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[Podcast] Client Advisory Services Best Practices with Connie Hammell of KWC

Posted by The AI in Accounting Podcast on Dec 9, 2020 7:30:00 AM
The AI in Accounting Podcast

In this episode of the AI in Accounting Podcast, you will meet Connie Hammell, the Managing Principal of KWC in Alexandria, Virginia, just outside the Washington, D.C. metro area. KWC is a CPA firm that specializes in creating and scaling new accounting systems for growing companies that are anticipating a liquidating event in the future.

Listen to the episode in full to hear what Connie thinks about the risk involved in relying on a brick-and-mortar accounting department in the modern world:

[Podcast] Client Advisory Services Best Practices with Connie Hammell of KWC

“The pandemic really brought to light how dangerous it is to rely on a brick-and-mortar accounting department. When you have areas that have been quarantined and shut down, and they'll still need to be paid, payroll still needs to be run. Companies that were relying on somebody sitting in the AP department, printing checks out of their computer and walking them down the hall so that somebody could sign them, I think that really exposed to a lot of business owners a very dangerous weakness in their process.”

Connie also gives some great insight on her predictions for the post-pandemic future of outsourced accounting. In her words:

“When we look back, we're going to look at this period of time where everybody's spread out and at home and can't go anywhere and still needs to run their businesses as the time that … people started thinking about outsourced accounting not so much as a novelty anymore but as a true partner in their businesses.”

Additionally, Connie gives some great advice on the importance of selecting and streamlining the right tech stack for your practice to eliminate inconsistencies:

“A lot of the scalability of this practice comes from having efficiencies, and if you have half your clients on a desktop software, half of them in the cloud, then all of a sudden, all of your plugin applications operate differently … you just have to be an expert in way too many things.”

In this podcast episode, you’ll learn all about the importance of:

  • Finessing the onboarding process for new clients;
  • Narrowing down your tech stack to drive the right client fit; and
  • Streamlining your tech stack across your client base to eliminate inconsistencies and miscommunications.

 

Watch the Podcast Interview

 

Watch on YouTube: Client Accounting Services Best Practices with Connie Hammell of KWC


Listen to the Podcast Interview

 

 

Listen to Apple Podcasts: Client Accounting Services Best Practices with Connie Hammell of KWC

 

A lightly-edited transcript follows below:

Joshua Feinberg (00:02):

I'm Joshua Feinberg from the AI in Accounting Podcast, and I'm being joined today by a very special guest, Connie Hammell from KWC in Alexandria, Virginia, just outside of Washington, DC. Connie is a managing principal of KWC's outsourcing. Connie, thanks so much for joining me today.

 

Connie Hammell (00:22):

Sure. Thank you for having me. I appreciate it.

 

Joshua Feinberg (00:25):

Very welcome. The first place I usually like to start in these podcasts is to learn a little bit more about your background, how you got to where you are in your career, when you knew accounting was your calling, and how that all fits into how you've built out the outsourcing practice at KWC.

 

Connie Hammell (00:45):

Sure. I'm not sure too many people can say they grew up knowing accounting was their calling.

 

Joshua Feinberg (00:52):

You'd be surprised.

 

Combining Dual Degrees in Accounting and Management Information Systems

Connie Hammell (00:55):

My father is a CPA. He started KWC 40 years ago and growing up, I thought I'd never be an accountant because I saw him do tax season, and I saw what that looked like, but yet I got to college and started taking accounting classes, and it really made a lot of sense to my brain. So, after I graduated, I went into public accounting. Well, let me back up. When I graduated from college, I had dual degrees in accounting and management information systems, and when I got into public accounting, I suddenly didn't use my information system portion of my degree for anything. I got into tax and audit, just like most people do in the public accounting space. Then about three years ago, I got a client opportunity who was looking for essentially an outsourced accounting department, and they came in, and they were telling me about what they were doing, and what they felt like they were lacking as the company grew, and it really piqued my interest. I think it spoke to the information system side of my brain that had been incredibly dormant, and so I accepted the client, and I dove headfirst into this as an arena, and we've grown it into a standalone service line in our practice.

 

Joshua Feinberg (02:14):

Wow. Just in a few short years, it went from being a second thought in college to, "When am I ever going to use it?", to all of a sudden, now accounting is so technology-centric.

 

Connie Hammell (02:26):

Right, right. It was that thing that seemed like a good idea at the time, and then I subsequently never used for 15 years, and now it's become quite prevalent in my day-to-day job.

 

Joshua Feinberg (02:37):

Yeah. I mean, when I talk to CAS practice leaders, and outsourced accounting leaders, and I hear them describe how they put together the technology stack, it doesn't sound much different than what a business technologist was doing 15 years ago as a standalone career, and now, all of a sudden, it's all wrapped into public accounting.

