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[Podcast] Outsourced Accounting Best Practices with Michael Doody of EFPR Group

Posted by The AI in Accounting Podcast on Nov 25, 2020 7:30:00 AM
The AI in Accounting Podcast

Michael Doody is committed to providing services that meet clients’ expectations and hopes to be a trusted advisor who can help guide owners to business decisions and growth opportunities.

Michael received his Bachelor of Science in Accounting from Le Moyne College and has been with the same accounting firm for almost 25 years. Michael Doody is a Partner in EFPR Group’s Tax and Business Services Department. Michael also is a Managing Principal of EFPR Solutions, a division that provides outsource accounting services and automation services for accounting. 

Michael works with owners and management of closely-held businesses, performing financial statement review and compilation services, as well as business and individual tax planning and compliance. He has worked with a diverse range of industries, such as manufacturing, printing, equipment leasing, and food processing. Michael’s main focus is around financial statement engagements for companies in the development stage, and he hopes to provide insight on growth strategies, financial analysis, and communications. 

Listen to how Michael Doody embraces change in the marketplace and keeps an open mindset on outsource client accounting. Michael also gives his insight on building an outsource accounting team and the importance of having specialized team members to increase value and earn clients’ trust!

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

  • Lean into change in the marketplace and be open to a different mindset in client accounting; 
  • Define a person on the team to specialize in each of the major cloud accounting services; 
  • Find ways to move up your client’s value chain and provide value to the client; 
  • Motivate change in behavior using change management; and 
  • Manage expectations and earn your client’s trust. 

Watch the Podcast Interview

 

Watch on YouTube: [Podcast] Client Accounting Services Best Practices with Michael Doody of EFPR Group

Listen to Apple Podcasts: [Podcast] Client Accounting Services Best Practices with Michael Doody of EFPR Group

 

Highlights include:

  • "My #1 tip would be to lean into the change that you are seeing out in the marketplace. Usually, that revolves around some sort of technology, and how that's being used in the bookkeeping and client accounting sphere. Don't run away from that and pretend it's not there. Because it's only becoming more and more prevalent."
  • "Volunteer to become a power user for some of the tools that your firm is using—or to find a tool that is better than what you are already using—and be that power user for it. Train your staff and teammates on it and be the person that is the face of that software to your team." 
  • "For more experienced accounting professionals, you have to find a way to move up your client's value chain. If you have taken on a client, and it's a smaller client, that's going to be commoditized fairly quickly, as artificial intelligence begins to play a more prominent role in the industry. You're going to need to be able to be in front of clients and providing them value, not just numbers."
  • "We are your advisors. We are one of your trusted team members. Just like if you hired a bookkeeper internally, we want you to feel the same way with us. Earning that trust by making sure we are honest and hitting deadlines that we said we were going to hit and acting with the upmost integrity with the client's numbers is always of upmost importance when we start a client relationship."
  • "As a result of the pandemic, it's forced a lot of business owners’ hands into having to look for other solutions, as opposed to waiting for their current solution to get better. What we're going to continue seeing is pressure on small-to-medium-sized businesses to become leaner and more efficient on how they process financial information. The ones that succeed the most are going to be the ones that lean into that. A lot of the routine tasks are going to become automated."

A lightly-edited transcript follows below:

Michael Doody:

We know how you process information internally. We know how you run your books. They're very clean, but they're very labor-intensive. We love to just come in and help you automate a lot of these processes. There's tools we can plug in for you. We can get you in the cloud and do these things.

 

Speaker 2:

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, I'm Joshua Feinberg from the AI and Accounting podcast, and I'm being joined today by a very special guest, Mike Doody, from EFPR Solutions. Mike is a partner with their outsourcing group and based in Rochester, New York. Thanks so much for joining me today, Mike.

 

Michael Doody:

Yeah, of course. Thanks for having me, Josh.

