Earmark Team

5 Key Metrics for Boosting Manufacturing Profitability: Insights from a CPA Industry Expert

Earmark Team · May 30, 2024 ·

As a CPA serving manufacturing clients, you hold the key to unlocking hidden profitability and driving sustainable growth. By strategically managing the following five financial and operational metrics, you can help your clients navigate industry complexities and achieve long-term success.

In a recent episode of the Best Metrics podcast, Leslie Boyd, a principal at CLA’s Manufacturing Industry Group, shared her expertise on the key metrics CPAs should leverage to help their manufacturing clients thrive. With over 15 years of experience in public accounting, Leslie provides valuable insights into using these metrics to identify opportunities and guide clients toward increased profitability and growth.

EBITDA: The Cornerstone of Manufacturing Profitability

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is a critical metric that indicates profitability and cash flow health. Banks and investors rely heavily on EBITDA when assessing a company’s creditworthiness and growth potential.

“If you have a negative EBITDA, it’s probably a pretty clear indicator that you are going to struggle to generate cash flow,” Leslie warns. “And quite frankly, if you’ve got banks looking at you and you’re struggling to generate positive EBITDA, they’re going to be hesitant to lend to you.”

EBITDA also plays a vital role in business valuation and succession planning. With an estimated $140 trillion in wealth expected to change hands over the next several years due to the aging baby boomer generation, manufacturing companies must focus on maximizing their EBITDA to ensure a smooth transition and secure the best possible valuation for their business.

To help your clients improve their EBITDA, consider the following strategies:

Identify opportunities to reduce costs through operational efficiencies, such as lean manufacturing practices or automation.
Explore ways to increase revenue through product innovation, market expansion, or strategic partnerships.
Optimize pricing strategies to ensure competitively priced products while maintaining healthy profit margins.
Implement effective financial management practices, such as budgeting, forecasting, and cash flow management, to minimize financial risks and maximize profitability.

Employee Retention: The Hidden Driver of Manufacturing Success

While financial metrics like EBITDA are essential, CPAs must also recognize the critical role that employee retention plays in driving manufacturing profitability.

As Leslie Boyd explains, high turnover rates can lead to many challenges that directly impact a company’s bottom line: “If I’ve got turnover, then I’m retraining people all the time. And if I’m retraining those people, then I probably have a lot of training costs, probably have a significant amount of scrap rate as well. And it could also be indicative of the fact that I’ve got culture issues or other underlying issues going on.”

The costs associated with constantly replacing and retraining employees can quickly add up, eroding profit margins and hindering growth. Moreover, high turnover can lead to decreased productivity, increased scrap rates, and potential quality control issues, damaging a company’s reputation and competitiveness.

To help your manufacturing clients improve employee retention, consider the following strategies:

Conduct employee engagement surveys to identify areas for improvement in job satisfaction, work environment, and company culture. Use the results to develop targeted initiatives that address employees’ needs and concerns.
Encourage open communication and feedback between management and employees to foster a sense of trust and collaboration. Regularly schedule one-on-one meetings and team discussions to ensure employees feel heard and valued.
Invest in employee training and development programs to help workers acquire new skills and advance their careers within the company. Offer a mix of on-the-job training, workshops, and external courses to cater to different learning styles and needs.
Implement competitive compensation and benefits packages to attract and retain top talent. Regularly review industry benchmarks and adjust compensation to ensure your clients remain competitive in the job market.
Recognize and reward employee contributions to show appreciation and boost morale. Implement a formal recognition program that celebrates individual and team achievements and encourages managers to provide regular feedback and praise.

Inventory Turnover: Optimizing Cash Flow and Profitability

Inventory turnover is another crucial metric that CPAs should focus on when working with manufacturing clients. This ratio measures how quickly a company sells through its inventory, providing insight into its operational efficiency and cash flow management.

Leslie shares a powerful case study highlighting the impact of improving inventory turnover on a manufacturing company’s financial performance: “We had a company that really got themselves into some issues post-COVID. And many companies did. They had $50 million of inventory and we worked it down to 10 million. And you can imagine how much cash that unlocks on your balance sheet when you’re able to do that.”

