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[Podcast] Client Accounting Services Best Practices with Kevin Stewart of Briggs & Veselka

Posted by The AI in Accounting Podcast on Oct 21, 2020 7:30:00 AM
The AI in Accounting Podcast

With over 20 years of accounting experience, Kevin Stewart has worked within the professional services, public, and private sectors. Kevin is a CPA and an accountant who believes his experiences speak to why he’s different from the rest. Kevin Stewart started his career with a position as an Experienced Senior at PricewaterhouseCoopers, where he stayed for six years before briefly working at Grant Thorton and ultimately transitioning to Walmart.

Kevin Stewart spent almost seven years with Walmart and in that time had four different roles in four different departments. Kevin started in Internal Auditing, then moved to Real Estate Finance, and finally moved again to Financial Shared Services. After five years, Kevin became a Senior Manager at Sam’s Club, directing a special project with a goal of rolling out a new area of business from the accounting side.

[Podcast] Client Accounting Services Best Practices with Kevin Stewart of Briggs & Veselka

After his time with Walmart, Kevin worked as an Assistant Controller for Charming Charlie, the large women’s accessory retailer company. Kevin had a three-year stint back at Grant Thorton doing auditing but realized that his career goals were not aligned with the position he currently held.

Kevin Stewart has an understanding and deep interest in risk, and he facilitates accounting and finance teams to remediate failures and stabilize their present to support their future growth. Kevin is now an Advisory Principal for Client Accounting Services at Briggs & Veselka Co, where he is responsible for all non-tax accounting support operations, including payroll, accounts payable, general accounting, fixed assets, and financial reporting.

Listen in to learn how Kevin Stewart sees the benefit of providing services in numbers, as opposed to allocating a single individual for understanding and analyzing data. Kevin also shares some valuable advice on where to allocate resources, and the ways he thinks new meaning will arise in our changed world!

In this podcast episode, you’ll learn how to: 

  • Think of tax as an extension of a service that can be offered to clients; 
  • Understand that there is more to accounting than just bookkeeping;
  • Provide perfectly processed work through good operations; 
  • Navigate finances like an analyst and adapt the same mindset when it comes to CAS; 
  • Ask the right questions as you dig into the details to find added value; and
  • Rethink what accounting services mean in the new world.

 

Watch the Podcast Interview

 

Watch on YouTube: Client Accounting Services Best Practices with Kevin Stewart of Briggs & Veselka

 

Listen to the Podcast Interview

 

Listen to Apple Podcasts: Client Accounting Services Best Practices with Kevin Stewart of Briggs & Veselka

 

Highlights Include:

 

  • “I’m a CPA; I’m an accountant. But I’m not a normal CPA and accountant. I think my experience speaks to that.”
  • “In each of those instances, it was about collaborating across the operators, or non-accountants, or people in the business to either build better processes for them or to provide better information for them.”
  • “I understand risk; I do that well; I serve clients well. But really, what drives me is that advisory piece of it; it's that client-based business. It's driving improvements in people, in processes, in systems. That really is what I enjoy greatly, and I do very well at.”
  • “You have to define the process. You have the foundation of a combinations of systems and processes, and then the right people to manage that.”
  • “You don't have be a CPA; you don't have to have tremendous expertise to be able to do a debits-and-credits. But to interpret that data, that's really the value that we add.”
  • “There’s more to it than just bookkeeping. So, have that mindset, that there's real value to add. Even if you don't think you know as much as you should, you probably know more than that business owner.”

 

A lightly-edited transcript follows below:

Joshua Feinberg: Hey, it's Joshua Feinberg here from the AI in Accounting podcast, and I'm thrilled today to be joined by a very special guest. I have with me today Kevin Stewart from Briggs & Veselka in Houston. Kevin is the principal and practice leader of the firm's client accounting services group. Thanks so much for joining me today, Kevin.

Kevin Stewart: Absolutely. Thank you for the invite. I'm excited about today.

Joshua Feinberg: I am, as well. So, you know, it's interesting; what originally attracted me to your background is you've been putting out a lot of really great content lately on cashflow, liquidity, resiliency, what it takes to successfully navigate the current climate. I saw you did a webinar specific to the hotels industry and cash position. But where I usually like to start out with these interviews is to get a feel for your background, how you got to where you are in your career journey, your role within your firm, and where you kind of see all of this heading. But I know you have a lot of great experience, a mixture of both public accounting and in private industryespecially in retail. So, give us a little bit of background.

