Now’s The Time To Fine-Tune Your Billing Processes

Efficient, timely billing and collections are critical in a down economy. According to the 2019 IPA National Benchmarking Report, the average number of days production locked up for billed receivables is 53.6 days, and the percentage of AR over 90 days is 26.9% for all participating firms.

 

Some advice to consider:

  • Reconsider new client intake. Learn about prospects before they become clients.
  • Create or update your client approval process.
  • Update your engagement letters.
  • Don’t cut your billing rates.
  • Consider alternatives to hourly rates.
  • Ask for retainers from new clients.
  • Centralize engagement letters and billing.
  • Email bills and bill monthly.
  • Require accountability for time sheet deadlines and billings.
  • Share information about billing and collections with staff.
  • Reward partners and staff who are good at billings and collections.
  • Know your clients’ value.

Finance Execs Focus on Three Key Areas in New Survey

Given the fast-moving developments of the ongoing COVID-19 pandemic, the results of the latest Quarterly Priorities Survey from Financial Executives International (FEI) may seem slightly dated, since the 228 respondents were offering their opinions during the period of March 17-April 10, when stay-at-home orders in many parts of the country were still firmly in place and plans for reopening had yet to materialize. Nevertheless, even as several states and regions have now begun partial easing of those initial restrictions, the survey provides a good snapshot of where CFOs were directing their attention in the early going and where they expected to soon be focusing their recovery efforts.

Against the backdrop of the virus and its accompanying economic fallout, three main themes among financial executives emerged from the latest survey:

Digital Transformation

On average, 70% of respondents expected to alter work-from-home or travel policies at their firms in response to mandatory stay-at-home or shelter-in-place orders. Near-term changes would be reactionary based on the current health situation and quarantine restrictions, while long-term changes would be based largely on the impending economic downturn. Many survey participants indicated they will invest more and begin to think about how to provide better remote functionality for workforce segments that don’t traditionally work from home.

Meanwhile, the executives said travel – such as client meetings, staff meetings, and conferences – will be evaluated primarily by how it fits into the overall business strategy, with a higher bar needed to determine whether in-person attendance will be justified moving forward.

Talent Acquisition and Retention

The recent economic disruption has shifted job market equilibrium in favor of organizations at a time when 16% of respondents still see increasing, attracting and retaining talent as a top issue. So even as 46% of survey respondents indicated they were seeking to decrease headcount in the wake of the pandemic, those companies looking to add highly skilled finance professionals may find themselves with a bigger pool of quality options.

While data management, financial planning/analysis and technical accounting professionals were among the most highly sought additions, FEI expects regulatory professionals to become a higher priority in the coming quarters given complexities brought on by the CARES Act and other regulatory changes.

Capital Preservation

Overall, 32% of survey respondents indicated that their organization’s working capital increased over the last quarter, 33% said it decreased and 35% said it stayed the same.

However, given the anticipated duration and severity of the downturn, FEI expects working capital to decrease as companies begin to take measures to preserve capital, such as postponing or cancelling planned investments or trimming corporate payrolls.

Antony Nettleton Joins Sikich to Lead Assurance Team

Antony Nettleton

Naperville, Ill.-based Sikich (FY18 net revenue of $168.7 million) has announced that Antony Nettleton has been admitted as the PIC of its assurance team.

Before joining Sikich, Nettleton worked in a variety of roles at Grant Thornton International for nearly 30 years, most recently leading the firm’s global quality and enterprise risk team. Prior to that, he led Grant Thornton’s Chicago assurance practice and served on the U.S. firm’s partnership board.

“As technology drives significant changes in assurance work, those changes present great opportunities for forward-thinking companies,” says Sikich CEO Chris Geier. “Antony brings an ambitious, growth-oriented mindset to our business and an enthusiasm for using technology to improve processes and deliver superior client service that mirrors my own. I’m confident he’s the right leader to guide our assurance team through this era of change.”

