AI for Accounting and Finance Blog

[Podcast] Outsourced Accounting Best Practices with Sanjay Asija at SCL CPA

Posted by The AI in Accounting Podcast on Jan 27, 2021 7:30:00 AM
The AI in Accounting Podcast

In this episode of the AI in Accounting Podcast, you will meet Sanjay Asija, the Managing Partner of SCL CPA, based in the greater Chicagoland area. SCL CPA provides tax, accounting, and payroll services. They pride themselves on providing personalized service that is responsive to their clients’ needs and is delivered collaboratively through careful planning, analysis, and best practices.

In this essential episode, Sanjay provides a wealth of knowledge for those who are just starting out with their outsourced accounting practice. From picking a niche to learning how to attract your ideal client, Sanjay offers his sage guidance and expertise each and every step of the way.

Sanjay stresses that the most important element of developing a successful outsourced accounting practice is to define your ideal client when you are just starting out:

Sanjay Asija of SCL CPA

“Define your ideal client. … If you’re starting out in your practice, and you have all the time in the world, you may be leaning towards, ‘Let me take on every client that’s out there … just to be busy.’ I think that’s a trap for the unwary. … [If] you take on everybody now, it’s going to be a big drain, both mentally, emotionally, and physically. … You cannot grow your business and have the time that you need to … make the money you deserve. … Try to attract the best clients that are [the] best fit for you now and [in the] future.”

If you are uncertain how to court your ideal clients, Sanjay suggests using your social media presence:

“If you’re [on] social media, or Facebook groups, anywhere like LinkedIn, hang out where your clients are hanging out. Attract the right type of client that’s good for you. Some people say, ‘Hey, I want … e-commerce … clients.” Okay. Then hang out with the e-commerce clients, where they hang out. … Go to their meetings, whether it’s networking meetings or social groups. Be present, and then if you can, be a thought leader. Publish articles or newsletters that are very content-driven, so people will come to you once they see that you’re the resident expert on a certain topic.”

Sanjay also offers his insight on how picking a niche is like picking a specialty in the medical field:

“Pick what you want and focus on that. … You’ll find more people [will] line up [for] your niche-or-industry-specific expertise, rather than [if you try to be] a generalist to everybody. … Somebody told me … ‘Hey if you want to make a lot of money as a doctor, be a specialist. A heart surgeon or a brain surgeon will make more money than a general practitioner. A heart surgeon has to work on only one part of the body—the heart—and he’s very specialized. He has to go to only one medical conference for the heart. A general practitioner may have to go to different areas to learn a little bit about everything. So, be a specialist; know what you want, what your clients are looking for, and be present.”

Sanjay also shares his views on the future of outsourced accounting:

“Remote accounting … virtual accounting … outsourced accounting … is here to stay, and clients are not just looking for a bookkeeper. They’re looking for an advisor, and … a good bookkeeper … can definitely align themselves with a good accountant CPA to bring the advice … that they may not have.”

And finally, Sanjay offers his wisdom on what being a leader means to him:

“Being a leader means you have to be at the innovative edge of the firm, bring solutions before they’re needed, and motivate the staff so that they get excited about it.”

Listen to the episode in full to learn more about all of the above, as well as the importance of:

  • Making sure that you have the right value proposition for your clients by learning what they need most from your firm
  • Living up to client expectations by delivering exactly what they ask for
  • Having the right technology stack to deliver value-added services
  • Knowing the difference between price-conscious and value-conscious clients and drawing up a plan to attract each type
All this and more is discussed in detail in this episode of the AI in Accounting Podcast. To learn more about Sanjay and contact him with any questions about client accounting services, you can check out his LinkedIn page and visit his bio page directly.

 

Watch the Podcast Interview

 

Watch on YouTube: [Outsourced Accounting Best Practices with Sanjay Asija at SCL CPA]

 

Listen to the Podcast Interview

 

Listen to Apple Podcasts: [Outsourced Accounting Best Practices with Sanjay Asija at SCL CPA]

 

A lightly-edited transcript follows below:

Joshua Feinberg

Hi, it's Joshua Feinberg from the AI in Accounting podcast, and I'm being joined today by a very special guest. I have Sanjay Asija with me. Sanjay is the Managing Partner of SCL CPA in the greater Chicagoland area. Welcome to the podcast, Sanjay.

Sanjay Asija 

I'm glad to be here. Nice to see you again.