 

The Journey from Big Four and Walmart to Principal, Client Accounting Services Practice Leader

Kevin Stewart: Absolutely. My background, you know, I talk about myself; I'm a CPA; I'm an accountant, but I'm not a normal CPA and accountant, and I think my experience kind of speaks to that. Although I started Big Four, and I was on the audit side, and I did that for I think about six years at PwC, and then a year at Grant Thornton before I transitioned to Walmart, since that time, the majority of my experience has been around broken processes, broken systems. I generally stepped into clients, or situations, or departments that are either broken or brand-new, and so, something about that transition, I've always kind of been attracted to, so my experience has been around that. I spent six-and-a-half years at Walmart, and, in that time I had I think, four different roles technically; I was in four different departments. I started in internal audit; they were in transition. I stepped into real estate group, and they were a little bit in transition. Moved into a shared services environment, which was relatively new in the way that they were doing it for Walmart at the time, and then lastly was in Sam's Club in the special project, enrolling out a new area of business from the accounting side of it. But in each of those instances, it was about collaborating across the operators, or non-accountants, or people in the business, to either build better processes for them or to provide better information for them, right? And so, within the real estate group, it was building a better financial reporting package for them, and I was digging into systems and helping them understand processes and risks, and then moving into shared services, and that was really kind of my first experience with a—I'll call it an “internal client service”—of serving others and helping them. So, what we found was through the standardization of processes and procedures, we were converting to SAP at Walmart at the time. We had a homegrown system converting to SAP, which is not homegrown, and it's very expensive. So, by doing that and taking the accounting function out of pieces of the business—so, out of logistics and out of Sam's Club—and pulling it into a central environment of those things that needed to be more standardized, right? So, what we had at that time was there was almost this lack of trust: “I'm surrendering my accounting; I'm surrendering control to somebody else to do this.” And so, stepping from the business into that, I knew that because I heard the feedback from the people I worked with, and that there's this concept of, “This is going to be a self-service, not shared service.” So, I knew that communication aspect was significant in getting that confidence. So, when I stepped into that role in that shared services environment, what I clearly understood was getting trust and buy-in from those people that I serve is critical for me to drive improvements in what they're doing. So, we standardized; we did some different things, but with that team that I had, it was very clearly stating, “This is the role that we play.” So, we started meeting with those internal clients on a regular basis, at least monthly, and so by doing that, we very quickly turned the 55-hour-a-week job into about a 20-hour-a-week job, where we were bored out of our minds. So, then we started... what I empowered the team to do was, “Let's start reaching out to other areas of shared services,” and that was challenging. You know, it was challenging because people are protective of their space; they don't want to be told they're doing something wrong. So, what we had to do was say, "We've had some success, right? We've made some improvements, and we have time on our hands. We want to help, and all we want is a pat on the back and say thank you at the end of it. You don't even have to do that, but we just want to help because we're bored." And some people bought into that, and some didn't, and the ones that bought into it, truly, there was one specific instance where we saved them about 45 hours a month, this group. 45 hours a month is significant in our estimation. There was other instances; there was more than that. That first one off the bat was because it was just a coding error. But they didn't have the right relationship with the right connections because it was a big environment to get that done and done well, and we had experience with that; we had solved that problem in one of our areas. So, we served them in that way and had some success, which led to some other things, and honestly, that time was very much an eye-opening experience for me, and it shaped a lot of my career after that. I ended up leaving Walmart and ended up in Charming Charlie, and, at the time, they were about a $500M business. They were growing tremendously, a women's accessory retailer company. They've since struggled, filed bankruptcy, and all the things like that, but at that time, they were just growing like crazy, and so, they went quickly from 20 stores to about 280 stores in a period of about five years. So, it was huge growth, huge issues, wrong processes, wrong people, wrong everything on the backend of it, kind of doing it. When I stepped into that role as the Assistant Controller, and I was there for about a year-and-a-half, just transition is what it was, but it was the same thing; it was advisory. “How do get the close-down from 24 days to five days to three days? You know? How do we transition to true accrual counting?” Those types of things. “How do we provide better information back to the client? How do we get customers or vendors to