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[Podcast] Client Accounting & Advisory Services Best Practices with Mike Sapperstein of RS&F

Topic: Podcast

In this episode of the AI in Accounting Podcast, you will meet Mike Sapperstein, Manager at Rosen, Sapperstein & Friedlander, LLC (RS&F), based in Baltimore, Maryland. Founded in 1979, RS&F is a full-service CPA firm that provides business consulting and accounting services.

Mike has some great advice for those who are just starting out their CAS practice:

[Podcast] Client Accounting & Advisory Services Best Practices with Mike Sapperstein of RS&F

“Before you really do anything, determine who your clients are. … Learn who the clients are, what their needs are, what you’re providing them, and begin to look into things that you can put in place to provide better information for those clients. It’s going to take a lot of time … but if you do that, you’re going to get a good roadmap and idea for what software you want to utilize, how you want to write up your policies and procedures. … If you don’t do it off the top, you could go down some roads that are just a waste of time and money that could have easily been avoided.”

Mike also offers guidance to those who have been managing a CAS practice for some time and have hit a roadblock:

“You have to identify the problem. … Identify where [your] issues are. Once [you] have an idea of what the problems are, you then go about attacking those problems in a manner that corrects them and ideally puts in place safeguards to prevent those things from occurring. … Don’t waste time feeling bad for yourself or feeling sorry for yourself. … Get up, go, ‘All right, we’ve got a problem. We need to fix it. I built this thing once before. I can rebuild it again.’”

According to Mike, complacency is the antithesis to building and maintaining a successful CAS practice:

“You need to constantly be working on your business. You can’t allow it to come into an autopilot mode. While that sounds great, it’s just not a good place to be. If you’re on autopilot, you’re missing things.”

Listen to the episode in full to learn more about the importance of:

  • Managing your expectations based on the capabilities that you have today, so as not to overpromise and under deliver to clients,
  • Determining the exact kinds of clients that you want to work with, so as not to overextend yourself, and
  • Spending time analyzing the software and tech stack that you select, as well as how you intend to build your internal processes, to ensure that you are equipped with the best possible tools to take on your desired clients.

All this and more is discussed in detail in this episode of the AI in Accounting Podcast. To learn more about Mike Sapperstein and contact him with any questions about client accounting services, you can check out his LinkedIn profile or reach out to him directly via his email at msapperstein “at” rsandf.com.

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A lightly-edited transcript follows below:

Mike Sapperstein:

But I would spend the time learning the client, and I don't mean just what the business does. I'm really talking about learn their processes, learn their methodologies, and, perhaps most importantly, get to know their people and make sure that the people under you really are getting to know their people because it's these other employees of this company that are going to help you get your job done by providing insight into the company that you probably wouldn't get directly from the owner. Maybe the owner doesn't see it that way because they're not on the front line. Maybe the owner just has a perception of something that's not the reality, and you're going to need these people to provide you financial information, but you're also going to need them hopefully to provide you with just some corporate insights.

Voiceover:

Welcome to the AI in Accounting podcast, which helps accounting, bookkeeping, and finance professionals prepare for the future of outsourced accounting and accounting technology. Plus, you'll learn how to use artificial intelligence (AI), automation, and machine learning to scale your accounting practice. Now, here's your host, Joshua Feinberg of Vic.ai.

Joshua Feinberg:

Hi, it's Joshua Feinberg from the AI in Accounting podcast, and I have a very special guest here with me today. I'm being joined by Mike Sapperstein. He's a Manager at RS&F in the Baltimore, Maryland area. Mike, thanks for joining me on the podcast today. Welcome.

Mike Sapperstein:

Thanks for having me. Happy to be here.

Journey to Outsourced Accounting

Joshua Feinberg:

Awesome. The first place I wanted to start was to learn a little bit more about how you ended up in your current role at RS&F. Did you go to school knowing that you always wanted to be an accountant? Was there a moment in your childhood where a lightbulb went off and said, "Gee, this is what I want to do when I grow up," and how did all of that lead you to where you are today?