More news from Sikich

Leadership During Crisis

The long-ish title of a recent Oracle NetSuite webinar – “New Business Leadership Outlook: Planning, Forecasting and Taking Action in a Changing Business Environment” – reads like any of hundreds of similar management-focused sessions. But thanks to the ongoing COVID-19 pandemic, this particular video chat hosted by noted author and podcaster Christopher Lochhead happened to be unfolding amid a massively changing business environment, leading to a discussion centered on the very unusual circumstances that constitute a new working definition of “normal.”

Joining Lochhead among what has become the all-too-familiar sight of individual boxes on a computer screen were Jason Balk, the CFO of Adtegrity, a 40-person ad agency in Grand Rapids, Michigan, Julian Love, the chief business officer of St. HOPE, a not-for-profit education provider in Sacramento, California, and Jeff Vierling, the founder and CEO of Tailwind Nutrition, a small energy food/drink manufacturer in Colorado. While each was dealing with challenges related to the crisis that were very specific to his own industry and situation, all three hit on several themes and concerns that will likely ring familiar for almost any leader in these fraught times:

  • Companies that seem to be handling the crisis best thus far are being both “thoughtfully aggressive” and “radically generous” – that is, they are managing costs carefully yet remaining alert to potential opportunities, while also rededicating themselves to their communities. Illustrating this latter point, Vierling noted how Tailwind turned a downturn in demand for its nutrition products in the wake of so many canceled endurance events into a positive by pivoting to provide those same products to frontline workers in healthcare facilities around the company’s local area (who, it turns out, wear down in much the same ways endurance athletes do).
  • Digital leadership is beginning to emerge as a vital skill, as managers try to figure out how to transfer traditional leadership styles, qualities, techniques and communication tactics to the new remote working world.
  • Many leaders are struggling to find the right balance between being exceedingly transparent with employees to help quell fears and counter misinformation versus potentially inciting panic when the information they’re sharing isn’t necessarily comforting or reassuring. Vierling noted that people tend to prefer more information – even bad news – to no news, while Love said his biggest challenge is trying to give everyone as much information as possible when the truth is he doesn’t always have the answers to many of their most pressing questions (because nobody really does).
  • All three participants had applied for and received government stimulus money available through the Paycheck Protection Program (PPP), with both Love and Balk commenting that in this era of faceless online banking, it was the longstanding relationships with their local community banks that helped get their applications through the system and their money in the door. In other words, no matter how much technology enables the reduction or elimination of human interaction, those personal relationships proved invaluable when the going got tough.
  • Despite the welcome jolt of those PPP funds, all three leaders recognized the many shortfalls in the rollout of the program, and all three were aware of organizations that didn’t end up getting the funds they so desperately needed. In light of stories like those, Lochhead noted that one of the unintended consequences of this economic upheaval and the ensuing governmental response is that many companies may adopt a new sense of radical self-reliance, knowing that tomorrow isn’t guaranteed and that relying on the government might not be their best fallback in the next crisis. Going forward, then, many may come to the conclusion that there’s no such thing as having too much credit or too much cash on hand.

Soft Skills Like Growth Mindset, Creativity And Communication Matter In 2020 And Beyond

When Udemy for Business analyzed the fastest-growing soft skills people are learning at work in 2020, they saw an uptick in learning about topics like growth mindset, creativity, and innovation. It’s increasingly important for employees to adopt a growth mindset of continuous learning and be open to change in the workplace. While skills training is key, building an organizational culture and leadership to nurture innovation and creativity is critical.

Employees are leaning into their innately human skills and what robots can’t do. Critical thinking, communication, storytelling, and emotional intelligence top the list of fastest- growing soft skills in 2020 in the workplace.

Top 10 fastest-growing soft skills in 2020

 1) Growth Mindset

2) Creativity

3) Focus Mastery

4) Innovation

5) Communication Skills

6) Storytelling

7) Culture Awareness

8) Critical Thinking

9) Leadership

10) Emotional Intelligence

 Source: 2020 Workplace Learning Trends Report: The Skills of the Future

Managing Partner Viewpoints from the Archives, Part II: Motivating Partners, Fostering Consensus

Nothing about the job of the MP is easy. The internal and external challenges are many and the pace of change slow and fraught with complications. People issues can be the prickliest to manage, since by definition the MP solves the problems no one else will.