 

Joshua Feinberg:

You're very welcome. So, the first place I usually like to start with these conversations is to get a feel for what got you to where you are in your career. Did you always want to go into accounting? Have you always enjoyed working with other kinds of businesses and advising them on financial issues? And then how your team is built, how you currently fit into that today.

The Journey to Leading Outsourced Accounting and Accounting Automation at EFPR Solutions

Michael Doody:

Sure. So, I've been with the same firm since I got out of college some 23 years ago now. Started out in a traditional accounting and auditing type situation. We were a smaller regional firm at the time. Grown over the years through organic growth and M&A activity and felt the need probably four or five years ago now to have a separate dedicated team that got into outsourced accounting work and applying accounting services—whatever you want to call it with the buzzwords—and so, we decided to make that a specific focus about four or five years ago, and we've had tremendous success. So, we've got a separate team that is not our CPA track team. It's people that want to do bookkeeping and accounting services on a day-to-day basis, and that's all they're worrying about. They're not worrying about tax law. They're not worrying about crazy GAAP requirements that are changing on a regular basis. They're worrying about making sure they're getting good details and information to our business owner clients, and, because of that, they keep asking for more. So, we're growing pretty quickly.

 

Joshua Feinberg:

It seems like it's a different kind of mindset with the team member who's really content working with a lot of smaller companies, where they're essentially providing a salesforce function, where there's not a lot of depth in-house.

 

Michael Doody:

Correct. Yep. I would agree with that.

 

Joshua Feinberg:

So, you've been at this for quite some time. What advice would you give to someone who is relatively new to launching an outsourced accounting, outsourced bookkeeping, CAS practice, virtual CFO, whatever you want to call it? What are the potholes that you would think someone who's establishing a practice like this should look out for in the first couple of years?

 

How to Keep Up with Change in the Accounting Services Marketplace

Michael Doody:

Sure. We've learned a ton over the last five years, and I think probably my #1 tip would be to lean into the change that you're seeing out in the marketplace. Usually, that revolves around some sort of technology and how that's being used in the bookkeeping and prime accounting service sphere. Don't run away from that and pretend it's not there because it's only becoming more and more prevalent. We decided about three years ago to lean way into it, and that's paid a lot of dividends for us. We only support clients that are on certain platforms. If they're not on that platform, we can refer them to someone that maybe can work with them, and we've really figured out how to cut time out of our equation by using software tools that automate easy mundane processes. So, I'd say that's probably my biggest tip. My other tip would probably be to just have a different mindset. If you're going into this type of world, it's very different from being in an industry situation, where you're working for one or two companies at a time. If you're going to be in this client accounting services realm, you're going to be working with a dozen companies, all at the same time, and you're going to have to be able to put one down and pick one up and change your gears pretty quickly. It's definitely a learning curve for our new folks, for sure. But we try to kind of get them used to it with a little bits of information, and then just as they become proficient, they get a little bit more, and a little bit more, a little bit more, and then I guess the last step, I'd say, would be volunteer to become a power user for some of the tools that your firm is using or to find a tool that maybe is better than what you're already using and be that power user for it. Train your staff; train your teammates on it and be that person that is the face of that software to your team because every team needs that. You can't have the same few people mastering every single software package. We've got about a 10-person team, so we kind of divvy up those duties.

 

Joshua Feinberg:

That's a combination of staying in front of change, being prepared to contact-switch really quickly among clients, and then picking a person on your team to specialize in each of the major cloud accounting or ERP platforms. I'm curious; when you said about three years ago, there was a big change that you saw at the time, if we think about where we were economically, it seems like a vastly different world than even just thinking about six months ago. Was there something that you saw in the marketplace? Was there a certain kind of question you were starting to get from small business owners all of a sudden?