stop calling us because we're not paying our bills on time? So, how do we do all that?” So, it was this culture shift. So, I was able to apply a lot of that knowledge I learned from Walmart into this growing retailer, expanding hugely and building kind of a structure to then transition. At that time, we had a team of 20 doing payroll, AP, and accounting. How do we grow this to become a $2B business without really growing the team? So, it really became about standardizing the processes, getting some things down, and then, again, at the same time, getting confidence in the people we're serving within the business. For a variety of reasons, I left there, right? We just won't go there, but I left there, and I ended up back in public accounting, which was not my intent. It was supposed to be a placeholder to go to someplace else. But I ended up there, did audit, got some good experience at GT. Grant is a fantastic firm, right? But for my career path, where I was going, I'm not an auditor. I understand risk; I do that well; I serve clients well, but really what drives me is that advisory piece of it; it's that client-based business. It's driving improvements in people, in processes, in systems, and that really is what I enjoy greatly, and I do very well at. I ended up landing at Briggs & Veselka, which is the largest headquartered firm in Houston, Texas. We're an independent firm; we're the third-largest in the Southwest. We're growing; we're big, got 340 people, professionals across Houston, Austin, and some other, smaller locations in the Texas area, so it's a good-sized firm. But what attracted me to them was their entrepreneurial mindset. We want to serve clients; we want to break down barriers. Our theme in the past has been “Legacy & Loyalty” because we've had clients for 20 years, and that relationship keeps changing. We do that, and we do that well, but what I loved about that was we are small enough that I would have the freedom to build a practice, right? And then separately, we're big enough where we have the ability to be funded to do that practice, right? We're in that transition phase because, as I mentioned, I'm attracted to companies that are in that transition phase. So, really, we're moving to be more of a larger regional, and then we'll kind of see where we go from there. The attraction was to come in, be myself, lead, and kind of grow this. I was in audit for two years, transitioned to this advisory practice full-time. I did a part-time last year, full-time as of January of this year, and now, specifically, this CAS advisory practice, what I'd done last year was more around technical accounting, and controls, and processes, and we went into much larger companies that we normally serve and drove some pretty significant improvements for them, and significant savings. There's not quite that full book of business that supported me completely with that, but there was an opportunity within this CAS area, client advisory services. There was some transition, and it didn't have full-time leadership directing it where we want to go. Sheila Enriquez is our managing partner, and she's very much a visionary within our firm, and kind of where we're going. She's been in this role for about two years, and through conversations with her and figuring out what we want to do, and where we want to go, and then specifically, we were talking,, we were having a conversation, and it was a good conversation. We got to a point of, there was this realization, and I didn't realize there was really this opening in CAS. But as we were talking, there was almost like a light bulb went off in her head, and she said, "Would you be interested in this?" And I said, "Absolutely." Because it's very much like that shared services environment. It's very much advisory. Maybe the clients are a little bit smaller, but that means there's even a greater need for those clients to be able to meet, right? And so, all this experience I've had at Fortune One at the time, at Walmart, and then a fast-growing practice or business at Charming Charlie, where it was, “You make a decision; you screw it up, and you immediately fix it; you have to shift directions very quickly,” and through my experience at Briggs & Veselka, where I displayed some expertise around lease accounting transitions, and revenue recognition transitions, and controls, kind of those residual stuff, it combines all into this perfect environment of CAS, right? And so, the practice had been around for about three years, and it kind of went up and went down, but there was this lack of strategy of where we're going to go. But the firm—Sheila, specifically—saw it. There's firms we've seen that we have connections with, who've been very successful at it, right? But it's a matter of just having that strategy: “How are we going to do this? How are we going to move it forward?” And having the right person in place, and I believe I’m the right person. I hope I'm the right person. I was put in this position, so we're going to move this forward, but we've nearly doubled the business in this first six months of the year, eight months of the year, and a lot of that is building confidence in the people I work with in the firm, and then separately, you know, having the right strategy moving forward and having the right partners, and then specifically, we partner with both Sage Intacct and QBO. That's the two that we primarily service, and so partnering with those guys, those people that support us, is helping move us forward in that direction. So, I'm not sure if that's the summary you want, but that's the summary I got, as far as where I ended up, where I'm at.