This example demonstrates how optimizing inventory levels can free up significant amounts of cash, which can then be reinvested into the business or used to improve liquidity. By reducing the amount of money tied up in inventory, manufacturing companies can improve their cash flow, reduce carrying costs, and ultimately enhance their profitability.

To help your clients improve their inventory turnover, consider the following strategies:

Implement just-in-time (JIT) inventory management practices to minimize the amount of inventory on hand while ensuring that materials are available when needed. This approach involves closely coordinating with suppliers and streamlining production processes to reduce lead times and minimize waste.
Use data analytics and forecasting tools to predict demand more accurately and avoid overstocking or stock outs. Leverage historical sales data, market trends, and customer insights to develop more precise demand forecasts and optimize inventory levels accordingly.
Collaborate with suppliers to establish more flexible delivery schedules and reduce lead times. Work with key suppliers to implement vendor-managed inventory (VMI) programs or consignment stock arrangements that allow for more responsive replenishment and reduced inventory carrying costs.
Regularly review and adjust safety stock levels to balance minimizing inventory costs and maintaining adequate buffer stock. Use statistical methods to calculate optimal safety stock levels based on demand variability, lead times, and service level targets.
Implement lean manufacturing principles to streamline production processes and reduce waste. Conduct value stream mapping exercises to identify non-value-added activities and implement continuous improvement initiatives to eliminate waste and improve efficiency.

Value Added Revenue and Capacity Utilization: Unlocking Hidden Profitability

Value-added revenue and capacity utilization are often overlooked metrics that can significantly impact a manufacturing company’s profitability. As Leslie Boyd explains, value-added revenue represents the true value that a company creates through its production process, while capacity utilization measures how efficiently a company is using its available resources.

Essentially, value-added revenue focuses on the incremental value a manufacturer generates by transforming raw materials into finished goods, excluding the materials’ cost. By analyzing this metric, companies can identify opportunities to increase the profitability of their products or services by optimizing production processes, reducing waste, or finding ways to add more value for customers.

On the other hand, capacity utilization measures how much of a company’s available production capacity is used at any given time. Many manufacturers operate in a fixed-cost environment, where a significant portion of their costs remain constant regardless of production volume. By increasing capacity utilization, companies can spread their fixed costs over larger units, reducing the cost per unit and improving overall profitability.

To help your clients improve their value-added revenue and capacity utilization, consider the following strategies:

Conduct a thorough analysis of the company’s production processes to identify areas where value can be added or waste can be eliminated. Use tools like value stream mapping and process flow diagrams to visualize the current state and identify improvement opportunities.
Encourage the adoption of lean manufacturing principles to streamline operations and reduce non-value-added activities. Implement initiatives like 5S, kaizen events, and total productive maintenance (TPM) to improve efficiency, reduce downtime, and increase value-added revenue.
Help your clients understand their fixed and variable costs and how they impact profitability at different production levels. Use cost-volume-profit (CVP) analysis to determine the breakeven point and identify opportunities to optimize the cost structure.
Work with your clients to identify opportunities to increase capacity utilization, such as by accepting additional work or optimizing production schedules. Conduct a thorough analysis of capacity constraints and develop strategies to remove bottlenecks and improve throughput.
Assist your clients in developing pricing strategies that accurately reflect the value they provide to customers and ensure adequate profitability. Use value-based pricing techniques to capture the full value of the company’s products or services and avoid leaving money on the table.

Becoming a Trusted Advisor: Guiding Your Manufacturing Clients to Success

As a CPA, your role extends beyond crunching numbers and preparing financial statements. By understanding and leveraging the key metrics discussed in this episode, you can position yourself as a trusted advisor to your manufacturing clients, helping them navigate the complexities of their industry and achieve long-term success.