Joshua Feinberg 

Likewise. The way I usually like to start these conversations is to understand how you got to where you are in your career. Did you always want to be an accountant? What were the steps that got you on your current career journey to being in a leadership role with SCL CPA?

Sanjay Asija 

I can't say that I always wanted to be an accountant. I wanted to be a doctor, but with my friends, when I went to college, everybody was doing accounting. So, there were, like, five of us; everybody wanted to be an accountant, so I would be the odd one out. So, that's why I became an accountant because all of my friends were accountants.

Joshua Feinberg 

So, the accounting industry definitely owes a debt of gratitude to peer pressure. But it's funny because, at one point, I think for a semester or so, I was pre-med in college, and I was actually an accounting major for a semester, too, as well. But yeah, I'm always super curious about the genesis of what got people into their career. How did you end up in your current role at SCL CPA?

Sanjay Asija

We have been growing very, I would say, exponentially, and we merged in several different CPA firms. I was a solo practitioner up until about a few years ago, then emerged in a firm from Kenosha and Racine, Wisconsin. Then we brought in another firm from Arlington Heights—actually, two firms from Arlington Heights. So, we grew very quickly through organic, as well as inorganic, growth, and me being controlling the vast majority of the controlling interest and bringing the most value to the firm, I became the managing partner because I bring in the most revenue to the business, and I have the best strategies to grow the firm, as well as the leadership that we bring to the training and recruiting the staff, bringing the new technologies, taking the firm from a paper-pencil kind of environment to totally digital. So, we set up the stage for being the firm of the future, and even before the COVID, all of these things came in, we were completely digital-scanned for more than 10 years. So, we do not have file cabinets. Everything was digital. We had Zoom meetings even before COVID necessitated for everybody. So, when this happened, we were really streamlined. We actually grew our business and revenues without missing a beat. Our staff was able to work remotely. They did not miss a day of work, and the clients got their stuff done when they needed it, and they were really excited that we were able to accommodate all their changing needs. Then PPP happened, okay, and that also allowed a lot of exciting conversations with clients and staff because staff did not know anything about it, and we started to do all of that. So, they rely on me to bring these concepts and ideas to the team. So, being a leader means you have to be at the innovative edge of the firm, bring solutions before they're needed, and motivate the staff so that they get excited about it. Now, we're getting into more of the value advisory services for the last few years, and that has been a new challenge because everybody was in a traditional bookkeeping tax mindset, audit, and compliance, but nobody was prepared for the advisory section of it, and when we merged, I brought that into play. So, all of that became very helpful. It helped the clients do cashflow analysis, be prepared for slow-down when they do not have the operations open, their restaurants are shut down, or, like, they do delivery and carry-outs, and they do not have dining. I mean, it was a big shift for the clients, but since we had all these tools available for them to collect, take advantage of, they were able to survive this period, and this is what it takes to be a leader.

Joshua Feinberg

What's interesting to me, when I look at most of the people that I've interviewed for the podcast, and similar groups of accountants that I've had on webinar panels, is it seems like just about everyone that I talked to was thankfully ahead of the curve with adopting cloud at least a year ago; in some cases, significantly before that. So, they were in a position to be in significantly better shape than most of their clients from technology and remote and resiliency. What I'm wondering now, though, is because it's such a high percentage of people that were prepared, is that the people that aren't interested in talking about what they do publicly in a podcast that are truly the laggers, cause I'm sure there is not 100%, 90% adoption of cloud technology, or it wasn't eight or nine months ago across all CPA firms and outsourced accounting firms. But yeah, no, it's very interesting, and it's like degrees of implementation, degrees of digital transformation, where there's companies that were more aggressive, companies that are less aggressive, but it seemed to be something that most firms were in fairly good shape—at least, from being in the cloud, as opposed to desktop.

Sanjay Asija

Yes. It has been a blessing. I mean, being able to offer the remote services to clients, and to the staff. I mean, everybody was so pleased that we were ready for this, and we did not have to do anything different, and that has been really, I would say that being prepared for this, obviously, nobody could have anticipated it but glad to be prepared for it.

Joshua Feinberg

Yeah, and so, one of the big areas that I wanted to talk with you about today is what advice you would offer to someone that's just getting an outsourced accounting team, client accounting services, or client accounting & advisory services team off the ground. Maybe it's somebody that you went to school with and just got in charge of building a practice like this in another firm, in another part of the country; maybe it's someone you met at a conference back when we were going to physical conferences again, or a virtual conference: “Sanjay, it seems like you're doing all of the right things. We're just getting started with this. What should we focus on the first few years?”