Joshua Feinberg: Yeah, no, it's fantastic. What I've noticed over the last 6-12 months is outsourced accounting and larger accounting firms has been elevated to so much greater importance than it was over the last four or five years, and I think part of that is there was a lot of interest in moving legacy systems into the cloud, cloud accounting, technology, automation, and then along came the pandemic in March, and that sped up the impetus for anyone that was sitting on the fence and saying, "I don't know; maybe we'll do this in a year." It's like, "No, maybe we’re going to do this this week." Yeah, and so it's really interesting and very fascinating, too, to basically run an internal CAS department within Walmart, it was just another extension of shared services, right?

Kevin Stewart: It really is. It's just another extension of a service, and I don't necessarily know that people think about CAS in that way but that truly is what it is. Tax is our client; audit, to a certain degree, is our client. Then the client specifically is our client, as well. So, really, it's the shared services of, “How do we get the right information back?” And by connecting thatat least, in my headit makes it easier to understand and communicate to those people that need to know.

 

Advice for Those Starting a Client Accounting Services (CAS) Practice

Joshua Feinberg: So, given all of that, in the time you've been at Briggs & Veselka, and the time that you've taken over the CAS practice, what do you feel is most important for somebody that's first stepping into this role, either because I've seen a fair amount of small firms that are acquired into larger firms; I've seen a fair amount of people in your position, where you're in one role in the firm, and then shifting into doing this, what do you think is super important for that first six, 12, 18 months for a new practice?

Kevin Stewart: I think it's setting expectations and having a foundation, right? That's kind of the baseline. Similar to my experience at Charming Charlie, where they were growing by leaps and bounds, you can only throw people at something for so long, right? You have to define the process. You have the foundation of a combinations of systems and processes, and then the right people to manage that. So, I think, historically, as we look at the CAS practices, there was a lot of bookkeeping, right? So, you have an individual, and even in controllership services, sometimes, it’s an individual versus a task. But if you start breaking that down, really, what it is, “I can only serve so many clients as a controller, and if you just hire me as a controller, I'm one person; there is no segregation of duties; I am your controller, right? I have access to the books, the checkbook, everything. You're trusting me because I'm a good guy, right? But there's a risk there.” So, it's having those processes, set places, through Bill.com, through the different controls of QuickBooks. It's thinking about the risk perspective on how you can serve a client, where it's not just an individual, right? So, I'm happy that somebody wants to hire me as Kevin Stewart, but you're not hiring me as Kevin Stewart, Briggs & Veselka. You're hiring the CAS team, and the team is going to support you. So, somebody stepping into it, it's moving beyond the mindset of, “Me, as an individual, I have to do this.” It's setting up the processes, setting up systems, processes, controls so that you can support and advise, all right? Because bookkeeping is bookkeeping. You don't have be a CPA; you don't have to have tremendous expertise to be able to do a debits and credits. But to interpret that data? That's really the value that we add. So, I guess the combination of the two things is building the foundation, and then separately, focus on your expertise. It's focusing on that real advice, and that real experience, and I think, sometimes, firms—big firms, small firms—they devalue the service. “It's just bookkeeping,” and it's not just bookkeeping. You can hire non-accountants to do the roles. My first degree was political science and history, right? I went back and got my accounting degree. A couple of people that work on the team have got finance or social science degrees, right? But they are able to think; they're able to serve and kind of do things and kind of dig in. All to say that, there's more to it than just bookkeeping. So, have that mindset that there's real value to add. Even if you don't think you know as much as you should, you probably know more than that business owner, right? Because you're in this accounting world; you've seen multiple clients, and so, don't devalue that. Don't devalue your services; don't devalue your fees. You know, whatever your fees are that people are willing to pay, that's the fee you’re going to have to charge in addition to value services, but value service billing. But it's going into it knowing that you really have real expertise to provide, and it's more than just a commodity. Right? So, it's systems, process, foundation, and then valuing what you do, in my mind.

Joshua Feinberg: No, that makes perfect sense. I'm sure it comes from a professional services background, as well, and you used to getting the question from a potential client, like, "Okay, we're on the fence between whether we're going to hire an internal employee, or we're going to outsource to your firm. Walk me through the pros and cons." And that's exactly that. It's like, okay, you got one person with one static skillset, and then unless that person is the magic unicorn or has like the equivalent of the five-tool player in baseball, you're probably getting three or four out of the 10 things that you really need and may be prohibitive to get three or four full-time people, and there's a lot of benefits to doing that. But what's interesting—a recurring theme that keeps coming up, as well—is using technology more effectively to get the bookkeeping component done faster to free up budget and resources to do more advisory work. It's like, “Is it just aspirational on the website that you're providing outsource CFO services, and is it just really bookkeeping? Or do you actually have those kinds of relationships where you’re really adding value at that level?” It's very much a business strategy conversation. Probably has a lot to do with your client mix, too.