Mike Sapperstein:

It's kind of a funny story, to be honest with you. This is actually my second career. I came out of college in 2008, so that's probably not an enormous surprise for those that remember 2008, but I'm the son of a CPA. My father founded RS&F a little over 40 years ago, and a lot of our conversations were about the advisory work he did with his clients. Having said that, after my first accounting course in college, I actually hated accounting. Didn't enjoy it. Didn't like the teacher, and it just was a bad experience overall. Ended up going into a different career, and then after about a year in that industry, I realized everything I want to do requires kind of being a CPA and having that background is a really good place to start. So, I went back, I got my Master's in Accounting and had every intention of not working at RS&F. I wanted to kind of make it on my own. Well, luckily, my father's partner actually asked me to grab drinks with him one night, and when he asked me what I wanted to do, after responding to him, he kind of said, "Well, if you're ever thinking of coming back to RS&F, I'd rather you start with us, so we don't have to retrain you into the way we do things." I didn't really believe what he said because I never really thought it was an option for me and didn't really want to, but long story short, after he brought it up three or four more times, I thought about it, and I took it on. So, I joined RS&F in about 2010 as an intern, worked primarily in the A&A department, until I started to build my own book of business. I never really liked the compliance aspect of the job. I felt like providing information on the prior year was so much less important to a business owner than helping them with what's coming next and down the pipeline and the current situation, but I recognized that compliance is a really good way to get a nice foundation. So, I spent several years doing that, until I ultimately started picking up my own clients, and, as a result, I began doing more and more advisory type work with those clients, and then probably back in May, I think it was, of this year, our co-managing partner sat down with me and said that “We really want to revamp our whole outsourcing department,” and asked me if I wanted to take that on. I thought about it for about 15 seconds and said, "You want me to run my own business unit essentially? Yes, yes, I would love to do that," and that's how I ended up where I am right now.

Joshua Feinberg:

I've actually found that one of the more common threads—and one of the more fascinating things to discover—is that most of the people that are leading CAS practices and outsourced accounting practices have to think like an entrepreneur within a very traditional professional services firm. Sometimes, we even end up talking about business-development strategies because it's all part of growing a successful practice.

Mike Sapperstein:

Yeah, it really is.

Advice for Getting Started in Client Accounting Services or Outsourced Accounting

Joshua Feinberg:

So, the first place I wanted to get your insight on is if you were to run into someone you went to school with, or someone at a traditional conference—when we're back to having traditional conferences again—what advice would you offer to someone who's about to take over an outsourced accounting practice? What should they be thinking about in those first couple of weeks, first couple of months, to set a really solid foundation for success?

Mike Sapperstein:

Okay. So, I would say for someone coming in and getting ready to start taking over a CAS practice or starting up a CAS practice, “Before you really do anything, determine who your clients are. If you've got a practice that's already started but not really managed, and your job is like mine, where you're putting a real brand around a product; don't make the mistake I did, which was start looking at solutions to problems I didn't even know were problems.” Instead, I would tell you, “Go back, start at the beginning, and learn who the clients are, what their needs are, what you're providing them, and begin to look into things that you can put in place to provide better information for those clients. It's going to take a lot of time. You're going to be talking with the specific managers of those clients to understand what you're doing currently, what's going on, and then you're going to spend some time talking to the client a little bit, but if you do that, you're going to get a good roadmap and idea for what software you want to utilize, how you want to write up your policies and procedures,” and I would tell you that if you don't do it off the top, you could go down some roads that just are a waste of time and money that could have easily been avoided. I was able to luckily catch that pretty quickly and didn't go down those roads, but it could have gotten there pretty quickly if I wasn't careful.

Joshua Feinberg:

So, the idea of being very deliberate about the kinds of clients that you work with, the kinds of industries, the sizes, locations; that'll all impact the software, the technology stack you select, and how you build your processes.

Mike Sapperstein:

Absolutely, and I would tell you, though, if it's an existing practice that you're just taking over, I would take that to another level because you probably have some of that infrastructure put into place, but I would spend the time learning the client, and I don't mean just what the business does. I'm really talking about learn their processes, learn their methodologies, and, perhaps most importantly, get to know their people and make sure that the people under you really are getting to know their people because it's these other employees of this company that are going to help you get your job done by providing insight into the company that you probably wouldn't get directly from the owner. Maybe the owner doesn't see it that way because they're not on the front line. Maybe the owner just has a perception of something that's not the reality, and you're going to need these people to provide you financial information, but you're also going to need them hopefully to provide you with just some corporate insights, and ideas of what's going on so that you can look at ways to improve the processes, and, ultimately, the product you're providing to the client.

Joshua Feinberg:

So, just to set some context around this, most of the time you've been building this out has been while we're actually in lockdown. You started taking over the practice shortly after COVID hit.