 

Michael Doody:

No, I think it was more internally-driven. Our team was constantly having to maintain knowledge of five or six different platforms, all at the same time, and every client was on a different platform, and it was really inefficient for us to get month-end closes done and get reports out to our clients, and it was born out of necessity, but looking back at that time, we sized up our options and said, “The vast majority of our clients are going to be able to use and will use QuickBooks Online pretty easily. If they can't, we can refer them to somebody that could better service them.” And so, we made that decision just basically out of necessity. We needed to be able to get our work done efficiently and using the same process, client to client, so if there was any change in staffing, it was easy to kind of make sure it was done the right way the first time.

 

Joshua Feinberg:

Yeah, no. I totally hear you. As someone who's in marketing, sales development, business development, there's so many different options aside from the three or four with the biggest market share, and it's really hard to be multilingual. Some people can pull off, like, supporting two different CRMs or marketing ones. With some of the CAS outsourced accounting leaders, sometimes they'll support something that's a little more towards small business, and sometimes a little more mid-market. What's interesting, too, is I hear a lot of Intacct advisors lately trying to encourage even startups and some of the smaller companies to start sooner to get rid of the potential for technical debt and big, painful, expensive migrations later on. So, I think everyone's really thinking about this standardization now as a key part of efficiency.

 

Michael Doody:

Yeah, I agree.

 

Joshua Feinberg:

So, that's great advice for someone that's just building a new practice. What about somebody that's been running an outsourced accounting or CAS practice for 5, 10 years or so, and maybe they're at a crossroads with their firm or their career, maybe it's not growing as quickly as they'd like it to be, maybe their client portfolio was loaded with companies that are particularly vulnerable or going through some big financial hardships right now, and they kind of lost their way. What's the big advice you'd offer to someone that's been at this awhile on what they should be focusing on at this stage?

 

How Established Outsourced Accounting Practices Can Move Up Their Client's Value Chain

Michael Doody:

Sure. For more experienced accounting professionals—I think you're going to hear this a lot, probably from most of the guests you have on—if you have to find a way to move up your client's value chain. You just have to. If you've taken on a client, and it's a smaller client that you're just doing maybe some reconciliations and providing a month-end report or two, that's going to become commoditized pretty quickly, as obviously, artificial intelligence begins to play a more prominent role in the industry, which it's already starting to, obviously with Vic.ai being one of the solutions that can help shave time off of things. You're going to need to be able to be in front of clients and provide them value, not just numbers. So, you've got to find that way to do that. The way we found was pretty successful is when we're onboarding a client, we'll try to ask them, "How often do you want to meet?" And, "What do you want to talk about?" And, "What are the things that are really keeping you up at night?" And, "How can we help you at least address them or have you know that somebody is listening to you as the business owner?" And usually, more times than not, what ends up happening out of those discussions is more work for the advisor because they need to look into something or do a side project or involve another strategic partner, like a financial planning institution, or something like that. So, you got to be able to move up that chain. So, if you're finding that you're just kind of stuck in day-to-day transactional-level stuff, master that, and then try to spend your time talking to your clients, and then using that as a means of moving up the value chain. I think the other thing that I would say for folks that have been around a while is if you haven't changed how you do things in three, four, or five years, years go by pretty fast—especially if you're in accounting. There's always another month-end coming right up. There's always a year-end coming right up behind that, and it's easy to not change, but if you—again, like I said in the first part—if you find a way to lean into some of these technology solutions and really up the service game to your clients that you're currently providing service to, they're going to never think about switching from you. If you can get them nice, clean reports that are automated and can be spit out pretty quickly at month-end and have their logos on them and have some KPIs that they really care about that, they're going to really enjoy working with you, and you got to be able to get to that place to do that.

 

Joshua Feinberg:

Do you find it challenging to take a client that hasn't seen their accounting firm as higher up on the value chain and be able to transition that relationship at some point if they're used to seeing your firm as providing these commodity-level services? Do you think there's hope for those that have got boxed in to be able to mend and upgrade those relationships? Or do you feel some of your clients will make the journey, some won't?