Kevin Stewart: It does, and I would say we're kind of in that transition mode, going from, I think, traditionally, we have been a bookkeeping practice, and so it's changing that mindset to serve more. But there are so many good tools. I mean, even Excel is a great tool to pull information in. I probably wouldn't recommend it for improving processes, necessarily, but to do some basic analytics. Bill.com, which is a great partner for us, and we don't like touching people's cash. We want them to understand that, “We will tee it up; we'll get it ready for you. You push the button to approve it to send it out. We're going to be the control; we're going to do all we need to do.” But through the use of FATHOM, or Qvinci, or any of those, you've got Bill.com, even like the payroll providers of ADP or Gusto, or those, there are a lot of tools in place, and really, what you need is somebody just to manage the process, more so than actually do the functionality. So, by setting up QBO right or by setting up Sage Intacct right, a lot of those things are automatically coded if you set it up right, and then it's that expertise coming back in. It’s like, "I'm looking at it. Are they kind of booking the right place? Does it make sense based on historical activity or based on kind of what we know is coming in?" And then digging is necessary versus just spending the hours and hours and hours of, you know, keyboarding and typing stuff in, and so there are so many good tools out there, and so many things do have—even Excel has artificial intelligence in it, if you use it right, right? So, it does; it's not aspirational, and I think AI is more part of our life within finance and accounting than we realize, right? And so, then you need that expertise to manage the process. When I was at Walmart—this is kind of just a very quick story, and I apologize because I love stories—but there was an issue within cash reconciliations, and there was a lot of reconcilers in cash, and a lot of people reconciling, and there ended up being an issue. It was a very large reconciling item that wasn't being identified in practice, and so, I got brought in to assist, and I came in, and they’d been working on it for several months, couldn't figure it out. I got brought in, and I approached it from a different way. We figured it out pretty quickly. But the point of the story really is when they set up that process, that process worked perfectly if it was being operated well, and so, they did a lot with people; they had some systems, whatever else, but as soon as they went off-track, they didn't have the right skillset to fix it, right? So, doing the process, doing the entries, doing the reconciliations, they could do that, but as soon as there was a challenge, and as soon as it was broken, collectively, they had no idea how to fix it at all, and so, then it was this needle-in-a-haystack transaction, and we're talking about a massive encounter. Tons of stuff pulling in and out. So, we got brought in to fix that. So, when I think about that, the process is important. If you can get the process set up right, and then what you put in place—instead of just somebody who's executing and doing, which I think sometimes, as accountants, we think we're just executing and doing. But really, we need to have more of that analyst mindset, right? We're managing the process. We're not recording the entries or managing or analyzing. We're looking for areas of, you know, from the IT world, you have controls, where you connect the two together, and, if there's an error, it bounces back, saying, you know, "What went out did not come in, so what's off?" Well, that's a way to manage, to ensure that there's completeness of that data, and I think, in the same mindset as shared services or CAS individuals, we should be approaching it in the same way, right? So, we set it up right; transactions are flowing in, and we should be looking for or identifying, “Why is this not complete? What do I need to dig into?” Right? If there's an error on one side of the financials, that means there's an error in the other side of the financials, so what are the matching-type things? And that requires a different skillset, right? That requires somebody with an analytical mind, who can dive in and problem-solve, and really, I think, in that CAS, it is changing that mindset. You can be profitable doing bookkeeping. To really add value and to really take it up in that level, you're freeing up your time to provide the real advice to clients. If you can get that transactional stuff just kind of captured, you're problem-solving; you're making sure it's flowing through, then you can focus your real attention on helping them drive their business and creating margin in their time, right? They have more time creating margin in their financials; they have more profitability. You're creating margin; they're getting real advice, and that's where the value is. Anybody can bill 150 bucks an hour. Is that worthwhile? Is it worth 200? Is it worth  300? I mean, whatever it is, you're getting to the point where you're breaking down the barriers to doing good work, to give good advice, to really drive their business. And that's really what we should be, is problem-solvers, helping them improve their business to be more profitable.

Joshua Feinberg: I was facilitating a workshop on outsourced accounting and the future of accounting technology last fall, and one of the participants, we were talking about staffing issues, and they were just kind of sharing best practices on the frustrations around recruiting on campus, and new hires, and one of the things that came out was whether the new hires that are new into the industry were able to question when the AI was giving them information to know enough if it was not functioning properly. And the analogy we were coming up with at the time, it's like, “Okay, walk into a retail store or walk into a fast food restaurant, when the registers have gone down, and see if the person there is capable of making change.” I guess this is kind of reinventing, transforming the whole profession, where not only is it focused on technology, but it's equally focused on the coding, the processing is very much the commoditized part of the business, and wherever we can differentiate to make differences much higher up on the value chain.