These were among the many observations to emerge from the anonymous, candid responses of more than 70 MPs to a brief survey from INSIDE Public Accounting awhile back that shed welcome light on some of the most common frustrations and rewards they have experienced in the position. During this current period of uncertainty in the profession, their insights on some of the specific topics from that survey seem worth revisiting.

Partner Motivation

Partners are driven in their work by different things – be it money, recognition, prestige, respect or some combination of these – which is why MPs say a one-size-fits-all motivation theory simply won’t work. But getting to know partners on a “deep personal level” can draw out what motivates them, one MP says.

Many MPs say partners must be involved in setting firm goals, but they also need to be pushed and held accountable. Nevertheless, it can be difficult to balance the needs of individuals with the greater good of the firm, “especially if those actions don’t involve client service,” one MP says. It’s no surprise, then, that more than one MP commented in regard to the challenge of partner motivation: “It’s like herding cats.”

Beyond that common refrain, some of the MPs’ non-feline observations on the topic are applicable to a variety of situations, including:

“I wish someone had told me that most partners are happy with the status quo.”

“Sometimes it’s impossible to motivate partners. You can take away money, prestige, etc., but with today’s personnel shortage, they can just leave and someone will take them on at the same pay rate and benefit level.”

“Most CPAs are hardwired pessimists.”

“Figuring out what motivates them is challenging enough. Once you do that, you have to figure out how to best motivate them and keep the motivating factors aligned with the strategic plans of the firm.”

“Money is the No. 1 motivator that they don’t totally control. All else is based on self-motivation.”

“Not every partner is as successful as they think they are. Find what they need to keep working on, otherwise they coast.”

“Don’t spend time on the naysayers. Move on. Work with those who are enthusiastic and want to make it work. Recognize them, share the results and communicate often. Those who are naysayers will usually come around and adapt.”

“Use guaranteed payments and bonuses as the primary form of compensation rather than draws and distributions.”

“As much as individual partners will agree with required policy or necessary change, when the change touches them, the resistance can be as significant as one who overtly disagrees. The amount of managing partner time and energy necessary to maintain partner buy-in is significant.”

The Importance (and Limitations) of Consensus

When it comes to making big decisions, some MPs seek complete consensus on a range of issues, while some prefer to act quickly and inform partners afterward, and others only go to partners for big decisions. Many MPs said a small, efficient executive committee helps tremendously when the partner group gets too large, with one noting that a “democratic, very inclusive decision process” only works well if the partner group is eight or less.

The first thing an MP must do is determine which issues require consensus. One MP says, “I find the balance by deciding how much consensus to get, based on the issue. It is rarely good to make any decision quickly AND without consulting at least someone or a few persons. That said, sometimes time is of the essence and after at least a brief gut check with one or two others, you have to make the decision and prepare yourself to defend it without changing directions.”

Different MPs, not surprisingly, have different approaches to decision-making in their firms:

“We have set agreements and PICs of certain areas. They can make all decisions over their area and only certain decisions need an all-partner vote.”

“Only large decisions like new partner promotions and a merger or acquisition go to the full partner group. Some partners push back as they feel like they should have a say on all decisions, but that’s just not realistic. We have to get the work done.”

“I seek complete agreement. Will discuss to reach agreement among the group.”

“Communicate. Give everyone the opportunity to voice their opinions, but it must be clear that the MP will do what he/she believes is best for the firm given the fact that the MP knows more about the inner workings of the firm than anyone else in the group. It’s important that partners understand that it’s OK to not agree with the MP’s decisions, but they must accept them and allow the MP to do his or her job.”

One MP warns that consensus is not always best. “Sometimes decisions have to be made that are not popular. Many times decisions directly affect specific partners and they are probably not going to like the result. You are not the managing partner because you always please everyone. You are in that position because your partners trust you and your decision-making with their livelihood.”