 

Michael Doody:

I think it's the latter. I think some will make the journey, some won't, and I myself have had pretty nice discussions with some existing clients that are clients on our tax side that we maybe do financial statement services and tax services for and went to them and said, "Hey. We know how you process information internally. We know how you run your books. They're very clean, but they're very labor-intensive. We'd love to just come in and help you automate a lot of these processes. There's tools we can plug in for you. We can get you in the cloud and do these things." And if they just didn't want to make the change—“Everything's working; everything's humming along; everything's exactly how we want it to be,” and they just didn't want to make the change—that happens from time to time, and we just said, "If your mind changes six, 12 months from now, you know how to find us, and we can help you," and we've decided to add that as a separate service offering of our CAS group is just to help either existing or non-clients just get more automated because what we found is if we help them do that, and then we give it back to them and train them how to use it, usually within six months, they say, "Hey, can you also help us with this, this, and this? Because we're not sure how to do that." Or, "We have an offline POS system that's not talking correctly. Can you come and help us with that?" So, you're not going to catch them all. We made the mistake of spending a little too much time with the ones we thought were going to come along with us, and, in the end, they just decided they liked their job the way it was, and they didn't want to hear about it. So, we just moved on and kept them as a tax client and said, "Okay. If you want to call us later, you can."

 

Joshua Feinberg:

Yeah. Change management, motivating changes, and behaviors is really difficult. It's way more, a lot of times, than just figuring out the process that needs to be automated and tactical. You're dealing with so much resistance, and you're dealing with so much personality. Does that ever feel like almost therapy, where they're venting, and you're trying to help them?

 

Michael Doody:

It kind of does. It's an emotional decision for a full-time bookkeeper that's working for a company to, all of a sudden, have somebody come in and say, "Hey, we could change this, this, this, this, and this. I don't know what you're doing, but you're doing a really good job." It makes them maybe feel like they should've seen it coming. But quite honestly, today's bookkeepers, if they've just been doing their job for the last five years, they wouldn't have time. They don't have time to go out and find a new solution to do these things. So, that's where we've found that we add value is we can kind of pull the curtains back on these types of services and say, "Hey, these things exist, and they're becoming almost the majority of what's happening out in the marketplace, not the minority. You really ought to make a change." And sometimes, they decide to; sometimes, they don't. It's almost like you're a professional. The business owner has one set of feelings, and you want to play to that, but usually, their key person is their bookkeeper, and if their bookkeeper says no, then usually it's a “no” for a while.

 

Joshua Feinberg:

Depends on who the relationship's with. It's interesting, too; before I moved into working with outsourced accounting firms, I came from the IT services world, and it's so common when a small company has a virtual CIO, virtual CTO relationship. The small business owner may be thinking of, like, "I just want to make sure the network doesn't go down. I want to make sure everyone has shiny new hardware all the time." But they completely miss that there's all these line of business applications, because nobody's thinking about that if they don't have that outsource CIO, CTO, or outsource CFO relationship. No one's really looking at the big picture. It's so easy to get stuck in the weeds.

 

Michael Doody:

Yeah, and they just do the things the way you've always done them, and next thing you know, five years goes by, and you're probably spending twice as much time on AP management as you really need to be.

 

Joshua Feinberg:

Guess it can be a drag on retaining certain kinds of employees, hiring certain kinds of employees. I can't imagine many entry-level accounting students are enamored with coming in and working with companies that are anti-automation.

 

Michael Doody:

Right. Most of them are usually raring to go on the latest-and-greatest sets of technology.

 

Joshua Feinberg:

I keep hearing a lot of that, also, that there's so many openings, and it's hard to fill all of these jobs, and it seems like that's a competitive differentiator, too, is making sure that the tools and platforms are keeping up with the modern way of approaching all this. When you've taken over new clients that either come over from other firms, or if they've been limping along in-house, what do you see as the biggest mistake that kind of makes you cringe that you wish people—if they just knew about—could prevent? What's the most kind of painful thing to be able to fix later on when you're onboarding a new client?