Kevin Stewart: I think that same struggle—or that same transition—is occurring within audit, and other areas of the business, as well, within internal audit and having bots that do the testing, and then looking for errors in the testing within specific auditing itself. There are a lot of technology tools with the AI, and so then, when I was at Grant Thornton, there was a transition to a shared services environment in India, where they supported this. Then the question becomes, “If they're doing cash, and they're doing these other basic things you would think a brand-new auditor would do, then what do we do with these brand-new auditors? How are they getting experience?” So, there is value in getting into the detail and digging in and understanding. I think there's a place for that, right? And, by doing that, they may understand a little bit more completely. If you go back 30 years, Big Eight—or whatever it was—from audit firm, it was binders, and paper, and lots of work, and it was five times the amount of effort. But I would say those guys—those partners who are now retiring or have retired—they probably had a more in-depth knowledge of auditing the process and financials than what we're able to get today. We have more tools, and we kind of fall back on them. There's a lot of industries going through the same thing. I think we're kind of there. So, I do think there's value digging into the details, but yet, it is a different skillset, and I'm not sure it's exactly a skillset that colleges and universities are teaching, but we value it when we see it, right? We value it in tax; we value it in audit; we value it in CAS. But I would think, really, from CAS, really, what we're looking for is someone who's interested. They're inquisitive. They're wanting to learn more, and, you know, they see things, and even if things aren't wrong, somebody who's asking questions, "Well, why is this this way?" I would say, in my 20 years of experience, I've known a lot of answers, but I wanted to confirm them, so I play stupid, which isn't hard, right? But it's going to ask the question, "Can you help me understand?" And then whatever the question ends up being. “Walk me through this,” and, by doing that, by somebody talking through the process—whether it be a client, a staff, a manager, a partner, whatever it is—it helps think through the process, and you kind of get to the point of, “All right, help me understand.” Something may be off, or it may be right, but when you do that, it's a bigger picture. But that requires not just coding transactions and typing stuff in; it's taking a step back, and it's thinking, and I think there's real value in taking that step back and thinking. So, if you're doing and doing and doing and doing and doing and doing and doing and doing and doing, well, you're just doing. There's no thought process; you're just doing, and so, if you're doing it wrong, you're going to do it wrong. But if you take a step back, and the way that we solved that cash problem at Walmart was taking a step back. Big picture: “What are some of the things that look off? Where could there potentially be errors? Where could there potentially be duplicates? Where could there potentially be a mistake?” And that's kind of where we dug down into and very quickly, what took them months and months and months to not figure out, we were able to figure out and resolve, too, within a couple of million dollars—which for Walmart was fantastic—within a period of two weeks. So, I planned for it; I went on vacation. "Team, do this." Right? And they did it; they're texting me while I was on vacation, "Hey, we solved another $5M. We solved another $12M." And I was like, "Now, that's fantastic," and I'm not even there, and they're doing it. So, it was very quickly resolved. I think it really is the same thing here, right? Some of the very first things we talk about is we have more expertise than we realize, right? But some of that inquisitiveness, sometimes, it's hard to teach. You either got it, or you don't. But we encourage it; we push it, you know? “Why aren't you asking the right questions?” And if we're not being asked some questions, now, I'm questioning, “Why aren't they asking any questions?” I can go on forever, but we only have a limited amount of time.

Observations from Inheriting New CAS Clients

Joshua Feinberg: The thing I wanted to make sure that we got to today was, have you, in your role leading the CAS practice, have you inherited clients that have come over from other firms, and, if so, if there's been anything that's kind of jumped out at you as cringeworthy, or where you just wish the best practices were in better shape across the industry?

Kevin Stewart: We get a lot of brand-new clients who've never been served before, but we have had a handful that, you know, before the transition, that they’ve left to go to a well-established CAS practice, and they got over there, and it wasn't exactly what they thought it was going to be. Either the customer service wasn't there… there's a responsibility for the client on doing that some of that themselves, and there's a responsibility for the provider. I have no real horror stories, but I guess where I come back to, I think most businesses in this $0M-$10M-$15M space or more are really underserved, and sometimes, the best new clients are those ones that understand that they have a need, right? And you can educate, and you can help understand that these are the things you need, and this is the value, and this is when you should probably start engaging a bookkeeper, or a controller, or a CFO, and so, it's that education process. There's only been a few instances where we've advised in different ways, and we went to the bookkeepers like, "You're not really being taken care of," or it's been a fractional CFO that really is operating as a senior accountant, and they’re borderline incompetence. There's a lot of great firms out there, there's a lot of great B2B CFOs out there, and B2B controllers, but I do think there is... it's very easy to put up a shingle and say, "I'm a fractional controller," or, "I'm a fractional CFO," but what does that really mean? And going back to what we were talking about a few minutes ago, as far as when we provide a team of three to service clients versus a team of one, and collectively, where there's three—and I think in that I put a billboard out there—that three is less than one. For the cost of one controller, our three people cost less than your one, but you get more controls, better processes, whatever else through that. Just doing something on your own, for me, I think, puts that individual at risk, which then puts the business at risk, and so, collectively, by having a firm like Briggs & Veselka—call me!—it makes more sense because you want to protect yourself. You want to make sure that your assets are what you think they are. You want to make sure that the cash in the bank is what you think it is. I had a client reach out to me recently, and they looked at last year; they looked at this year—and actually, COVID has had an impact on everybody, has had an impact on them—but in his mind, there is no reason why their financials actually... they should have been in a better CAS position, and they have a bookkeeper in-house, and he doesn't think there's anything nefarious going on, and hopefully, there's not. But something was off, and he's not sure what, and he thought they actually should have been ahead because they got PPP fund. All right, so they got another $100K in PPP, so really their payroll was taken care of for that time period, but something's still off, and it's wrong. They have one person doing those books. If they'd be using a Briggs & Veselka, or somebody like us, then you would have a team of three, and there would be an individual, and there would be somebody revealing it, and they’d be producing some sort of financials, or analytics, or KPI tools, or whatever else. We'd be walking through the business owner with that and helping them understand, and so, there's more of a process in that place that can allow a small business to have a very established, rigorous accounting and finance function to help them operate better as a company, and that could be at $24K a year; it could be $100K a year, but it's going to be less costly more times than not, and better quality just because you’ve got more people putting eyes on it, right? And more expertise, and that's kind of what we do. That's where I lean is that process matters because that process naturally has controls in it, and segregations of duties in it, which ensures better quality more times than not.