Focus for New Accounting Practices

Sanjay Asija

Okay, first of all, I will say that they should have the right mindset to do this, that, "Hey, this is something that I want to do." It's not just that the demand of the time; it's going to be the demand from the clients, and everything else that's coming through from your staff. This is here to stay. Remote accounting, or virtual accounting, whatever you call it, outsource accounting. This is here to stay, and clients are not just looking for a bookkeeper. They're looking for an advisor, and, for some people who are a good bookkeeper, they can definitely align themselves with a good accountant CPA to bring the advice sometimes that they may not have the ability. So, you need to know where they stand. Are they the bookkeepers who are just doing the traditional type of bookkeeping and maybe aligning with the CPA or doing the bookkeeping, as well as the advisory part of it? The second thing I would say is that make sure that you have the right value proposition for the clients. What do they value the most from you? Is it traditional accounting? Do they need cash management tools? Do they need bill payments service or payroll service? Needing to know what are the things that you want to do for the client, and what the clients expect from you. Then I will say that you should also have the right technology stack to make sure that you are able to deliver these services. You have the right outsourced accounting modules of bookkeeping, payroll delivery, all of that, having the Zoom, for instance, to have that kind of conversation. The other thing I would say is that make sure that we have our pricing done right, and make sure that we have the right package of services that we give to them, and some clients are going to be price-conscious. Some clients are going to be value-conscious. They're hungry for information. So, you need to know what is the right fit for what services the clients are looking for. Another thing that I would say in mind is getting into the clients that understand the value of what you're bringing to the table and not getting into so much the price conversation and having the right type of a client for that. Define your ideal client. We always talk about client ABCD type. Everybody wants A clients; nobody wants D clients. So, if you're starting out in your practice, and you have all the time in the world, you may be leaning towards, “Let me take on every client that's out there, okay? Just to be busy.” I think that's a trap for the unwary is that you take on everybody now, it's going to be a big drain, both mentally, emotionally, and physically, that you cannot grow your business and have the time that you need to be making the money you deserve. So, know the client; try to attract the best clients that are best fit for you now and for future long-term. So, think about whether it's an industry-specific niche you're trying to do. Is it geography-specific? Say, "Hey, I'm going to do everything within a certain mile radius." So, pick what you want and focus on that. You will find that you'll find more people who are lining up to your niche-or-industry-specific expertise, rather than be a generalist to everybody, and the greatest example that somebody told me, he said, "Hey, if you want to make a lot of money as a doctor, be a specialist. A heart surgeon or a brain surgeon will make more money than a general practitioner. A heart surgeon has to work on only one part of the body—the heart—and he's very specialized. He has to go to only one medical conference for the heart. A general practitioner may have to go to different areas to learn a little bit about everything." So, be a specialist; know what you want, what your clients are looking for, and be present. If you're in social media, or Facebook groups, anywhere like LinkedIn, hang out where your clients are hanging out. Attract the right type of client that's good for you. Some people say, "Hey, I want e-commerce types of clients." Okay. Then hang out with the e-commerce clients, where they hang out. You go to their meetings, whether it's networking meetings or social groups. Be present, and then if you can, be a thought leader. Publish articles or newsletters that are very content-driven, so people will come to you once they see that you're the resident expert on a certain topic. So, those are the things that come to my mind.

Joshua Feinberg

Yeah. It's interesting. I'm looking at your website right now, and I see there's, like, seven different areas—healthcare, professional services, franchises, restaurants, real estate—and it's also clear on your LinkedIn that you specialize in real estate, and that alone—if someone is in the real estate business in your metro area—I'm sure that knocks out 90% of the competition almost immediately, that they know that you have a tremendous amount of institutional knowledge that will help their business model. You know what the metrics should look like; you know what the KPIs are; you know what normal looks like; you know what abnormal looks like; you know what patterns can help them figure out their baselines.

Sanjay Asija 

Yes. It's better to be an expert of something rather than be a—what would you say? Be a generalist?

Joshua Feinberg

Jack of all trades.

Sanjay Asija

You're better off. Yes. Jack of all trades. That seldom works for people.