 

Successfully Onboarding New Clients

Michael Doody:

When we're onboarding, probably the biggest thing is just making sure that the client knows we're there to make them look good. We want things to be right. But being able to communicate with that business owner, like, "Hey, we may find a whole bunch of things in your prior way of doing things that just either aren't efficient or maybe weren't even just done properly," and finding those and being able to point those out on the front end, it's a tough thing to do until you're kind of in the weeds trying to do the current month-end stuff. So, we found making sure that our clients know, "Hey, in the onboarding process, there may be some things that pop up, and we're going to need to chat through those things and make sure that you understand what we need to do, and what you need to do. But our long-term goal for this relationship is that we are your advisor. We're one of your trusted team members, just like if you hired a bookkeeper internally, and you have them in every single meeting that deals with numbers. We want you to feel the same way with us." So, earning that trust by making sure we're honest and hitting deadlines that we said we're going to hit and acting with the utmost integrity with the client's numbers is always of utmost importance for us when we start a client relationship.

 

Joshua Feinberg:

Yeah. It's really fascinating that you brought that up. We commissioned a small study about a year ago and published a research report on the state of client accounting services based on a couple dozen different questions, and one of the narrative questions that came up quite a bit was people struggling with managing expectations and education and getting their clients to see the big picture. So, it makes total sense that's going to always be an ongoing work in progress to get people onboarded with the right mindsets. Mike, where do you see the business model of outsourced accounting or client accounting services headed in the next 12, 18, 24 months? What do you think is going to be most impactful that we're going through right now, where you're going to look back and say, "This was the big inflection point"?

 

Looking Ahead to the Future of Outsourced Accounting and Accounting Automation

Michael Doody:

Well, I think, definitely as a result of the pandemic, it's forced a lot of hands; it's forced a lot of business owner's hands in having to look for other solutions, as opposed to waiting for their current solution to maybe get better. So, we definitely have seen a lot of that. Maybe the existing bookkeeper got laid off. Maybe they retired, and they just don't have the money to bring in somebody at the same pay scale to do that job. We're going to continue seeing this pressure on small-and-medium-sized businesses to become more lean and efficient with how they process financial information, and the ones that succeed the most are going to be the ones that, again, lean into that. A lot of the routine tasks are going to become automated, right? They're kind of halfway there now with bank feeds and setting up roles in certain platforms, and things can kind of come in and get posted almost automatically. We're pretty darn close to having that cross over to the finish line and have the transactional-level stuff just taken care of, and that's going to mean client accounting services needs to become more advisory, right? We can't rely on crunching debits and credits all day and having our clients wanting to pay us a good size fee for that, when we've just told them we can take four hours out of the equation and not have to do that. Now, that does mean value billing will become way more important for CAS providers. The keyword there is “value”. They got to be able to add the value to get the billings they want, and that means you got to have people on your team that know the debits and credits, and the software tools that can make sure things are getting done well and timely and correctly. But then you also have to have people on your team—whether it's the same people or not—that know how to read that data, interpret it, and bring the client actionable steps out of that. "Hey, we're seeing that your margins are slipping this week, or this month, because we've got your numbers up to date through yesterday. Did something happen?" "We ran some materials through our press and yeah, we had a huge issue with some scrap, and we had to throw out a whole bunch of materials, and guess what? My margins just took a dip for the month." Those are the types of things, when a client hears, "We saw that," and they know that we saw that, and they have the answer, then they start to trust us a lot more. So, we really want to get to the place where it's, "Hey, next month, you better be ready for this," and instead of, "Last month, this happened, and this is why it happened," it's going to become way more future-looking and interpretive and advisory. So, we're kind of in the middle of trying to get there—as I'm guessing most people that are operating CAS practice are—because things are changing so rapidly that by the time you get one software tool kind of into your repertoire and kind of deploy it out to several clients, there's another one that's ready to go that might be better. So, it's kind of an interesting time to be in the industry, for sure.

