Are any of your clients confused about PPP? I have spoken to a lot of business owners, and I have yet to meet one who is not confused about PPP at some level. This is some of the confusion I have met:
- I have not applied for a PPP loan because I’ll have to pay it back anyway
- I received a PPP loan, but I dare not spend the money
- I can use the money on anything and still get forgiveness
PPP has received a lot of attention in the media. So it is baffling that business owners can be so confused about it. And it seems a bit illogical that business owners don't check the conditions of the “free money” they have received from the government.
I have recognized a common pattern of accountant PPP engagement in all these cases:
1. No accountant contact: The accountant and business owner have not spoken about PPP loans at all.
2. No PPP engagement: The business owner has asked the accountant for help, but the accountant did not want to engage in any PPP related activities.
3. Only PPP Compliance: The accountant is filling out the PPP forgiveness form.
I shake my head every time I hear about an accountant on one of the first two levels. Not engaging with clients on PPP is a lost business opportunity. The accountant is literally throwing money down the toilet. On these two levels, it is not uncommon that the business owner asks me if I can help them find another accountant.
The loss is in 3 areas:
- Losing potential revenue from existing customers on PPP assistance.
- Losing converting the clients into future advisory clients. PPP can very easily be used to upgrade a client’s perception of their accountant.
- Potentially losing the clients to another accountant who cares more.
Make sure you engage your clients on PPP loans.
Make sure to join the Insightful Accountant webinar with Johan Colvig of MoreReporting, "Maximize Your Clients PPP Forgiveness" today, July 30 at 4:00 p.m. Eastern Time. You can register here.
The 3rd level is better, but there are still problems. We have built a comprehensive PPP forgiveness calculator in MoreReporting. Of all the PPP forgiveness calculations, I compared the forgivable amount with the loan amount. And I found that clients on average were missing 14.3% in forgivable amount. With an average loan size of $104,000, that becomes $15,000 per client! That is $15,000 that they will have to pay back to the government. And this is easy to avoid.
But it is my experience that some accountants are missing this opportunity. In our calculator, we have added two numbers that are not on the PPP form: Unforgivable loan and unforgivable expenses. We have once been asked why those numbers are there. We have also been asked to remove them, so they are not distracting. However, the two numbers are important input for advisory. When you do a tax return, what number is the client most interested in? How much are they going to pay or get back in taxes! PPP forgiveness is not any different. They don’t want to pay back anything, and they don't want to spend more than what they need.
As with tax returns, it is much easier to maximize the tax return during the tax year than when the tax year is over. Again, PPP forgiveness is not any different. If your client is heading towards a lower PPP forgiveness, it is 100 x easier to fix it during the covered period.
But to see if they are going to pay back a part of the PPP loan, you’ll need to forecast this during the covered period. And you need to show your client what they can do to improve the forgivable amount. This is advisory.
After the forgivable period, you are stuck with compliance. And your clients are stuck with the check.
So act now, and adopt the 4th level of PPP engagement: PPP maximization. If you do, your clients will see you as their new hero. You just helped them get $15,000! How much would they love you if you could magically increase their tax return with $15,000? This will change your client’s perception of you. They will begin to see you as an advisor. And it will be easier for you to sell them advisory services.
Make sure to join the Insightful Accountant webinar with Johan Colvig of MoreReporting, "Maximize Your Clients PPP Forgiveness" today, July 30 at 4:00 p.m. Eastern Time. You can register here.
Author Bio: Johan Colvig has 15+ years of experience as an industry leader in the business intelligence space. He is also a co-founder and architect of MoreReporting, the most advanced financial analytics tool for QuickBooks. His core philosophy is "AI Assisted Advisory." He believes that AI should augment accountants to become advisors to their clients. Before MoreReporting, Johan was a co-founder of Infotrust A/S based in Europe. Infotrust was a leading SAP business intelligence partner. They won the Partner of the Year award 4 times in the Europe North region. He has 8 years of experience in teaching financial analysis. He has been a keynote speaker in different conferences in the US and abroad.