Mike Sapperstein:

Yeah. Right around the time the PPP loan was in full swing, and I was kind of doing both of those things: learning the PPP, but also diving into this.

Joshua Feinberg:

So, what's interesting is you, really, I guess, didn't have to have the debate with clients about getting rid of paper.

Mike Sapperstein:

Yeah.

Joshua Feinberg:

The kind of morbid thing that was going on early on, "Where do you picture yourself in five years?", and no one pictured this in five years. So, all the processes, all the tech stack, and everything was built with the idea that your team would need to be agile enough to potentially be working remotely at least part of the time; clients would need to be working remotely at least part of the time.

Mike Sapperstein:

It was, but I would tell you that some of the clients really wanted us to still come onsite. So, we had to handle that, and, as a result, it may actually have ended up making it easier for us to convert a lot of our clients to online versions or cloud-based accounting softwares to enable us to do the work virtually without sending backup files back and forth or switching to a model where we were hosting their QuickBooks file.

Advice for Getting Back on Track with an Outsourced Accounting Practice

Joshua Feinberg:

So, for someone that has been at this for a while and maybe doesn't seem like everything is clicking; it's been a really tough year; what do you think is the key to resetting and getting back on track with their practice?

Mike Sapperstein:

Sorry, just repeat the first part of that question, please.

Joshua Feinberg:

For someone that's been growing a practice like this for a while—and maybe it didn't quite go according to plan, and they're frustrated; the clients are frustrated; maybe there's been a lot of churn with clients, a lot of turnover among the team—what do they need to be thinking about to get the practice back on track, and normally, for someone that's been building out a practice over five or 10 years, I'm usually super curious about what their advice is to someone that's five or 10 years in that's hit this wall, but everyone has largely said that in the last eight or 10 months, we've gone through five or 10 years of digital transformation, anyway. So, what suggestions would you have for someone where the practice doesn't seem to be going according to plan and helping them reset?

Mike Sapperstein:

Sure. So, the first thing that I would tell that person is to pull their team—especially the key people within their group—into a room, and you put it out on the table and say, "Guys, this isn't going the way we all want it to. Think we all know that." Assume that's the case and begin to uncover the reasons for why. I mean, until you can fix a problem, you have to identify the problem. So, I would tell those people to first identify where their issues are. Once they have an idea of what the problems are, you then go about attacking those problems in a manner that corrects them and ideally puts in place safeguards to prevent those things from occurring, but the other thing that I would tell them is there is some chance that complacency was in some way the cause of the drop in revenue, or loss of clients, or what have you—whether it be just not taking the time to look into your processes and see if there was a way to make it better, looking into new software that's been popping up left and right over the last several years—but you need to constantly be working on your business. You can't allow it to come into an autopilot mode. While that sounds great, it's just not a good place to be. If you're on autopilot, you're missing things. So, I would say, “Identify the problem and attack the problem. Don't waste the time feeling bad for yourself or feeling sorry for yourself.” No. Get up, go, "All right, we've got a problem. We need to fix it. I built this thing once before. I can rebuild it again," and you're not even rebuilding from scratch. You're probably rebuilding from a nice place still, and it shouldn't take you too much to get yourself back on track.

Joshua Feinberg:

In going through building out this practice yourself over the last six, eight, 10 months, has the concentration of the kinds of clients you work with by vertical or by industry impacted any of this? Have you had any types of clients that were hit especially hard by COVID?

Mike Sapperstein:

Firm-wide, we definitely have some clients that were hit pretty hard. In the CAS department, we've been lucky. Luckily, none of our clients have really hit that hard of a time just yet but for the most part, we've kind of been okay. I mean, we've been fortunate enough that we don't have a lot of restaurants; we don't have a lot of hospitality-type services, or travel-related services—or even that much retail for that matter, especially not in our CAS group—so for the most part, we've been okay.

Outsourced Accounting Clients

Joshua Feinberg:

Another area I wanted to get your thoughts on is when you take on a new client, are they typically coming from having a bookkeeper or controller in-house, and they're outsourcing to RS&F? Are they typically coming from another accounting firm? What's the usual path that you see that lands somebody on your doorstep as a new potential client, and, when you do see that is there any big mistake that you see being made across the board that you end up having to correct most of the time?

