Many firms have launched Client Accounting Services practices using SAAS applications like QuickBooks Online and Bill.com. Technology-enabled services geared around recurring monthly bookkeeping and accounting is commonly called Cloud Accounting.
Need for Scale
Because bookkeeping is a big part of Cloud Accounting, there is a limit to the price clients will pay especially in today’s crowded marketplace. Cloud Accounting practices must achieve scale in order to be profitable. However, firms are learning there are differences between traditional accounting and Cloud Accounting, and finding it is difficult to scale their Cloud Accounting businesses. Many sign up clients, then struggle to deliver quality service and meet client expectations.
Attributes of Successful Cloud Accounting Firms
In surveying firms who are successfully scaling their Cloud Accounting businesses, we’ve identified distinct attributes driving their success. The more successful Cloud Accounting practices:
- Have clearly defined service offerings, including scopes of service and a process for managing and billing out-of-scope services. This is critical if the firm operates on a fixed price model.
- Design and perform work in a manner that is repeatable and scalable across many clients and across different staff at the firm. To Cloud Accountants, it is not a question of whether one accountant can follow a custom process or use a new software app for one specific client. Rather, it is a question of whether any other accountant at the firm could easily take over the work without problem and continue to meet client expectations. Decisions are made in the context of whether it can be successful for 100 clients, not one client.
- Are as skilled if not more so in process and technology as they are in technical accounting. Of course accounting is important, but most Cloud Accounting clients need modified cash or basic accrual accounting, not GAAP.
- Have Standard Operating Procedures (SOPs) and accountability systems that can scale across many more clients than they currently have. They limit deviations from the firm’s SOPs, as they’re learned deviations tend to spiral into unmanageable complexity and firms end up failing to meet client commitments.
- Their bookkeepers and accountants take pride in setting up a client so that any other staff member in the firm could step in and take over the work without problem.
- Have a specific Technology Stack fully supported by the Firm, utilized by its clients, that supports the needs of the firm’s target market. They do not support components outside the firm’s Tech Stack. The firm does not take responsibility for systems it does not have broad expertise with, having learned the hard way that doing so leads to failed engagements.
- Document important client-specific processes and policies so they can deliver consistent outcomes, and so that another accountant at the firm can take over and follow them to continue to deliver successful outcomes for the client when the first accountant goes on vacation or transitions off the client.
- Have rigorous internal quality assurance processes.
- Evangelize and coach prospects and clients to appreciate the benefits of adopting Cloud Accounting. When clients ask for something that is not supported, their people don’t say No or reference the firm’s policies, they evangelize and coach the benefits of the firm’s solution.
- They understand that in the CAS world, they must operate in a manner consistent with a good work environment for their firm’s people. Good cloud accountants are more mobile than ever, and if they are disengaged or frequently turning over, the practice will not be successful.
For more information on this topic, make sure to join Cal Wilder, founder of SmartBooks Genie, for our webinar on May 27, "Managing Quality in Your Client Accounting Service Practice." You can register here.
Author Bio: Cal Wilder is founder of SmartBooks Genie, an application powering client accounting services practices. Integrated with QuickBooks, Genie automates accrual accounting, monthly close management, custom reporting and dashboards, task management, and scope of service-based pricing. Genie was born out of the challenges of scaling Cal’s original client accounting services business, SmartBooks Services, from zero to forty people in 7 years.