To become an indispensable partner to your clients, consider the following approaches:

Proactively educate your clients on the importance of metrics like EBITDA, employee retention, inventory turnover, value-added revenue, and capacity utilization. Help them understand how these metrics impact their financial performance and provide guidance on improving them.
Review your clients’ financial and operational data regularly to identify trends, opportunities, and potential challenges. Use this information to provide insights and recommendations that help your clients make informed decisions and stay ahead of the curve.
Collaborate with your clients’ management teams to develop and implement strategies that drive profitability and growth. This may involve working with other departments, such as operations, human resources, or sales, to ensure a holistic approach to business improvement.
Stay up-to-date on industry trends, best practices, and emerging technologies that can help your clients optimize their operations and gain a competitive edge. Share this knowledge with your clients and help them evaluate the potential impact of these developments on their business.
Foster open and transparent communication with your clients, regularly checking in to discuss their goals, challenges, and concerns. By building strong relationships based on trust and mutual understanding, you can become a valuable resource that your clients rely on for guidance and support.

To Learn More, Listen & Subscribe to “Best Metrics”

To learn more about how you can help your manufacturing clients unlock hidden profitability and drive sustainable growth, listen to the full podcast episode of Best Metrics featuring Leslie Boyd. With her wealth of experience and practical advice, Leslie provides a roadmap for CPAs looking to take their manufacturing advisory services to the next level.

The Psychology of Fraud: Why Even Experts Fall Victim to Deception

Earmark Team · May 29, 2024 ·

In the early 2000s, Bernie Madoff’s multi-billion-dollar Ponzi scheme came crashing down, revealing a shocking truth: even seasoned financial experts and savvy investors had fallen victim to his deception. Despite their years of training and experience in detecting fraud, these professionals had been duped by Madoff’s charming demeanor and the allure of steady returns.

This raises the question: if even the most skilled among us can be fooled, what chance do the rest of us have against the psychological tactics employed by fraudsters?

In this thought-provoking episode of “Oh My Fraud,” hosts Caleb Newquist and Greg Kyte delve into the complex world of fraud detection and prevention with guests Dan Simons and Chris Chabris.

Join us as we explore how fraudsters capitalize on human psychology to deceive their targets, why even highly trained professionals struggle to detect and prevent fraud effectively, and what can be done to enhance critical thinking training and mitigate the impact of inherent biases on decision-making.

What Fraudsters Understand About Human Psychology

To understand the challenges in detecting and preventing fraud, it’s crucial to recognize the psychological tactics fraudsters employ. One of the key vulnerabilities they exploit is people’s tendency to focus solely on the information presented to them without seeking additional relevant details.

As Chris Chabris points out, “[Fraudsters] know that when people focus on one thing and process the information that’s in front of them or that’s been put before them, they’re very unlikely, or at least less likely to go and look elsewhere for other kinds of relevant information. People will often make a decision based just on what’s in front of them, even when other information they don’t have could be just as important or more important to making the decision.”

By capitalizing on this cognitive bias, fraudsters can lead individuals to make decisions based on incomplete information, making them more susceptible to fraud. They craft compelling narratives and present information in a way that draws people in while skillfully omitting details that might raise suspicion.

This tactic is particularly effective because it takes advantage of our natural inclination to trust the information we’re presented with, especially from a seemingly credible source. As a result, even those who consider themselves savvy and skeptical can fall victim to fraud if they don’t actively seek out additional information and question the narrative they’re being sold.

Overconfidence and the Illusion of Being a Good “Bullshit Detector”

Another psychological vulnerability that fraudsters exploit is overconfidence in one’s ability to detect deception. Paradoxically, this overconfidence can make individuals more vulnerable to fraud.

Dan Simons illustrates this point with an example from the world of magic: “Magicians are very good at giving people a false story. They give you a narrative, they make you think, here’s what I’m doing when they’re actually doing something totally different. So all they have to do to fool somebody who’s a good critical thinker is give them a possible explanation for the magic effect that’s wrong. And if they think they’ve discovered it themselves, they lock on to it.”

Like magicians, fraudsters can exploit overconfidence by providing false explanations that appeal to a person’s sense of having “figured it out.” When people believe they’ve uncovered the truth, they often overlook other potential explanations or red flags.

This psychological vulnerability can affect even the most critically minded individuals. When we’re overconfident in our ability to detect deception, we may let our guard down and become less likely to question our assumptions or seek out additional information.

As a result, those who pride themselves on being good “bullshit detectors” may be more susceptible to fraud in certain situations. By believing they’ve outsmarted the fraudster, they can fall right into the trap set for them, failing to recognize the deception until it’s too late.

