparation activities can take place online - from the comfort and convenience of your own office. Because financials and tax forms are prepared online as well, you can make adjusting entries, generate trial balances, even make tax filings anytime and anywhere, without compromising the privacy of your client's information.

Gregory Price: Does anyone have concerns about security?


Gregory Price: The delivery of consulting services involves an array of activities that extend upon the core accounting functions of client write-up, audit, and tax preparation. These consulting activities include activities such as financial planning, fund raising, leasing, business strategy formulation, market analysis, process implementation, system design, application integration, technical support and training. Using traditional practice methods, to perform most of these projects effectively, you must be at your client's site so you have full access to their data. Typically, a great deal of time is spent straightening out system problems and adding little value to your client's business.

With an e-practice, things change dramatically. The core accounting system is hosted online by software and data-center experts. As a result, there is typically no new hardware or software to install, and no macros, scripts or code to write. Clients save tens of thousands, even hundreds of thousands of dollars that they would normally have to invest to make their accounting systems work properly. You account for your time and invoice for it electronically if you wish, freeing yourself even further from tedious and unproductive operational tasks.

Most importantly, with an e-practice, the time you spend at a client site is with your client rather than a PC monitor. And it's time that adds tremendous strategic value to your client's business, is far more enjoyable for you, and generates higher profits for your practice.

Gregory Price: Why Build An E Practice?

Many of the advantages of building an e-practice may be apparent, but it is worth stating them explicitly so you have a clear view of the benefits that you can offer your clients and obtain for yourself.

Operational Issues

The advantage perhaps most evident from the illustrations above is that of operational efficiency - the ability to accomplish more in the same amount of time. By performing many of your accounting processes online, you increase the efficiency of meetings, reduce time lost to travel, and allow you and your clients to schedule activities when they are most convenient.

Perhaps more importantly, when client information is available online, you can access it anytime and anywhere. The result? Rather than serving two to three clients per day, you may be able to serve as many as 10 to 15, dramatically increasing your potential billings. And because invoices can be prepared and delivered online, you can speed up collections of the amounts owed to you, by days if not weeks, while reducing the actual cost of billings by up to 80% over that associated with paper invoicing.

You can also make sure that your firm gets paid first!

Reducing IT Costs

Traditional in-house PC and client/server accounting systems are inflexible and can be very expensive. Typical costs for such an implementation include

From $10,000 to $50,000 in systems integration and troubleshooting Some 15% to 20% of this total in annual maintenance and software upgrade fees Salaries for IT professionals, at a fully loaded cost of $80,000 to $250,000 per person Thousands, even tens of thousands of dollars in training costs. Smaller clients are probably a better fit at first, but you may find certain larger clients that can work this way.

As the core of an e-practice, online accounting systems eliminate most of these costs altogether and reduce the others. With an e-practice, for example, there are typically no up-front software licensing costs, no dedicated hardware and networking costs, no annual maintenance and software upgrade fees, no requirements for additional in-house IT personnel, and no expensive consulting fees. These costs--and the services they represent--are all included in the base monthly fee for the online accounting service. And while even online accounting services require some training and transition time, these costs are minimal when compared to the days or weeks of training and downtime required by traditional client/server systems.

Improved Client Service

As a professional service provider, your first commitment naturally is to your client. You have to make a profit, of course, but even here exceptional customer service can play a critical role. It is usually far less expensive to maintain an existing client than it is to acquire a new one. And the more satisfied your clients are - typically, a direct reflection of the quality of client service you provide - the longer they will stay with you, the more services they will purchase, and the more readily they will recommend you to their colleagues.

An e-practice allows you to enhance your client service in a number of ways:

  • Real-time access. Perhaps most visibly, an e-practice gives your clients immediate, anytime, anywhere access to their data and the analyses you prepare for them. As a result, not only can they receive the answers they want at the moment they want them - and wherever they happen to be - they can obtain many of these answers without having to interrupt you, thereby increasing your productivity while giving them more value for their investment.
  • Geni Whitehouse: But isn't it hard to convince your clients to provide their information this way? Gregory Price: Yes, the question of security comes up quite a bit. One of our answers is the use of Payroll Services. Most smaller companies use ADP, etc. They share all kinds of confidential information with clerks of these companies. Yet they have no problem with that. It is important to make sure the service/software and providers have adequate security. But is generally a perception problem. Once you get over the initial thoughts, it can be quite effective. We have a couple of clients that have offices in Milan, Houston, and Hong Kong. They use our service to do their books. Everyone has access over the Internet and everyone gets to see their historical records.