Communication is, as always, a critical part of a well-functioning partner group. One-on-one time with partners is important to explain the whys and hows of issues that require tough decisions. MPs appreciate the ability to talk with a few partners who are willing to serve as a sounding board before decisions are made. There’s no such thing as over-communicating, and patience is key. As one MP put it, “Change is slower than you want it to be and never as easy as you expect it to be.”

From finding ways to motivate their people to determining how to best arrive at key decisions amid trying times and challenging circumstances, these are insights that many MPs may find worth revisiting in the here and now.

LEA Global Appoints New CEO

Tony Szczepaniak

Cleveland-based LEA Global, an association of independent accounting firms, has appointed Anthony Szczepaniak as CEO.

Szczepaniak’s career includes 15 years leading Fortune 500 corporate tax teams and 15 years in public accounting, including as a tax partner serving primarily middle market clients. He most recently led the Moore North America accounting and consulting firm association.

“Tony brings perspective from outside the industry with his corporate roles, inside the industry with his public accounting experience, and the very specific expertise gained in leading an international association,” says LEA global board chair and Fuller Landeau MP Michael D. Newton. “Under his leadership and growth mindset, we will further strengthen the LEA Global community and move forward into the future.”

Managing Partner Viewpoints from the Archives, Part I: Promoting Alignment, Parsing Advice

While deep industry knowledge, technical expertise and the ability to bring in business are all de rigueur for MPs, today’s leaders must also have the skills to handle the messier challenges of a rapidly changing business environment.

This was among the many observations to emerge from the anonymous, candid responses of more than 70 MPs to a brief survey from INSIDE Public Accounting awhile back that shed welcome light on some of the most common frustrations and rewards they have experienced in the position. During this current period of uncertainty in the profession, their insights on two topics from that survey feel particularly relevant and instructive.

What one thing do you wish someone told you when you became MP about aligning the firm behind a common vision?

The Importance of Alignment

MPs aim to make a common, firmwide vision their guiding light, encouraging everyone to work toward the same goals and operate with the same values in mind. It’s a huge challenge, but one of the most important parts of the top job. Respondents generally agreed that alignment is the top priority for any MP. Most recommended to start articulating the firm’s vision on the first day, making it clear and compelling, ensuring it fits with the partners’ individual goals and compensation plans, and remaining vigilant.

These MPs also noted that over-communicating the vision and embodying that vision in every decision and action were crucial components of getting the message across. It’s a goal that one respondent said requires him to be “as much psychologist as MP some days.” Some of the other comments on alignment from MPs included:

“I wish they had told me that this would take time, and that simply saying it once or twice or communicating it in one or two presentations would not be enough. Alignment can be a 12- to 24-month process if done well, so patience is needed to carry this out.”

“Do it sooner rather than later. Lack of common vision is a really big deal; you may not think so, but it really is.”

“Many partners have their own agenda and goals in mind. It is challenging to try to get them to change their goals to ones that would be more beneficial to the overall good of the firm.”

“Partners will say they are behind a vision but watch what they do more than what they say.”

“Compensation structures drive behavior and must align with the vision. If they aren’t aligned, compensation structure will dictate behavior.”

“You will have competing interests at the firm and making sure everyone is aligned on a compelling and differentiating vision will move the firm forward as one. If there is no common vision, the firm will be a sub-par performer.”

When alignment works, respondents said the rewards are palpable. One MP expressed pleasure in seeing everyone “pulling in the same direction,” after a strategic planning process that involved input from all parts of the firm. The result? A newly energized team.

What one piece of advice did you receive about being MP that didn’t turn out to be true?

Differentiating Between Good and Bad Advice

Most MPs were given advice about taking on the top job that turned out to be untrue, while many were relieved that some of the warnings were unneeded. In other words, take most advice going in with a grain of salt, including some of the unfounded advice that our MPs encountered on their way to the top job (accompanied by their comments):

Expect to make more money – “That hasn’t occurred to my satisfaction.”