Professional Skepticism in Accounting and Its Limitations

One might expect that professionals in fields like accounting, auditing, and journalism, trained in critical thinking and skepticism, would be better equipped to detect and prevent fraud. However, the reality is that even these professionals face significant challenges in combating fraud effectively.

Dan Simons states, ” Auditors, journalists and scientists are all supposed to be trained in critical thinking. They all get some training in critical thinking and how to ask questions and when to dig further. But they’re all subject to the same sorts of biases that we have.”

These biases can cloud judgment and make it difficult to detect fraud, even when one is actively looking for it. Some of the biases that can affect professionals include:

Confirmation bias: The tendency to seek information that confirms one’s beliefs and ignore evidence that contradicts them.
Anchoring bias: The tendency to rely too heavily on the first piece of information encountered when making a decision.
Availability bias: The tendency to overestimate the likelihood of events that are easily remembered or readily available in one’s mind.

To combat fraud effectively, professionals must be aware of these biases and actively work to mitigate their impact on decision-making. This may involve implementing additional strategies and procedures, such as:

Seeking out dissenting opinions and alternative explanations
Conducting thorough due diligence and fact-checking
Using checklists and other tools to ensure a systematic approach to fraud detection
Engaging in ongoing training and education to stay up-to-date on the latest fraud schemes and detection methods

By recognizing the limitations of professional skepticism and taking proactive steps to address them, professionals in accounting, auditing, and related fields can improve their ability to detect and prevent fraud. However, it’s an ongoing challenge that requires constant vigilance and a willingness to question one’s assumptions and biases.

The Bottom Line: Staying Vigilant in the Face of Fraud

As fraud schemes become increasingly sophisticated, accounting and auditing professionals must stay vigilant and adapt their strategies accordingly. This may involve incorporating insights from psychology and behavioral science into professional training programs and fostering a culture of healthy skepticism and critical thinking within organizations.

Detecting and preventing fraud is a shared responsibility that requires ongoing collaboration and communication between professionals, regulatory bodies, and the wider public. We can create a more resilient and fraud-resistant society by working together and staying informed.

To learn more about the fascinating world of fraud and the psychological battleground it creates, be sure to listen to this captivating episode of “Oh My Fraud.”

Intuit’s Tightrope Act: Balancing Innovation and Accountant Needs in a Shifting Landscape

Earmark Team · May 29, 2024 ·

Intuit has emerged as a leader in the evolving accounting software landscape, continuously pushing the boundaries of innovation and ecosystem development. However, as the company strives to stay ahead of the curve, it must also navigate the delicate balance between introducing new features and addressing the specific needs of its accountant user base.

In a recent Unofficial QuickBooks Accountants podcast episode, Hector Garcia, CPA and Founder of Right Tool for QuickBooks, and Alicia Katz Pollock, CEO and Founder of Royal Wise Solutions, delve into the challenges and opportunities Intuit faces as it seeks to maintain this balance.

Intuit’s Successes

Hector and Alicia offer unique perspectives on Intuit’s successes and challenges.

Hector commends the company’s exceptional educational content for accountants, noting that “it’s above and beyond the call of duty. They get that absolutely right.” He also praises Intuit’s ability to gather and listen to feedback, describing the company as “a feedback gathering machine.” Furthermore, Hector highlights the ease with which developers can integrate with Intuit’s platform, citing it as the “easiest one to work with” among many companies.

On the other hand, Alicia emphasizes Intuit’s ability to foster a strong sense of community among its users, creating a passionate and dedicated user base that actively engages in helping one another. She stresses the importance of embracing change in the accounting industry.

A Challenging Transition to QuickBooks Online

A key challenge discussed is transitioning from QuickBooks Desktop to QuickBooks Online.

Hector says, “Moving to a single platform on the cloud is the right decision. The current state of things is rocky. We don’t have all the features we want. Desktop has more than online. There’s tons of glitches.” While rocky, Hector believes moving to a single cloud-based platform is the right decision for QuickBooks’s future.

To successfully navigate this transition, accountants must:

Embrace change and adapt to new workflows.
Leverage Intuit’s educational resources and training programs to build expertise.
Communicate openly with clients about the benefits and challenges of the transition.
Collaborate with peers to share best practices and troubleshoot issues.