 

Connie Hammell (02:58):

Right, right.

 

 

Tech Stack Advice for Starting Out in Client Advisory Services 

Joshua Feinberg (03:01):

Connie, when you are talking with peers about what it's like to grow a practice, what have you found to be super relevant advice that you'd offer to someone that is just getting started and spinning off a client accounting advisory services group, or an outsourced accounting group? What tips would you give to someone—maybe if you were having coffee with someone you went to school with—who was exploring this?

 

Connie Hammell (03:27):

Sure. I think the #1 thing is to pick your tech stack and don't get talked into deviating from it. One of the things that are so critical for this to work is to be efficient and to have processes that are very repeatable and in public accounting, and a lot of service-based industries, we're very easily talked into whatever our client happens to be doing—whether that's a different ledger platform, a different whatever—but by doing that, “Yay! You got a new client!” But you've just lost all of the efficiencies that you could have had that would make your practice scalable much quicker, and so when we started doing this, we were very adamant about, “If you're coming on board, here are the programs we're using. You have to be willing and open-minded to switching, or else we're not going to go forward.” When you're building a practice, it's not your first inclination. Your first inclination is to accept every client that walks in the door. But if you do that, I think you're really going to miss out on what makes this area so great because you're never going to get a handle on everything; you're never going to be a master of those software.

 

Joshua Feinberg (04:50):

Did you come to the conclusion that tech-stack standardization was critical because you had gone down the path of letting clients twist your arm into going into that direction? Or you just figured out that it'd be super important to get this right out of the gate?

 

Connie Hammell (05:05):

I think it was honestly the idea of having to master a whole bunch of new software—which I was doing anyway at the time—but having to potentially know more than one ledger system back, forward, sideways, whatever, was too daunting. So, I had read some articles about selecting your tech stack, and it had talked about how important sticking to your tech stack was, and that really made a lot of sense to me because again, a lot of the scalability of this practice comes from having efficiencies and if you have half your clients on a desktop software, half of them in the cloud, then all of a sudden, all of your plugin applications operate differently, and you're just having to be an expert in way too many things.

 

Joshua Feinberg (05:51):

Yeah, no, I totally hear you. Essentially, what it comes down to is the client has to decide that they want your firm enough that they're willing to change, and I guess part of that, too, is it speaks to their commitment.

 

Connie Hammell (06:04):

Yep.

 

Joshua Feinberg (06:05):

If they're like, “I don't know, maybe I'll try KWC out for six months, or a year, and see if it works," they're not going to be as open to change, whereas, “Okay, our firm has hit a roadblock. We have all kinds of financial and operational issues we're dealing with. We want to grow; we want to be able to expand; we need to get our house in order.” And if they're thinking long-term, it seems like that would align better.

 

Connie Hammell (06:27):

Yeah, and we always jokingly say amongst ourselves, “We can tell within five or 10 minutes of talking to a prospective client as to whether this is going anywhere.” Because if they are really stuck in what they're doing and can't consider or envision what other software might look like, other processes might look like, we just know it's not going to be a good fit, whereas conversely, we can also tell very quickly whether somebody is in the right headspace for making a commitment and making a transition to something different.

 

Joshua Feinberg (07:03):

Yeah, mindset's really key. Most of the time, are you working with entrepreneurs, relatively small companies?

 

 

Focusing on Companies in Growth Mode

Connie Hammell (07:09):

Yeah, our main demographic is companies that are in a growth mode, that are anticipating some sort of liquidating event in three, five, eight years, and so they come to us and generally have very unsophisticated accounting practices and systems, and we help them get it cleaned up, tidied up, and allow the business owners to focus on scaling and making it a possible liquidating event.

 

Joshua Feinberg (07:37):

Well, that definitely gives me a really good idea of what someone should do that's just starting out, really: getting the tech stack right, before you go too much further, and then once you have it right, being very focused on making sure that you get clients that are bought into that, so you service them profitably and efficiently.

 

Connie Hammell (07:57):

Right. Right.

 

 

How to Persevere When Building a Client Advisory Services Practice

Joshua Feinberg (07:58):

What advice would you give to someone that's maybe five or 10 years into building a practice like this, and the wheels seem like they're going to fall off, and they feel burned out? Maybe they're having a high churn rate among clients; maybe they're having a high churn rate among team members. What do you think is the real key to being able to persevere five, 10 years into building out a practice like this?