Joshua Feinberg: I've always seen, with different categories of professional services—whether it's IT services, or us marketing services, or management consulting—the business owner is an expert at knowing how to hire and manage the kind of staff that's core to that business. Are they really an expert at staffing an accounting department? Are they really an expert at staffing an IT department?

Kevin Stewart: No.

Joshua Feinberg: This is where the outsource ends, and this is one of these things, where the pandemic, I think, is going to accelerate the recognition. You got to pick your battles after a while.

Kevin Stewart: The other piece of it, too, is that business owner, and the way that we shape it is, “You are great at building your business. You know your clients; you know your product. You're great at it, and you've built it to whatever that level is. Building a business is hard, so you have expertise on building a business. Why would you want to spend 10, 15, 20, 30, 40, whatever it is a month doing the accounting side of it, right? And we're going to do the best we can to make that accounting small, and the advice large.” To your point, you know the right skillset for selling; you know the right skillset or hire the right engineer to build the product; you know the right production type. So, the [00:32:30] accounting? You hire an expert for everything else, let's hire an expert to do that. So, that money is actually pretty well spent. One of the marketing tools I've used is calling myself a “Chief Profit Officer”: “I'm going to help you identify those areas of spend that you're not getting the bang for your buck, or where you're spending too much, where your costs of goods sold are often. maybe you're making more money in certain areas of the business than others. Maybe that high-end cost, you're not getting profit there more, but there’s another level there, as well.” I think that expertise, looking at things in a different light, being removed from it, being independent, it can truly push that business forward and helping them understand, having more of a strategic view of their finances and the way they're building their business, and, at the backend of that, there's acquisitions; there's, you know, exit strategies, all that type of stuff, and there is an importance of having that discipline at the beginning. Again, when a small company can have that structure and discipline of a big company and may be better by, again, outsourcing to somebody like us because when we're using the right tools, the right processes, the right people, to put all that together and to move forward.

 

Where the Client Accounting Services Business Model is Headed Next

Joshua Feinberg: Another question I have for you is your prediction on what's going to be the one big thing that's going to completely reshape the entire client accounting services business model, and its impact on the accounting industry. What do you think is going to be the big thing that we're going to look back 12, 18, 24 months from now and say, like, "That was it"?