Leveraging Third-Party Apps and Integrations

Effectively leveraging third-party apps and integrations is critical to thriving in the QuickBooks ecosystem. Hector emphasizes the ease with which developers can create integrations with QuickBooks Online: “The ecosystem of apps that integrate with QuickBooks is huge. The amount of options that you have in terms of using some other app to talk to QuickBooks is huge.”

To make the most of these opportunities, accountants should:

Explore the QuickBooks App Store and familiarize yourself with the available integrations.
Identify apps that streamline workflows, automate tasks, and enhance client services.
Invest time in learning and implementing relevant apps to improve efficiency and value.
Educate clients on the benefits of using integrated apps to manage their finances more effectively.

The Road Ahead: Balancing Innovation and User Needs

As Intuit continues to balance innovation and ecosystem development with the needs of its accountant user base, it must remain committed to open communication, transparency, and adapting to its users’ evolving needs.

By leveraging its strengths in areas like educational resources, user-friendly onboarding, and third-party app integrations, Intuit has demonstrated its commitment to empowering accounting professionals. However, more work remains in effectively prioritizing and addressing accountants’ needs as Intuit gathers feedback, integrates new products, and navigates the cloud transition.

For accountants, embracing change, adopting a positive mindset, and thriving in the face of evolving technologies and business practices will be key. As Alicia notes, “You just can’t be afraid of change. You have to embrace it.”

To dive deeper into the insights shared by Hector and Alicia and to learn more about how you can navigate the evolving landscape of accounting software, be sure to listen to the Unofficial QuickBooks Accountants podcast.

Alicia Katz Pollock’s Royalwise OWLS (On-Demand Web-based Learning Solutions) is the industry’s premier portal for top-notch QuickBooks Online training with CPE for accounting firms, bookkeepers, and small business owners. Visit Royalwise OWLS, where learning QBO is a HOOT!

Harnessing AI’s Power to Transform Your Firm (No Coding Required)

Earmark Team · May 27, 2024 ·

You’re sipping your morning coffee, scrolling through your inbox, when you see it – yet another anxious client email asking about their tax return status. You sigh, knowing the next 15 minutes will be spent digging through practice management software and crafting a reply. But what if there was a better way?

In a recent episode of The Accounting Podcast, hosts Blake Oliver and David Leary reveal how they’re using AI at their company, Earmark, to boost productivity and client service without resorting to fee hikes.

Their big idea? By strategically integrating AI into your existing processes and datasets, you can unlock massive efficiency gains, deliver proactive client communication, and increase profits – without charging a penny more.

In this deep dive, we’ll explore two key themes from Blake and David’s AI playbook:

The AI Pricing Paradox: Is “smarter” software a justification for higher fees, or a tool for doing more with less?
The Power of Practical AI: How no-code tools like Zapier can help you automate routine client communication by connecting siloed data.

Along the way, we’ll challenge some common AI misconceptions and share actionable tips for kickstarting your own AI experiments. Let’s get started!

The AI Pricing Paradox: Efficiency Driver or Fee Inflator?

A recent Thomson Reuters survey found that 40% of tax pros believe AI will enable them to charge higher fees, with a bold 2% even predicting “significant” rate bumps.

But as early AI adopters, Blake and David aren’t buying the hype. In their experience, AI’s magic is its ability to supercharge efficiency, not justify steeper invoices.

“At Earmark, we’re seeing AI drive 4-8x productivity gains,” Blake reports. “That means we can slash labor costs and pass those savings on to clients.”

Rather than inflating prices, they see AI as a powerful deflationary force, exerting downward pressure on fees as more firms reap its efficiency rewards.

Cutting Through the AI Fog

So, what explains the chasm between the survey respondents’ bullish predictions and Blake and David’s more measured take? They chalk it up to a simple truth: many accountants haven’t logged enough hands-on hours with AI to separate hype from hard-won insight.

In other words, the survey likely captures more AI daydreams than real-world road tests.

Bidding Billable Hours Farewell?

Looking ahead, Blake and David predict AI’s relentless efficiency march will sound the death knell for billable hours, forcing firms to embrace flat-fee and value-based pricing.