 

Connie Hammell (08:22):

One of the things that we've been doing from the first day—which I think has been very helpful on a client side—is these engagements are fixed-fee 12-month contracts, and so what that's protecting us from is, like you mentioned, like, "Hey, I'm going to try this for a couple months; see how it goes," and moves on. At the end of each one of those engagements, we have a debriefing with the client on the 12 months that just happened. “How did it go? What didn't work well? What could have better? Are your needs being met?” What that allows us to do is make sure that: One, it kind of keeps the engagement fresh. We're looking at, “What are they trying to accomplish in those 12 months?” From a staff perspective, I feel like that helps the potential burnout because it doesn't become this monotonous day-in, day-out churning of data. We have a goal that the client and ourselves are working toward together, and we cover that in that debriefing meeting. From an employee perspective, it's key to keep them engaged. As a business owner with an eye on profit, you want to say, "Okay, how many clients can my staffperson service?" Because we want to make sure that we're properly leveraging people. But at the same time, you've got to build enough time in there that the employee feels like they're able to step back and think about the client and to provide value and look at ways that they could do things better, as opposed to just being seen as a data entry robot, if that makes sense.

 

Joshua Feinberg (10:05):

Do you find that 12 months is like a perfect period to be able to deepen the relationship enough to add value? And, at the same time, has it ever gotten to the point where you have a client that's clearly not a fit, and you're just like, for one of your team members, "Hang in there; there's only two months left on the agreement"? No, we have a perfect chance to say, "Go down the street and torture our competitors."

 

Connie Hammell (10:27):

Yeah. Well, we definitely have more touchpoints throughout the year. We try to have formal quarterly meetings, but those are really more geared towards the results and making sure that everybody's on track with the goals for the year, whereas that 12-month meeting is really more of an engagement review and making sure that the engagement is still on track. We've had a client or two where we just ended up not being a good fit. Really, they thought they wanted to make all these changes, but when the rubber hits the road, they had a hard time really getting onboard with some of them, and it made our work very inefficient and very frustrating. My staffperson was very frustrated by the engagement. Those, we've terminated. There's no need to keep a client if it's just not working for everybody, so we do try to keep an eye on, “Who's where in the cycle of the relationship and is it worth continuing?”

 

Joshua Feinberg (11:26):

Have you ever run into the awkward situation where they're really happy with you, and it's not mutual?

 

Connie Hammell (11:35):

We have been fortunate enough that we have not had that situation, but I'm sure that would be very awkward.

 

Joshua Feinberg (11:42):

"Come on, Connie. Your team's doing great work for us. Come on, give us one more chance, one more year. We'll turn it around. We'll behave. We won't be abusive. We'll follow your deadlines."

 

Connie Hammell (11:51):

Oh, how many times have we heard that one?

 

Joshua Feinberg (11:55):

It's so relationship dependent. The key thing, too, is being able to get enough leverage early on that they see you as really a trusted advisor, and not just a vendor.

 

Connie Hammell (12:08):

True, mm-hmm.

 

Joshua Feinberg (12:08):

That's the key thing with all of this. In talking to a lot of people that run the practices, there's just so many parallels between the quality of the relationship they have with other trusted advisors. Do they have a good relationship with an attorney? Do they have a good relationship with a tech consultant? Most of all, are they focused on the kind of goals that you are around their financial health?

 

Connie Hammell (12:29):

Mm-hmm, yep.

 

Advice for Onboarding New Accounting Clients

Joshua Feinberg (12:32):

One of the things that I'm usually very curious to hear about is when you take over a new client, is there ever any state of chaos that comes in? Are there ever any big mistakes you see being made from a certain type of industry, or a certain type of way that they originated, whether they're coming from another firm or in-house?

 

Connie Hammell (12:55):

Yes. We've encountered a fair number of issues that range from somebody coming from a very small bookkeeping outfit that had a proprietary system, and so in order to get them out of that proprietary system, and then to something more ubiquitous in the environment of tools was a massive undertaking, the way the data was formatted and using some of the tools that are available—like the mass editor tools—to be able to adjust the data in a way that could then be fed into a new ledger system. We were using QuickBooks Online, so we've seen things like that. Then we've seen other things, where my personal favorite was we took over a file, and we were looking at the balance sheet, and literally every asset that the company owned had its own line item on the balance sheet, all the way down to a $25 microwave, and so trying to explain why it's not necessary or helpful to have that level of granularity on the face of your financial statements, and what we should do to fix that. We fortunately have not come across anything that is fraudulent or scary in that respect. Mostly, it's just situations where the client was outgrowing whatever their situation was—whether it was from a volume perspective, or the level of desire and sophistication that they were looking for—and so generally, when the clients come to us, there is this big cleanup—we call it a "build-out process"—where we take what they have and do an analysis of it and say, "Okay, here's how we recommend going forward," and then take the steps to make that happen, but we have not yet ever encountered a situation where we've taken the books as they were and kept going.