 

Joshua Feinberg:

Yeah. It seems like there's been such a convergence in the last six months, and I’ve seen from clients for this last couple of years, where really to do this successfully, you have to be very technology-forward-thinking, and any firms that are really technology-resistant, it seems, are just going to get left behind in the dust.

 

Michael Doody:

Yeah. Those clients that they do have, we'll probably be stealing those clients from them, or other firms like us that are just trying to stay on—I won't say, “the cutting edge”—but definitely the forward edge, things that we know work, and that work really well. We look at at least one or two tools a year to see if they want to fit into our stack, and, if they do, we try them out on a few clients first. If they work wonderfully, we then go to the next round of, "Okay. Which other dozen clients do we want to get this involved with?" You've got to be able to spend that time, and that means thinking about it all the time. We've found that we're very lucky in our firm's practice that we don't have the same team. We're not using our tax department people. We're not using our auditing people. We have a specific, dedicated team for our CAS practice, and they may or may not be full CPAs, but they're really good at software, and they're really good at debits and credits, and that's really helped us to figure out what's changing and have the time to become experts at it.

 

Joshua Feinberg:

Yeah. I mean, the idea of even having an R&D function that's completely separate from keeping up with pronouncements, and changes in gap, and financial standards, and it positions the company to be more like an IT solution provider, just as much as an outsourced accounting provider.

 

Michael Doody:

For sure, and it's hard to explain that to other traditional CPA firm partners, right? I mean, all my partners are like, "You're looking at what?" And, "Didn't you just change softwares last year?" Usually, you get a platform in a CPA firm, and it's there for a decade. You're not going to change that thing at all; whereas we've implemented four new apps or tools in the last 16 months, or something like that. So, it kind of boggles their mind from time to time.

 

Joshua Feinberg:

A lot of the barriers to entry and moats that existed just completely, I mean, when Benioff reinvented the CRM space 15, 20 years ago, it eventually got QuickBooks Online, Sage Intacct, NetSuite, it's all powered by software as a service platforms that allow for much easier entry and migration and training than ever was before.

 

Michael Doody:

Definitely.

 

Joshua Feinberg:

Mike, this has been really, really fascinating to get such a technology-focused, change-focused viewpoint on where the whole industry is headed, and I know our viewers and our listeners will get a lot of value from listening to this advice. If anyone has any questions or wants to reach out to you or connect with you, what's a good way? Are you active on LinkedIn?

 

Michael Doody:

Yeah. I'm active on LinkedIn. They can also email me. I don't know if you post the email addresses, but I am definitely on LinkedIn, and I'm on there quite often. So, I'd be happy to connect and discuss and see if you've got any ideas that we could share with each other and make each other better. That'd be awesome.

 

Joshua Feinberg:

And what's the best website resource to learn more about EFPR?

 

Michael Doody:

efprsolutions.com would be a great place. We've got all of our services laid out there. We kind of have a nice little service summary that breaks apart our three service offerings, and what they look like, and people can learn more for sure, and there's definitely contact information on there, as well.

 

Joshua Feinberg:

Terrific. Mike, thanks so much for taking the time to talk with me today. Been super helpful. I wish you all the best in growing your CAS practice and stay safe.

 

Michael Doody:

I appreciate it, Josh. Thanks for your time.

 

Joshua Feinberg:

Very welcome.

 

Speaker 2:

Thanks for listening to this episode of the AI in Accounting podcast. To subscribe and leave a review, check us out at blog.vic.ai or wherever you like to consume podcast episodes, including Apple Podcasts, Google Podcasts, and YouTube.

 

What's your favorite Client Accounting Services tip? And what did you find most valuable from Michael Doody'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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