Imagine an AI-augmented staffer cranking out in one hour what used to take eight. The old “bill-for-time” model crumbles fast in that brave new world.

Forward-thinking firm leaders proactively align their pricing with delivered value, not logged hours, positioning themselves to thrive in an AI-transformed marketplace. Luddites clinging to the billable hour risk being left in the dust.

The Power of Practical AI: Automating Client Comms with Zapier

Pop quiz: what’s the one email every accountant dreads? If you guessed “client asking for a status update,” you’re not alone. But what if you could banish those pesky requests for good without lifting a finger?

Enter Blake’s ingenious AI hack, courtesy of the no-code automation platform Zapier. With just a few affordable tools and clever stitching, he conjured an AI assistant that auto-responds to client status checks – no human intervention required.

Anatomy of an AI Email Wizard

Here’s a peek under the hood of Blake’s automation magic:

A client sends a status request email
Zapier AI parses the sender’s address
AI matches the address to the client database (in this case, a Google Sheet)
Presto! AI plucks client info like name, return status, and open items
AI whips up a bespoke email with all the key details, fires it off to the client

The best part? The whole thing unfolds in seconds, without an accountant lifting a finger.

Slashing Labor Costs, One Zap at a Time

Let’s do some back-of-napkin math. Manually checking a return status and pecking out an update could easily take 15 minutes. Multiply that by dozens of pings from antsy clients, and you’re wasting hours.

Blake’s AI sidekick liberates your team for higher-impact (and higher-profit) work. Even better, by proactively pinging clients, you can short-circuit many requests before they hit your inbox.

Anyone Can Build an AI Assistant

You don’t need a computer science degree or a seven-figure software budget to conjure your own client comms wizard. As long as your client data lives in a structured format (yes, even a Google Sheet), you can sic an AI on it to automate those repetitive pings.

Case in point: Blake spun up his prototype in under an hour.

Your AI Swiss Army Knife

Once you’ve caught the automation bug, the possibilities are endless:

Pinging clients about missing paperwork
Generating fee quotes and engagement letters
Confirming estimated tax payments

If it’s a predictable client exchange, there’s a good chance AI can handle it. Think of every minute you’ll save – and every billable hour you’ll free up – by outsourcing those routine pings to your AI email genie.

AI as a Catalyst for Reinventing the Billing Model

But AI’s true potential lies not in isolated tools, but in its power to reimagine firms from the spreadsheets up. In an industry sickened by a dwindling talent pool and the specter of commoditization, smart automation could be a potent antidote, freeing weary accountants to rediscover the strategic magic that drew them to the profession in the first place.

Imagine an AI-powered firm where every employee is a virtual CFO, unencumbered by the drudgery of data entry and free to build deep client relationships. AI, in other words, could be the catalyst for a new golden age of accounting – but only if we’re brave enough to change.

Embarking on Your AI Journey

The AI revolution is no longer a distant dream for accounting firms – it’s a present-day reality full of potential for those ready to embrace it. The question is not if your firm will adopt AI, but when and to what extent.

If you’re eager to start with AI, the best approach is to start small. Choose a single process and focus on automating it. Blake and David’s podcast offers a practical, actionable blueprint for implementing your first AI workflow in a week.

The path to a more efficient, profitable, and fulfilling accounting future begins with a single automated process, a single minute saved, and a single client impressed. The choice is yours: will you watch from the sidelines as others reap the benefits of AI, or will you take the helm and chart your course?

The opportunity is here, and the future is bright. Your AI journey awaits – it’s up to you to take the first step.

An Accounting Firm Owner’s Guide to Strategic Technology Adoption

Earmark Team · May 23, 2024 ·

Is your accounting firm’s technology stuck in the past? In a world where clients expect seamless digital experiences and remote work is the norm, relying on outdated, disconnected software can be a recipe for inefficiency, frustration, and even lost business. But with so many options on the market, how do you choose the right tools to propel your firm forward?

In a recent Earmark Podcast episode, Blake Oliver shared his framework for strategic technology adoption. He argued that firms that intentionally select software to streamline operations, enhance client experience, integrate smoothly, and enable standardization will be best positioned to thrive.