Kevin Stewart: COVID, right? Maybe in this environment of a lot of firms, you want somebody onsite. I think, the last five-and-a-half months, people like us, we're privileged because we have jobs, and we're able to work from home, work from anywhere. Some businesses, employees just aren't able to do that. You have to have people on the front lines. But for this type of work, I think it does dramatically shift us from, “I need to have somebody onsite all the time.” I talked to a prospect recently; it was about a month-and-a-half ago, a professional services firm, and they had a team of about four in their accounting, and they hired a controller right before all this happened—or replaced the controller before all this happened—and then, once this happened, the controller stepped out and said, "For various reasons, I need to not work now. I need to take care of my family." And so, they stepped away, and so, in that process, they very clearly understood the power of outsourcing. But through that conversation, what evolved from that. I think what's happening with a lot of businesses across the US and the world, what he said to me was, "Maybe there's a better use of those people within accounting.” Meaning that they've been here five or 10 years. They know the business; they know the clients. “If I hire you, Briggs & Veselka, Kevin Stewart, if we hire you, and you can focus on that accounting analysis on the financial side, I can shift these two people,” and I don't know what those two people make, but whatever they're making, “I can shift them over to help to drive the business because they know the business and know it well." So, I think what this shifting of COVID is doing is, I think, if there's not, there should be an evaluation of, “What is the right allocation of resources?” It doesn't necessarily mean firing people and cutting the resources. It's just, “What's the best use of people's time?” There's this term in accounting called “the highest and best use”. It comes when it comes to assets. “What's the highest and best use of these assets?” And I think with people and businesses right now, I think there is, first of all—and if there are not, there should be—those businesses think about, “What is the highest and best use of my resources?” So, with that, there's an accounting piece of that, that shifts that mindset of, “We’re hiring.” I think, more times than not, for a medium-sized business, you're probably spending $200K-$250K in people to support your business, and that would be a controller, and maybe a couple of transactional people that are supporting in a different way. If, instead, you hired a Briggs & Veselka and kind of outsourced that from a fractional side or support, that cost may be 60% of that. Maybe-ish. That's been our estimates. It is about 60-75% of the cost, and it’s shifting those other resources to something, really driving the business forward, and you could take that down to a business owner, who's doing the accounting themselves, and you're freeing up 10, 15, 20 hours a month for them to make another sell, to visit the client, to build a better product. So, is that $5K a month? That's what they're paying us, right? That's the amount that they're paying us. They’re paying us that to free them up to make two more sales that are $40K apiece, and profitability of whatever, does that make sense? And I do think this whole thing that we're going through now, I do think it shifts the whole mindset of outsourcing, and I think companies are outsourcing more than they realize, right? When they're working with a bank, in a lot of ways, they're outsourcing their treasury function, right? When they're working with an attorney, they're outsourcing their legal function. When they're working with ADP, in a lot of ways, they're outsourcing their payroll function, right? And then you have somebody managing that type of thing, and I think this is just another step in this process to help business owners understand, “Am I allocating my resources right?” I think that's kind of where I lean. I do think this has been a horrible event, right? And thankfully, it hasn't been quite as bad as the worst prognosticator they were saying it's going to be, and yet, in some ways, it may be beneficial to all of us because it helps us collectively reevaluate where we are, what we're doing, how we serve, and then—specifically within this accounting and finance function—we can serve differently and just as well—maybe even better—remotely as we can at home. So, that's my story, and I'm sticking to it.

Joshua Feinberg: Excellent. Yeah, you've shared a tremendous amount of valuable advice on how to look at where to allocate resources, the benefits of multiple people providing services, as opposed to one person, really understanding what's going on with the data, analyzing data and not getting stuck in the weeds, and really just rethinking what all of this means in the new world, in the new economy, and where everyone else is going to end up. Kevin, you've put out some great content. I’ve seen some articles, and slides, and videos. I know you're active on LinkedIn. Where would you recommend if somebody wants to follow you, learn more about what you're doing, and ask any questions? What's the best place?

Kevin Stewart: To start off with, I mean, they can definitely reach me via email, but regarding a LinkedIn, and that thing, I’m connecting nearly with everyone. The 300 recruiters I'm connected to proves that. But connect via LinkedIn; look at those articles and look at those pages; like and whatever else; connect with me, and then reach out via message. Otherwise, the Briggs & Veselka website is out there, which is,  just Google “Briggs & Veselka CPAs”, and then that'll pull in Houston, Texas, and you'll be able to connect with them through there, as well. But I'm happy to visit; I'm happy to talk to you, and just yesterday, I talked with two other friends, new friends from different firms, who are building CAS practices, as well, and so, I'm happy to talk with and understand and problem-solve together, and, “How do you do it? How do I do it? How do we do it together?” And kind of look forward because I do think, in some ways, it's one of the fastest-growing practices for CPA firms, and there's a reason for that. Beyond the money, and I think the money is attractive. There's good margins in this, and good money for this on a recurring basis, whichever one is looking for. The other piece of it, too, is really, we're a feeder to tax and audits, and by partnering together, by being a full-source provider, by being full and doing all those things together, I think it allows for a greater collective service of clients, and so, it really is value-add. But reach out to me via LinkedIn, reach out to me via the website, and I would love to engage in more conversations. But I appreciate you reaching out to me, Josh, and it's been fun.

Joshua Feinberg: And a lot of fun, as well. Thanks so much for sharing all your great wisdom over your career in public accounting and in retail and back into public accounting, and it certainly gives a tremendous background, and a toolkit to be able to help small companies that don't have a lot of internal resources to be able to figure this out on their own.

Kevin Stewart: Well, very good.

Joshua Feinberg: Thanks so much, Kevin. Stay well and be safe.

Kevin Stewart: Will do.



What's your favorite Client Accounting Services tip? And what did you find most valuable from Kevin Stewart's podcast interview? Let us know in the Comments section below.

 

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Topics: Podcast, Client Accounting Services Best Practices

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