Outsourced Accounting Firms Getting Back on Track

Joshua Feinberg

Yeah. I think, too, is the world has gotten more connected and more digital, and people are able to find specialists that may not be as local as they are. It'll drive even more specialization because of the competitive nature of these spaces. That’s great advice for beginners. Now, at the other end of the range, I'm thinking about someone that's been running an outsourced accounting team and outsourced accounting practice for 5, 10 years or more, and they've gone through a tough year, like this year, and they may have lost some clients. They may have had some attrition among their team that's left, and maybe they're starting to feel a little bit burnt out, and they're trying to recharge the batteries and figure out what to do next. What advice would you give to a professional colleague that's built a reasonably good practice but feels like they've kind of hit up a plateau, or a wall, and they're not really sure what to do next to get back on track?

Sanjay Asija

I would say that look back and take a holistic view of what you have done. Maybe the clients you lost were not set up for COVID, or any catastrophe, and they had to shut doors. Could you have done something to prevent that, like doing a pivot? I had clients who really struggled through this business but because we had the right cashflow-planning tools in place, we watched them suffer, but they recovered very quickly and did this. So, I would say that, "What could we have done to prevent it?", and that's a big take-away and do that with the remaining clients so that this cannot happen to you again. One time, it happened because you were not prepared. We cannot let that be the reputation, and then recovering from that, going back to these clients that you still have, what is it that you are currently doing for them and reevaluating, and then maybe they need some additional services. It's easier to sell to an existing client than to get a new client. So, if you're doing bookkeeping for them, maybe you can offer payroll. If you're doing payroll and bookkeeping for them, maybe you can offer them management reporting. Maybe you can do cashflow management, budgeting to try to see what else you can do for them, because this is a time, if you worked with them, they will come out strong. You will come out strong with existing clients, and then looking at the clients that you're helping. Then the next thing I would say is go back to them, ask them for a referral of other business owners that you like to deal with. Again, knowing the ideal client for you will help you tone your message so that you're very clear. It’s, like, "Hey, this is the type of client I want to work with," and be very focused. Have a CRM tool. So, you track all the leads you're getting on the prospect you're doing and tracking how many proposals you're sending out, how many closings you're doing, bringing them into sales, have a benchmark, have a tool that tracks all of your success, knowing your own success, you will be able to help your clients succeed. So, take a step back, look at the big picture, try to pivot from what you have learned, and help yourself, help the clients that you have, and you will know that once your heart is in the right place, and you're doing the right thing for the client, clients will see that, and they will really appreciate it, and they will send you more business of their own, plus their own referrals, and the recommendations that they will give you. Get the testimonials from them. That's a big plus. Get reviews. All of that will help you market and position yourself as a leader, and that's what you want to be. You want to be in a good place.

Outsourced Accounting Biggest Mistakes

Joshua Feinberg

That all sounds like great advice. Another area I wanted to ask you about today is when you take on a new client, and they've come from either doing accounting and bookkeeping internally, or they maybe have come from another accounting firm, what's the biggest mistake you see with new clients that take a little bit of time to clean up?

Sanjay Asija

The biggest mistakes that accounts required to clean up is that the accountants have never understood the client's business. Okay, so, the reports, they come out, yes, that's good. P&L, balance sheet. You get it. Income expenses have been categorized correctly, but it doesn't give any business intelligence. So, for example, they never use the proper classes or locations to dig deeper into the business. Okay, so, if a client has multiple streams of income or revenue or different customer segmentation, or they have different sales reps or managers who produce a different kind of a business, you need to look at their business and try to understand that. "What information can I dig out of this that will add to the customer?" Doing customer segmentation, I had a call this morning with a doctor client who runs a very successful psychiatric business. Okay, we are not the bookkeeper for them. Somebody else does the bookkeeping, and they never did customer segmentation. So, we did an analysis for them. That’s my recommendation. "Hey, look at all the customers that you're retaining. Which are the customers you're losing? What is the strength of each customer? Who is a champion, and who's a good customer?" So, we did the customer segmentation strategies, and looking at, "Okay, what is the day sales outstanding? What is the average delinquency? How late are they paying?" All of this is very important, and one of the things that we discovered is that cash basis. They were running profitably. They had a $90K profit year-to-date. I looked at the cash basis. I said, "Okay, that looks good. You're going to pay some tax." Then I went to accrual basis, and we did some analysis, and they're actually $600K loss. Guess what? They're losing clients. The way they were able to survive is because they were getting a contract collected from the previous client, a previous billing. Now, the account receivable is done, and they will not last three more months at the current rate, and this is a $6M revenue, and if they do not do fixing now, they will be out of business in three months.