Mike Sapperstein:

Sure. So, in our case—or in my case, specifically—a lot of my time has been focused on RSF's internal clients and once we identified what we wanted to be, and the services we wanted to offer—at least, initially—and spending time with the various partners and managers around the firm, explaining what it is we can do, and then talking to them about their clients, and what we could potentially do for them—whether it fits into what we're already doing, or getting an idea for things that we should look into being able to do because we've got a handful of clients that could utilize that ability—but having said that, a lot of the time that doesn’t mean we haven't brought in some clients from outside the firm, and those are typically just coming through our referral network that various business developers have kind of developed over the last 40 plus years, and usually it's coming in one of two forms. Sometimes, it's just a group that they need someone to take over everything. They don't want to pay for a person in-house, but they're fine outsourcing it to us, and we're doing essentially everything for them. We're doing a lot of that for our developers, real-estate investors, that type of stuff for them. Other clients, we're doing pieces of the job, bank recs, credit-card recs, and maybe some special reporting here and there, but then there's others where they don't want to hire a controller; they're a fully operating business, and we're almost like an employee that's just not onsite, and we're constantly getting updates, and a lot of that was the historical stuff. I'm in the process of not having so many different types of clients in our group. I want it to be a more of kind of two buckets. We’re doing your bookkeeping, just your general accounting stuff, and then for some of our larger clients, we're handling just pieces of their process. Maybe we're helping them automate their payables process because we're cheaper than a full-time person, essentially, for something like that. So, that's kind of how we've built it out.

Outsourced Accounting Mistakes to Avoid

Joshua Feinberg:

When you inherit a new client—either internally or through one of your outside business-development sources—is there any common mistake that you ended up having to fix during onboarding across the board that you see that could be prevented if people knew about some best practice they're missing? Or are you still figuring out the standards, and where the best fit is?

Mike Sapperstein:

I think the biggest piece of that is not so much with the client itself, but more with our internal staff and making sure they have a clear understanding of what it is we can do right now, and what it is we can't do. There's been a couple of situations where people have brought opportunities to us; they were all excited about it, got the client excited about it, and then we looked at them and said, "Maybe in a year but right now, we don't have the ability to handle that," and it's important to say that. I mean, look, you don't want to turn away business ever but sometimes, you have to; sometimes, you need to realize that, while it's a client you'd love to have, you really only get one shot to prove yourself, and if you do it at the wrong time, when you're not ready, that door's closed forever, and I'd rather take the approach of, "Let's make sure we've got our product down pat, our service down pat, and really buttoned up, and then we can start to look into some engagements that fit that are just a little outside of our comfort zone because we've got enough infrastructure in place."

Joshua Feinberg:

So, part of it's just basic managing expectations about capabilities that you have today versus capabilities that may be one year, two year, three years out.

Mike Sapperstein:

Absolutely, and there are times where I'll find out about a need from clients, and it matches up with four other clients internally that have similar needs, and it's like, well, then you got to step back and go, "Maybe this is something that we need to take a deeper dive into right now and look for a solution because it's not just a one-off," and that's the constant push-and-pull of which direction to go. My toughest challenge right now is just balancing the different things that we could be doing with what should we be doing, and what can we do now, and then putting together a timeline of building out the other services and capabilities.

Joshua Feinberg:

Coming from a technology background, one of the things that I've observed that the AI CPA has done a phenomenal job with is the packaging and promotion of figuring out the client accounting services (CAS) —and even the client accounting and advisory services model. The one thing that I find that a lot of people haven't vocalized yet is essentially, you have to wear a product manager hat as if you're in a technology company of constantly observing, “What are the unfulfilled needs? Can we do this?”, and, like you just mentioned, there's a certain element of pattern recognition. It's like, "Well, I thought this one client was an anomaly, and then a couple weeks later, another one came to me, largely asking for the same thing, and, like, wow! In the last three months, five clients have asked for this. Maybe we should figure out a way to offer it."

Mike Sapperstein:

Very, very true, and for me, it was even more so because I never considered myself a techie by any means. I wasn't blind to technology, but I also wasn't somebody who was diving into all the latest technologies, learning all about all that. Having said that, I've become one a little bit over the last 6-8 months, as I've been diving more and more into the various products that are out there to build out your tech stack with. I've sat in on lots of demos. I've actually gone back and redone demos with prior software packages because now that I know so much more, I can ask a lot better questions on a product that I liked but wasn't quite the right time to go after or to get into an agreement with them, but yeah, I mean, just in general, if you're not someone who's really up to date with the technological advancements out there—especially in this space—make sure you become one, like, yesterday.