You can’t please everyone – “While that may be true, we can seek to build positive relationships with all and show them that we care about them.”

It’s a miserable job – “It’s hard, a lot of work and a lot of stress, but it’s not miserable.”

It gets easier – “Turns out, if you grow and merge practices, that is not true.”

You are the boss – “The opposite is really the truth – you work for the benefit of everyone in your firm.”

Dealing with employees is the most difficult part of the job – “Dealing with the partners is more work.”

Keep paying partners more and they’ll follow you – “Partners want increased compensation and the right to challenge leadership and direction.”

Young partners will never develop business like the senior partners – “Our young partners have risen up HUGE and helped take the firm to a much higher and profitable level once those senior partners finally retired.”

Many MPs wouldn’t change a thing, despite misperceptions, stresses and the difficult decisions required. One respondent said that the “visionary/entrepreneurial aspects of the MP role far outweigh the challenges. It is a great opportunity to lead and have a lot of fun learning from peers.” Another added that “I love it, find it rewarding and wouldn’t want to do anything else. It has some frustrating moments, but by far, I love being an entrepreneur and building on the legacy we have started to create.”

These are the types of positive thoughts about the position that MPs will do well to keep in mind as they navigate the challenging waters ahead.

Looking Ahead Pays Off With High-Growth Service Lines, More Satisfied Workforce_Part Two

Lessons on predicting the future have been circulating throughout the profession for the last five years. The Anticipatory Organization™ Accounting & Finance Edition teaches the difference between “hard trends,” things that will happen, versus “soft trends,” things that may happen.

By examining hard trends related to digital disruption, an aging population and new regulations, firms have been making concrete changes.

Maryland Association of CPAs (MACPA) president and CEO Tom Hood says client accounting services is an example of an opportunity linked to a hard trend in demographics. Bookkeepers are growing older, CFOs are retiring and the shortage of talent is continuing. For many firms, managing finances for clients as a CFO-for-hire is one of their fastest-growing practices.

Consider the results of these firms: Ridgeland, Miss.-based HORNE (FY18 net revenue of $91.3 million), Gaithersburg, Md.-based DeLeon & Stang, Salina, Kan.-based K·Coe Isom (FY19 net revenue of $69.4 million), York, Pa.-based Stambaugh Ness (FY18 net revenue of $15.1 million) and Canfield, Ohio-based Hill Barth & King, or HBK, (FY18 net revenue of $93.9 million).

The firms have had better success with innovation projects since they are based on hard trends, and they are having more meaningful conversations with clients. Leaders have learned to narrow their opportunities to one or two “must-dos,” while staff are accepting change more readily and enjoying new ways to serve clients.

Advancements:

  • HORNE, seeing cybersecurity problems coming down the road, bought a small tech company in 2016 and created HORN Cyber Solutions, one of the fastest-growing practices at the firm.
  • HORNE created a mobile application for its government services division that allows property owners to take photos of damages during a disaster and easily file for recovery programs.
  • HORNE and K·Coe have implemented value billing since technology allows more work to be done in far less time.
  • HBK leaders and staff are talking to their clients about the future, discussing trends like AI and 3-D printing. HBK acquired a technology consulting firm last year to add technical experts and services to its subsidiary HBK IT.
  • Stambaugh Ness, which sets aside weekly meetings to apply hard trends to their industries, is distributing The Anticipatory Organization™ model to clients to help them plan projects that give them a competitive edge.
  • K·Coe’s research into hard trends by industry has led to trade show presentations, white papers and more consulting opportunities.
  • Deleon and Stang is rethinking the audit process to make it future-oriented rather than historical, focusing on business succession planning services and consulting with clients in new ways.

“I just think as CPAs we’ve got to be more educated about the future because it’s coming faster,” Hood says. “That’s why I feel like this program – for us as an association and the folks working with it – it’s a game changer.”