  • Reduced operational costs. As noted above, with an e-practice, clients reduce systems hassles, while saving money by assigning clerical and operational tasks to entry-level personnel. This reduces expenses and frees up their time and financial resources so they can work with you on solving more strategic business issues. As a result, clients receive more value for what they spend, and you earn a greater return on the hours that you bill.
  • Flexible, inexpensive data systems. Instead of constantly requiring your client to upgrade systems, with an e-practice, clients simply need Internet browser access on any type of computer. When they need to upgrade systems, they can do so without upsetting day-to-day system operations and endangering their ability to do business.
  • One side note...all browsers are NOT created equal. So level set your clients here before you embark on this. Also, their ability to use the Internet will only be as good as the speed of their ISP. Dial up is not recommended.

  • Enhanced Knowledge Sharing. No matter how much professional development a CPA or other professional service provider may pursue, the world is changing far too rapidly for any one person to be an expert - or even conversant - in every field of knowledge needed for a practice's success. Fortunately, the e-practice helps address this problem by promoting the sharing of knowledge among a practice's partners. This knowledge transfer can take place more easily in an e-practice than in a traditional paper-based practice in part because so much information is stored and maintained online, where it can be viewed by the entering of a password and a few button clicks.

Some of the largest accounting and consulting firms have made this online sharing of knowledge an institutionalized feature of their practices. Arthur Andersen, for example, maintains a 35,000-page internal web site called KnowledgeSpace that allows individual practice members to bring the firm's collective knowledge on dozens of different topic areas to bear on a particular problem. Ernst & Young has created a Center for Business Knowledge that includes more than 70 firm-wide communities of interest. And Coopers & Lybrand, prior to its merger with Price Waterhouse, developed an intranet service called KnowledgeCurve that gave its practice members direct access to all of the firm's market and competitive intelligence. They estimate savings at more than $1 million a year if it cut just an hour per week from the time that professionals spent looking for information.

While most small and midsize accounting practices possess neither the staff nor the resources to develop sophisticated application solutions, the knowledge-sharing principle still applies. Indeed, the mere fact that, through an e-practice, the majority of the practice's collective information has already been placed online makes it a relatively painless exercise for practices to organize this information in a way that actively promotes knowledge sharing, further improving the quality of service that practice members can deliver to clients even as it promotes the delivery of higher margin consulting services.

The Move to Online Services

Ultimately, perhaps the most important reason for building an e-practice is that you may have no other choice. Industry analysts and technology vendors all see accounting systems and services shifting to the online world rapidly.

Business Week's "Information Technology Annual Report" dated June 19, 2000, warns that the "jig may be up" for makers of corporate accounting and related software who for years have "racked up huge profits by charging customers hefty up-front licensing fees for hopelessly complex software?" Business Week's prediction: over the near term, "lump-sum licensing revenues could give way to smaller monthly fees." Admits PeopleSoft CEO Craig Conway: "If I was starting a company today, I'd go with the subscription model. While [the monthly subscription model] may be great for PeopleSoft two or three years down the road, no one would buy the stock in the meantime."

Side Note: Tier 1 packages racked up huge profits. The rest of the guys are still trying to make it.

Officials at Great Plains software, long the leader in delivering pricey, packaged accounting software solutions for the middle market, similarly concede that the traditional packaged software approach is dying. Lynne Stockstad, Great Plains' vice president of business development, confessed to Business Finance magazine in June that the industry will soon see the end of internally deployed accounting systems, with their large up-front price tags and high ongoing fees. Their replacement? Subscription-based online solutions. "We see a movement toward more of a subscription service," she predicted, "either for a yearly amount or a monthly amount or a transaction fee."

CPAs and other professional service providers might do well to heed this trend. Harvey Goldstein, managing partner of the CPA and management consulting firm Singer, Lewak, Greenbaum & Goldstein LLP and former commissioner for the White House Conference on Small Business, warns that the emerging electronic accounting systems threaten to disenfranchise accountants who are not ready for the changeover. When bankers and other financial services clients "start seeing the technology available to them," with "total access to customers' accounts electronically," these clients may "no longer depend on the independent accountant on the outside to provide financial accounting savvy" to probe balance sheets and income statements.

The era of XML and XBRL will be here soon. Packages like Navision will do will with these requirements.