Joshua Feinberg:

I've noticed that, as well, because I used to do SMB IT consulting 20 years ago, and I remember partnering with a MAS 90 specialist. Now, what I've seen is almost all CAS leaders are forced to be technologists. A lot of them do have dedicated IT services groups within their own firm or partner for really specialized needs, but there's so much of what they're doing on a regular basis that involves figuring out the tech stack that they want to standardize on.

Mike Sapperstein:

Absolutely. We do have that, and for certain products, we have some groups outside of the firm that we can go to and partner with for implementation.

The Future of Outsourced Accounting 

Joshua Feinberg:

That's great. The final area I want to ask you about today is your thoughts on where the business of client accounting is headed in the next two years. What are we going to look back on now and say, like, "Wow, this was the big inflection point that happened right now that made an enormous difference on how these services were packaged, sold, the value of the clients we're getting, and made just an enormous difference”, thinking two years out?

Mike Sapperstein:

So, two years from now, third-party software platforms providing artificial intelligence, machine learning, and other automation-type technologies are going to be even more prevalent than they already are today, and, quite frankly, I wouldn't be shocked if they become a standard requirement for any CAS practice to offer to their clients, and I would even go so far as to say that if firms aren't utilizing some form of automation within two years from now, they're going to be losing clients and margin at a rapid pace—if they aren't already. It's too hard to scale; it's too hard to provide the timely service you need without utilizing some automation. Maybe I'm wrong, but I don't see how it's possible—especially not with the clients that we're working with.

Joshua Feinberg:

Yeah, we've had this thesis for a couple of years that as much as people think there might be an adjustment process; is there really an adjustment process to Netflix or Amazon suggesting what movie you should watch next? Or Alexa or Google Home knowing exactly what to respond to, and Amazon telling you, based on what you ordered last week, what you probably want to order today?

Mike Sapperstein:

Yeah. I mean, definitely, and honestly, look, I think every time I talked to a client about various software platforms I want to put them into, I get pushback, naturally. First, they're worried about security, so I'll have I handle that question, but they're also worried about, “What's it going to do, how's it going to impact?”, and what we ultimately say is, honestly, we provide them with the marketing material provided by those companies that most of them will allow you to put your logos on it, but at the end of the day, they ultimately care about one thing: their information is correct, accurate, and timely. What we do our best to share with these business owners is that if you want things to be timely and as close to real-time as possible, there's two ways: hire a whole bunch of people, or the more likely option is utilize some form of automation. It's the way of the world now.

Joshua Feinberg:

Yeah. I look at the digital transformation, and how much of your clients are forced to be 7/24/365 now. With people's expectations, they're expected to go faster. Their service providers they work with are expected to go faster, and no one has any tolerance for waiting anymore, and if you think of the patience of somebody that's a 40- or 50-year-old CEO, compare that to what the CEO's going to look like in 10 years from now.

Mike Sapperstein:

Terrifying, actually. We're headed towards even more unrealistic expectations than we currently get right now.

Joshua Feinberg:

Look at my two kids: one's nine, and one's 14, and one never knew life without an iPad, and if you think about when he starts influencing purchase decisions, 15, 20 years out… interesting times.

Mike Sapperstein:

Oh, yeah. Oh, yeah. For sure.

Joshua Feinberg:

Mike, where's the best place for someone to learn more about the work that you do at RS&F? Is there a good place for someone to reach you? Are you active on LinkedIn?

Mike Sapperstein:

Sure. So, you can certainly reach out to me on LinkedIn. I'm happy to help in any way that I can. That's probably the best way. If you're just looking to learn about what our firm's doing in this space, you can go to our website—rsandf.com—or you can reach out to me directly. My email is just msapperstein “at” rsandf.com.

Joshua Feinberg:

That's terrific. Mike, thanks so much for joining today. It's been super helpful to learn about your career journey, what you've learned in getting the practice off the ground early during one of the most challenging times in generations, and how you've thought about standardizing around processes, standardizing around technology, where your clients are coming from, what you've learned, and then onboarding, and the future of where the CAS business model's at. It has been super helpful.

Mike Sapperstein:

Oh, it's my pleasure. Thank you, Josh, for having me.

Joshua Feinberg:

Thanks for joining us.

 

What's your favorite outsourced accounting tip? And what did you find most valuable from this podcast interview with Mike Sapperstein? Let us know in the Comments section below.

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