 

Joshua Feinberg (14:56):

Are you mostly inheriting clients that have come from other firms or outgrown internal, or is it a mix of both?

 

Connie Hammell (15:05):

It's a mix of both. A handful have an outsourced bookkeeper—somebody they knew from the neighborhood, or whatever they were doing right when they got started—and then we've had a couple that have also transitioned to us from firms.

 

 

Building a More Resilient Approach to Small Business Accounting 

Joshua Feinberg (15:23):

The final area I want to talk with you about today is to get your thoughts on where the business of outsourced accounting, where the business of client accounting services is headed, what's going on right now that we're going to look back in 12, 18, 24 months and be like, "This was the big inflection point that changed the whole model"?

 

Connie Hammell (15:41):

Well, everybody's tired of hearing this, but it's the pandemic. The pandemic really brought to light how dangerous it is to rely on a brick-and-mortar accounting department. When you have areas that have been quarantined and shut down, and they'll still need to be paid, payroll still needs to be run, and companies that were relying on somebody sitting in the AP department, printing checks out of their computer and walking them down the hall so that somebody could sign them, I think that really exposed to a lot of business owners a very dangerous weakness in their process. I don't think that the true breadth of that has been seen yet; I think that's still coming, but I think when we look back, we're going to look at this period of time where everybody's spread out and at home and can't go anywhere and still needs to run their businesses as the time that, really, people started thinking about outsource accounting not so much as a novelty anymore but as a true partner in their businesses.

 

Joshua Feinberg (16:50):

Everything digital.

 

Connie Hammell (16:54):

Everything digital. I mean, our clients—a lot are heavily concentrated in the DC Metro but again, what we do is not geographically constrained—have had no blips in their finance department. We're able to continue doing everything as we were doing it before. People are getting paid: vendors, employees. None of those balls are getting dropped because they invested in this as a business practice, and we're ready to rock-and-roll.

 

Joshua Feinberg (17:28):

If traffic on the Beltway wasn't a motivator for technology and cloud, if snowstorms weren't a motivator, if the occasional hurricane or tropical storm wasn't a motivator... like the meme that was going around early on. “Which of the following was most responsible for your firm's digital transformation: Was it the CEO, the CTO, or COVID?”

 

Connie Hammell (17:48):

COVID. COVID, yeah.

 

Joshua Feinberg (17:49):

COVID, yeah.

 

Connie Hammell (17:51):

I tell you if anybody is winning the COVID-19 battles, it's the internet, and the memes. But yeah, I 100% think that this is going to be the pivotal point.

 

Joshua Feinberg (18:04):

You're in such a critical, trusted advisor role with so many of your small business clients, where the gold standard for who to listen to is their accountant. So, lead the way. Let's lead the way, which is why, when you look at QuickBooks, a lot of these companies were so brilliant to set up these partner-and-certified-advisor programs years ago because they recognize that once you figure out a standard, that most of your clients will come along with the platform.

 

Connie Hammell (18:31):

Mm-hmm, yep.

 

Joshua Feinberg (18:33):

Connie, what's the best way for someone to learn more about your firm, your practice group, to potentially get in touch with you if they have any questions?

 

Connie Hammell (18:40):

Sure. Our website's probably the best place to start. It's www.kwccpa.com, which is where you'll find my contact information, along with my team, and we'd love to talk to people about what we do. I think we feel like we can make a huge impact on your business, and your frame of mind, and your stress level, and we'd love to talk to you about how to do that.

 

Joshua Feinberg (19:05):

Are you active on LinkedIn, too?

 

Connie Hammell (19:07):

I am.

 

Joshua Feinberg (19:08):

Okay, great. I'll make sure to include a link to your LinkedIn (Connie Hammell of KWC), as well.

 

Connie Hammell (19:12):

Okay, great.

 

Joshua Feinberg (19:12):

Connie, this has been terrific. I really appreciate you taking the time to talk with me.

 

Connie Hammell (19:16):

No problem.

 

Joshua Feinberg (19:17):

And explain to our viewers, our listeners, readers, how you've built your practice, your advice for focusing on technology, and how that helps drive the right client fit, how to look at new clients that come onboard, and the importance of making sure that everything is all lined around the right technology.

 

Connie Hammell (19:34):

I'm happy to do it. Thanks for having me on your podcast.

 

Joshua Feinberg (19:37):

Thanks for participating. I really appreciate it.

 

Connie Hammell (19:39):

Yep. Take care.

 

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

 

Learn even more about client accounting services (CAS) when you download the free report: The State of Client Accounting Services and Outsourced Accounting.

 

Download your free copy of The State of Client Accounting Services and Outsourced Accounting.

 

 

 

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