The answer, says Mr. Goldstein, is for accountants to transform themselves before the market does it for them, to begin retooling their practices now to provide higher value and less easily replicated services like consulting, financial planning, and auditing. Barry Melancon, president of the American Institute of Certified Public Accountants (AICPA) goes one step further. In a March 2000 address, he declared that, if they are to survive and prosper in the Internet age, small and midsize accounting practices must learn how to expand their service lines and make significant investments in their futures. Such practices, he warned, had better focus on "faster, better, and cheaper" ways to deliver their services, or they will be extinct before long.

The Road Ahead

The core of an e-practice is an online accounting system designed from the ground up for the Web. The system is the e-practice's hub, the place where accountants and clients can enter, execute, and analyze transactions, reports, graphs, and other critical decision-making information. A properly designed web-based accounting system is optimized for network speed and efficiency, offers secure anytime/anywhere accessibility, and integrates easily with other online services.

We were out of our offices for one month here at PKF due to the Houston flooding. We were impacted, but we were able to remain highly productive. Without our e-practice, I would hate to think of what might have happened.

A web-based accounting solution, exemplifies the future of accounting on the Internet. It is designed expressly for high growth and midsize companies caught between the functional inadequacies of PC-based bookkeeping programs and the prohibitive costs of complex and expensive client/server systems. A fully GAAP-compliant web-based service provides professional-strength versions of the four core accounting functions: general ledger, accounts payable, accounts receivable, and human resources.

Michael Horrocks: I've never heard of Human Resources referred to as an accounting function before?

Gregory Price: Well let's call it the accounting side of the transaction.

These capabilities enable you to handle all the business transactions you have with customers, vendors and employees. Key features "which meet and, in many cases, exceed those available on far more expensive client/server systems' include:

  • Powerful accounting capabilities, like true double-entry accounting, closeable
  • Accounting periods, and powerful, integrated budgeting with multiple projections
  • Robust, customizable reporting and graphing, including drill-down tables
  • Charts that can be created in real-time with point-and-click report and graphing
  • Customizable hierarchical structures for locations, departments, territories
  • Account groups, reporting relationships, time periods, and workflow processes
  • Anytime, anywhere access enabling accountants, clients, and other authorized users to view their financial data from any Internet-connected computer, from multiple locations or multiple offices.
  • Built-in scalability so that you and your clients can accommodate essentially any number of users, locations, accounts, or transactions as your practice and their businesses grow.Unlike entry-level bookkeeping programs built on the checkbook metaphor, the web-based system represents a new wave of web-based accounting solutions designed to handle the needs of growing business and professional accountants. Any solution in this area needs to support the four central aspects of a professional accounting practice:
  • Client write-up. With a fully web-based general ledger and associated journals and reports, combined with the system's speedy performance and easily navigable interface, you and your clients can enter transactions and other financial data as easily as you can log these entries into a paper or PC-based system. And having been entered once, the data never need be entered again, reducing duplication of effort while enhancing accuracy.
  • Online auditing. An auditing service, fully integrated with the accounting system, will enable CPAs in small and midsize practices to employ the same auditing methodologies used by the Big Five, and will offer such professional-level features as audit management, analysis, sample selection, and electronic confirmation. The auditing service should also provide direct context-sensitive access to background check services, related statistics, and other industry information from third party sources available on the Web.
  • Tax preparation. The software needs to integrate tax preparation capabilities into the accounting system.
  • Professional services billing. Web-based time- and materials-billing systems for professional services that should be integrated directly into the accounting system.

Geni Whitehouse: Does this exist now?

Gregory Price: Big Five firms will be trying for years to come up with answer for this one. But if you can get your clients using the same system, today you will be ahead. Yes. This does exist now.

Increasing Value to Your Clients

Winning and retaining clients in the hyper-competitive age of the Internet is the ultimate goal of building an e-practice. To do so, you must make your practice and your web site an indispensable resource for your clients.'

Making the transition from client/server and PC-based accounting systems to professional web-based accounting systems is a critical first step in launching your e-practice. Here are several additional steps you can take to achieving your ultimate goal:

Private Label Your Accounting System

In the business world, a company's identity - its brand - is everything. Yet accountants, who sometimes spend years trying to build their reputation and respect with clients, often find themselves recommending accounting solutions for their clients in which the software maker's name, not their own, is emblazoned on every screen of the application. How much more beneficial would it be for your practice if, every time a client entered a transaction or inspected a report, they saw your name, rather than that of a third-party application vendor? With web-based accounting systems, this private labeling is not only possible, but is an integral part of the service. So, choose, an accounting service that you deploy to your clients can feature your name, logo, and colors on every screen and every transaction and report page.