Joshua Feinberg

Wow. So, if you were just doing heads-down bookkeeping and coding and compliance work without giving them advisory work, they would have been too late. They wouldn't have had a chance. At least, with three months, they have a fighting chance to go line up credit.

Sanjay Asija 

Correct.

Joshua Feinberg

Yeah, that's great. It's interesting, too, so much emphasis on segmentation because, coming from a digital marketing world, the most important way to improve your relevance and value that you provide to prospects and customers is to be more specific, more relevant, and get the segmentation right to understand exactly who your ideal clients are, and where they are on the journey of working with you.

Sanjay Asija

Absolutely.

The Future of Outsourced Accounting

Joshua Feinberg

Yeah. So, the final area I want to ask you about today, Sanjay, is your thoughts on where the future of outsourced accounting is heading. What do you think is going on right now that we're going to look back in 12 months, 18 months, 24 months from now and be, like, "God, that was the thing that made all the difference"?

Sanjay Asija

I think it's going to be knowing what your customer wants, giving them the right service. Clients do not know what they do not know. It's our job to be at the forefront of it. Like the example I just said, this client, if I would not have done this step, and I would have looked at it very traditionally, everything would have been okay, and six months later, we would have found out that they can't survive. Right? So, where I see the new course of outsourced accounting is that it is in an evolution phase. We got to do more than the traditional write-up work, or accounting and bill payment work. We need to be able to take it a step further, give them the insight. What I look at is that traditional accounting has been the hindsight. We look at the numbers in the past. That's in hindsight, and what we need is truly a foresight to be able to project forward and look at the future. What is coming down the pipe? But in the meantime, the two other steps before we can go from hindsight to oversight, something I call the second step is called “oversight”. "Hey, somebody else is doing bookkeeping or accounting, or we're doing the accounting. Let's have the proper oversight, making sure that we are on the right track, and if he needs a course-correction right now." And when we look at that, the third step would be the insight. Taking that information, like the data, doing the analysis, getting the insight that we need, so the business owners can make the business decisions, so that they can get to where we need to be—the foresight, what we thought it was. So, we go from hindsight to oversight, to insight, to foresight. This is what I call the “four-step process” in order to get where they need to be. Otherwise, you're going to be stuck where we are, and we do not see where we're going, and we may be running into a wall, a dead end, and then nobody's going to like that solution. So, we need to evolve better than anybody else. We need to keep this in mind. We need to inform the clients because they trust us more than anybody else. We are the #1 expert advisors. We're the #1 trusted experts that they look to, and they do not know their business because they're busy doing the day-to-day stuff. We need to take this a step forward to them, and you will see that they will really appreciate it, and this is how you're going to save their life. You're going to save them from ruin and destruction. Okay?

Joshua Feinberg

Yeah, and that's a great value of being able to anticipate what's going to happen months down the road and prevent them from taking their business over the cliff while there's still time to be able to course-correct.

Sanjay Asija 

Yes.

Joshua Feinberg

Sanjay, what's the best way for someone to learn more about your firm, learn more about the work that you do, perhaps reach out to you if somebody wants to connect or chat?

Sanjay Asija

Reach out to me, or one of my other CPA partners or associates. If you do not know who the right person is, reach out to me (Sanjay Asija on the SCL CPA Website | Sanjay Asija on LinkedIn) , and I can connect you to the right person.

Joshua Feinberg

Yeah. We'll link to your website in the blog post, in the show notes. We'll also link to your LinkedIn profile. So, anyone that's watching, if they want to connect, network with you, they want to chat about anything that's in the episode, they'll have an easy way to reach you, as well. But I really appreciate you coming on the podcast today. Excellent advice. Great best practices around evolving, helping your clients prevent minor problems from escalating into things that can threaten the survival of their business, the importance of technology, the importance of specialization, and cost segmentation, all super helpful stuff. So, thank you, Sanjay. Really appreciate it.

Sanjay Asija

Thank you. Pleased to be here, and I look forward to seeing you in the future soon.

Joshua Feinberg

Likewise. 

 

What's your favorite Client Accounting Services tip? And what did you find most valuable from Sanjay Asija'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.

 

Topics: Podcast

Download Free eBook: The Future of Accounting Technology
AI Can Be a Game-Changer for Your Firm’s Growth and Profitability | Schedule a Complimentary 30-Minute AI in Accounting Consultation

Recent Posts

Privacy Policy