As CPAs Learn To Anticipate The Future, An Unimaginable Crisis Hits: Part One. Read Part One.

As CPAs Learn To Anticipate The Future, An Unimaginable Crisis Hits_Part One

For five years, the Maryland Association of CPAs (MACPA) and futurist Daniel Burrus have been evangelists for identifying future trends and capitalizing on opportunities they present today.

The concepts taught in The Anticipatory Organization™ Accounting & Finance Edition, co-created by Burrus and experts provided by MACPA, has led firms to make fundamental changes – new service offerings they hadn’t considered, for example, or a new mindset to approach clients with future-looking advice and guidance.

Then the coronavirus swept through China, Europe and the United States, killing tens of thousands worldwide. Businesses closed their doors, and one after another, states issued stay-at-home orders. Unemployment is up; the stock market is down, way down.

Was there any way to predict the coronavirus and its effects using the learning model? Can it prepare accounting firm leaders for once-in-a-lifetime events such as this?

Tom Hood

Tom Hood

MACPA president and CEO Tom Hood says no. And yes.

No, predicting the coronavirus itself wasn’t possible. Hood says it’s a black swan event – rare, severe and generating assertions after the fact that we should have seen it coming.

But yes, The Anticipatory Organization™ teaches participants to act on what Burrus calls hard trends, or future facts. The entire MACPA staff, along with firms, took all 28 lessons, offered through MACPA’s Business Learning Institute. According to the teaching model, firms can be certain of changes in technology, demographics and regulations. Undeniably, technology will continue to advance, the population will continue to age, and new regulations will continue to evolve.

Using the Training to Get Ahead of the Coronavirus Effects

MACPA was ready on the regulations front. The AICPA led the effort to extend tax deadlines in light of the COVID-19 shutdowns, but before the parent organization said “go,” MACPA had secured signatures from the two Maryland senators on a letter asking Treasury Secretary Steven Mnuchin for relief.

Additionally, in response to shutdowns of non-essential businesses ordered in New York, Pennsylvania and New Jersey, MACPA planned for Maryland to do the same. Any profession left off the “essential” list in the initial executive order would have to petition the state to be included afterward – a process that could take weeks. MACPA emailed the governor and other state officials on Saturday, March 21. They responded right away, saying accountants would be considered essential, and the shutdown came Monday.

Another to-be-expected event on the regulations front? A flurry of state and federal relief packages. “When government gets caught in a big thing like this, they react and put legislation out. It’s a huge opportunity,” Hood says. MPs can help their clients react quickly to take advantage of programs to keep their businesses afloat.

As for technology, firms that had already moved to the cloud and set up the infrastructure to allow remote working – a hard trend seen years ago – are faring much better than those that lagged behind and are scrambling now.

Observers have long said that technology changes are exponential, but the spread of the coronavirus reveals what that really looks like, Hood says. At one point, COVID-19 cases in New York were doubling every three days, for example.

Playing it Safe: The Worst Thing to Do Now

Daniel Burrus

That’s why futurist Burrus says that looking ahead and acting now, or “pre-solving” problems, is critical. Burrus, author and CEO of Burrus Research, says that in his work with more than 1,000 companies, 93% of the CEOs told him that most of the problems they’re dealing with now could have been pre-solved a year earlier.

Agility is important as well because no one can predict everything, but agility means reacting quickly after a disruption occurs, Burrus says. That’s why coasting isn’t an option. Agility has less value every year because you can’t react fast enough.”

This is true even now, in the midst of the massive global disruption of COVID-19. Be agile, but don’t take a wait-and-see attitude. Hard trends won’t wait. The coronavirus will not stop digital disruption. In fact, the opposite will occur. Focus on new ways of helping clients get through the crisis. Burrus says accounting firms can be the disruptors – positive disruptors.

Burrus poses this question: “How will you and your organization be remembered after it is over? Will you squander this defining moment, or will you do something about it now?”

Part Two: Looking Ahead Pays Off With High-Growth Service Lines, More Satisfied Workforce. Read Part Two.