Blake walked through the key software categories firm leaders need to consider, from proposal management to artificial intelligence (AI). He emphasized the importance of choosing tools that are easy to use, align with the firm’s unique needs and processes, and facilitate client collaboration.

Proposal Software

Blake recommended proposal software options that allow firms to quickly generate professional, standardized proposals, collect e-signatures and payments, and kick off projects seamlessly. “You cannot standardize the service delivery to your clients if you don’t have standard terms in your engagement letters,” he noted.

For example, Practice Ignition and Anchor allow firms to create templated proposals with standardized terms, pricing, and payment schedules. Clients can quickly review and sign off on engagements digitally, reducing friction and ensuring consistency across the board.

Practice Management

For practice management, Blake stressed the importance of workflow tools that centralize client communications, automate tasks, and provide visibility across the firm. With remote work now the norm, he argued, “If you’re in a remote environment, how can you work remotely without having workflow software?”

Platforms like Karbon, Canopy, and Client Hub offer client portals, task management, team collaboration, and insights reporting features. By standardizing processes and centralizing information in one system, firms can boost efficiency, transparency, and accountability, even with distributed teams.

Blake shared a cautionary tale from his experience, where choosing the wrong practice management tool cost his firm weeks of lost productivity. The lesson? Prioritize ease of use and team buy-in when evaluating options to ensure successful adoption.

General Ledger & Payroll

In the realm of general ledger and payroll, Blake advised firms to curate a lean tech stack of best-fit solutions. Instead of accommodating every possible client need, he suggested choosing one or two options that cover the bases for core client types, focusing on scalability, integration, ease of use, and reporting capabilities.

For the general ledger, that might mean standardizing on QuickBooks Online for most clients, with Sage Intacct reserved for those with more complex needs. On the payroll front, Blake highlighted Gusto and OnPay as user-friendly options that automate compliance and integrate with popular GL systems.

Blake emphasized the goal of going deep on a few core platforms rather than spreading yourself thin across a dozen different tools. By strategically limiting your tech stack, you can streamline training, support, and processes while still meeting diverse client needs.

Accounts Payable & Banking

Turning to bill pay, Blake highlighted the spectrum of solutions available, from all-in-one platforms like BILL for larger clients with complex approval workflows to more streamlined options like Relay for smaller businesses. He emphasized the key is to match the tool to the client’s specific needs and design efficient processes around it.

For example, a large nonprofit with multiple departments and strict controls might benefit from BILL’s advanced approval routing and audit trails. A small business, on the other hand, may prefer Relay’s simplified workflow and flat-fee pricing. The right fit depends on factors like transaction volume, number of approvers, and accounting complexity.

Whichever tool you choose, Blake stressed the importance of clear client communication and well-defined processes. Establish expectations around bill submission, approvals, and payment timelines upfront, and consider designating a dedicated team member to manage the AP queue and troubleshoot any issues.

Artificial Intelligence

Finally, Blake touched on the exciting frontier of AI, noting that ChatGPT’s new offering for teams, coupled with Microsoft’s significant investment in OpenAI, has made the technology more viable for accounting firms than ever. He advised listeners to start exploring use cases like drafting routine documents.

For instance, firms could leverage ChatGPT to generate first drafts of engagement letters, email responses, or work papers based on predefined parameters. By automating the initial content creation, staff can focus on more strategic work like analysis and advisory.

However, Blake cautioned against an “AI-first” approach. Tools like ChatGPT should augment human expertise, not replace it. He recommended starting with narrow, well-defined pilots and keeping humans in the loop to review and refine AI-generated content.

The Path Forward

Across all these categories, Blake underscored the importance of approaching technology decisions with intention and a focus on client needs. Flashy features may generate buzz, but the true test of any tool is how well it supports your firm’s service delivery and client experience.

By aligning your tech stack with your strategic priorities, designing efficient processes, and investing in training and change management, you can harness the power of modern software to drive meaningful results. The key is to start small, iterate often, and never lose sight of the humans at the heart of your business’s heart – your team and your clients. Ready to dive deeper into Blake’s strategic technology playbook? Listen to the full episode and start charting your firm’s path to digital success.