Extend Your Practice's Capabilities

The proper system will be distinguished among web-based business services by its full adherence to open standards, particularly XML (the extensible markup language), which has become the industry's de facto standard for the transport of data among applications. Your system should be able to quickly and efficiently integrate a variety of business services into its core accounting system, and is in the process of adding numerous others, including bill presentment and payment, e-commerce, credit card processing, check clearing, payroll and benefits administration, and expense reporting, as well as a variety of vertical industry solutions. Meanwhile, technically astute CPAs and their clients can leverage XML's straightforward integration protocols to customize their accounting system by augmenting it with their own or third-party applications.

Build a Commanding Web Presence

To boost your practice's image and appeal, you may want to consider creating an attractive and compelling marketing-oriented web site. If you are to have a web-based practice, shouldn't you have a professional web site? After your site is created, it's then a simple matter to add a button that allows your clients to launch directly into your private labeled, online accounting service.

Make Yourself Part of the Management Team

The best way to become indispensable to your clients is to become a virtual part of their management team. During the months ahead, you should begin deploying online business services that integrate seamlessly with its core accounting functionality. You will be able to select those services that answer your clients' needs, increasing the value you bring to their organizations, and strengthening your long-term relationship with them. The more exposure you generate for your practice in this way, the more your clients will recognize your value to them, and the more likely they will be to call upon you for high-margin management consulting services.

Gregory Price: Gail that concludes my prepared presentation. I would be happy to answer any questions.

Session Moderator: Thank you so much, Gregory. If anyone has any questions or comments to share, please post them at this time!

Geni Whitehouse: Does your firm have an in-house web developer?

Gregory Price: Yes. We do, we also use an outside source as well.

Michael Horrocks: ours does too (me).

Geni Whitehouse: That role seems important to the success of this kind of initiative

Gregory Price: Mr. Horrocks are you using some of the features we talked about.

Michael Horrocks: Not yet, that's why I am here.

Gregory Price: Well I hope it helped generate some interest.

Michael Horrocks: I will forward the transcript to the owners or at least part of it.

Gregory Price: Ms. Whitehouse, some software vendors may be able to assist in this area. Do you know of any?

Geni Whitehouse: I can think of at least one.

Gregory Price: The smart software vendors are going to seek out the CPA firms. The AICPA is working on something in this area also, but some CPAs may want to be independent of that effort.

Geni Whitehouse: They all have programs for CPAs - Navision, Sage and Great Plains can assist a firm in these efforts.

Gregory Price: Tax links are going to be the "silver bullet". Once that is done...watch out!

Michael Horrocks: what's the best way of producing reports that contain XBML are there any packages that do it yet?

Gregory Price: I know that Navision Software is XBRL ready right now. Also, remember the software companies may go directly to your clients and cut you out of write up work. So, get in there first with your product.

Session Moderator: Thank you all so much for joining us today!

Gregory Price: Thanks everyone. I hope I generated some interest for you.

Michael Horrocks: Thanks.

Geni Whitehouse: Very informative

Teanesha Rowe: Thanks a lot!


Gregory Price is a Shareholder/Director of one the fastest growing locally owned and operated CPA firms in Houston, Texas. Mr. Price is responsible for the Firm's Business Systems Consulting (BSC) group. The BSC group has been in operation for less than two years and has raised IT consulting revenues from less than $50,000 prior to its inception, to $450,000 in fiscal 2000. Fees are projected to exceed $1,000,000 in fiscal 2001.

During this startup period PKF became a Navision Software Solution Center and an Intacct Software e-business partner. Mr. Price, in conjunction with the Houston Business Journal, conceived and initiated Houston's first annual high-tech event, the FastTech 50 Awards, honoring 50 high-tech companies which have experienced the greatest percentage revenue growth for the two year period ended December 31, 2000. He is also a frequent speaker and guest contributor to such publications as Accounting Technology, Accounting Today, and Practical Accountant. He has been featured on Webcast presentations for the AccountingWEB and Pro2Net Web sites. He was also a judge at the Southwest Business Plan Competition hosted by Rice University. This event is a regional competition of the Moot Corp national and international competition where businesses submit business plans for judging. The Top 40 people behind start-up business in the Houston business community are asked to serve as judges. Gregory Price was asked to sit on this panel and was the only CPA among the panelists. PKF was the only CPA firm represented on the panel.

Prior to joining PKF, Mr. Price was a partner with a Big Five firm, having spent the first 20 years of his professional life working on over 1,000 clients of domestic and foreign origin with this organization. Mr. Price is licensed as a CPA in Texas and Louisiana. He also carries the following certifications: CITP, CISA, and CFE.

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