Earmark Team

Embracing the Remote Work Paradigm in Accounting

Earmark Team · May 13, 2024 ·

In a world where the nature of work is rapidly evolving, the accounting industry finds itself at a crossroads. As remote work, alternative arrangements, and AI automation become increasingly prevalent, firms must adapt to stay competitive and attract top talent.

In episode 380 of The Accounting Podcast, hosts Blake Oliver and David Leary explore the shifting dynamics of work in the accounting industry and discuss how firms can navigate this uncharted territory to create a more flexible, balanced, and fulfilling work environment.

Navigating the Salary Landscape: Remote, Hybrid, and In-Office Work

A recent study by ZipRecruiter sheds light on the salary disparities between remote, hybrid, and in-office workers.

David shares the findings: “Fully in-office workers average $82,000 on average. Hybrid workers average $60,000 on average. So basically, it’s almost $22,000 less than in office. Fully remote workers get about $75,000 on average. So, in the office, you’re making more; fully remote you’re making more. But if you’re kind of hybrid, not making as much.”

The study also suggests that high-performing staff prefer remote work and can command higher salaries. This trend underscores the need for the accounting industry to adapt to the changing preferences of top talent and remain competitive in attracting and retaining skilled professionals.

H&R Block’s Successful Transition to Permanent Remote Work

The shift towards remote work is not just a theoretical concept; it’s a reality many companies already embrace.

H&R Block’s experience provides valuable insights into how a major player in the accounting industry successfully transitioned to permanent remote work. As the company continued to grow, they hired corporate employees who were fully remote. It quickly became apparent that high-performing staff preferred remote work.

Jeff Jones, H&R Block’s CEO, put it simply: “There isn’t a good reason why we would do that. There’s just no reason to have a required to come back to office policy.”

H&R Block’s experience demonstrates that even large, established companies can adopt remote work and benefit from focusing on outcomes rather than micromanaging employee time and location.

The Productivity Puzzle: Debunking Myths About Remote Work

One of the most common concerns about remote work is its impact on productivity.

However, as Blake points out, “Studies on remote work productivity suggest that it is generally a net zero impact. While there may be some inefficiencies with remote work, these are offset by increased employee satisfaction and the elimination of commute times.”

It’s important to recognize that the true cost of requiring employees to work in the office extends beyond the walls of the workplace. Expenses like gas, car depreciation, and the additional cost of living close to the office can add up quickly for employees.

By offering remote work options, firms can help their staff save money and reduce stress, leading to a happier, more productive workforce.

The Four-Day Workweek: Challenging Traditional Work Arrangements

In addition to remote work, alternative work arrangements like the four-day workweek are gaining traction.

Blake notes, “In the UK, a pilot involving 61 organizations implementing a four-day workweek found that 89% continued with the model after a year, with many making it permanent. The study reported positive impacts on staff well-being, lower turnover, and easier recruitment.”

The success of four-day workweeks in other industries raises questions about the accounting industry’s traditional approach to work, particularly during busy seasons. Many firms still require staff to work weekends during peak periods despite evidence suggesting that alternative arrangements can lead to better employee and firm outcomes.

The future of work in accounting is not a distant concept; it’s already here. As the industry faces unprecedented change and disruption, it’s clear that the traditional ways of working are no longer sufficient. To thrive in this new era, accounting firms and professionals must embrace the opportunities of remote work and alternative work arrangements. For all the details, listen to episode 380 of The Accounting Podcast.

Struggling to Communicate Your Worth? Revolutionize Your CPA Firm’s Pricing Strategy

Earmark Team · May 10, 2024 ·

Are you tired of wrestling with pricing your services for potential clients? Do you struggle to communicate the value of your accounting services? It’s time to rethink your pricing strategy.

In a recent episode of the “Who’s Really the Boss” podcast, Rachel and Marcus Dillon, the founders of DBA, share their journey of transforming their pricing model from traditional, transactional pricing to a value-aligned subscription approach. By aligning their pricing with the value they provide to clients, Rachel and Marcus have streamlined client relationships, better communicated their worth, and optimized their practice for growth.

Let’s examine how adopting a value-aligned pricing strategy can benefit your firm. We’ll delve into the process of developing a subscription pricing model, the importance of analyzing internal data and conducting market research, and the benefits of communicating value through transparent pricing.

The Evolution of Pricing at DBA

Like many CPA firms, DBA initially priced their services based on what clients paid their previous CPA, a practice known as “apples-to-apples” pricing. Marcus Dillon explains, “We priced just like every other CPA firm does. And I know if you’re listening to this and you hear what I’m about to say, you’re going to shake your head. Because if you can gain access to their QuickBooks Online account and see what they paid in the past, you’re going to charge them what they’ve at least paid, or a little bit more.”

However, as DBA grew and evolved, they realized that this pricing approach needed to reflect the additional value they provided to their clients. They then shifted to value-based pricing, which aimed to align their fees with the perceived worth of their services. While this was a step in the right direction, it presented challenges. Value-based pricing required individual negotiations with each client, making it difficult to scale the business.

The turning point came when DBA decided to implement a subscription-based pricing model. This approach allowed them to streamline their pricing, remove owners from setting prices for each client, and better communicate the ongoing value they provided. By offering a set of standardized service packages, DBA was able to create a more predictable revenue stream and simplify the client onboarding process.

DBA engaged a consulting group to conduct secret shopping to gather insights and benchmark their pricing. The consulting group reached out to firms similar to DBA, posing as potential clients, and obtained quotes for comparable services. This process provided valuable information on competitor pricing and helped DBA ensure their fees were competitive while still reflecting their unique value proposition.

Developing a Subscription Pricing Model

DBA’s subscription pricing model offers a straightforward approach that benefits the firm and its clients. The model consists of three service plans: Essential, Premier, and Elite, with base prices of $1,500, $2,000, and $3,000 per month, respectively. Marcus explains that these prices are not set in stone: “We do give ourselves a little bit of flexibility in that we could customize that pricing based on complexity of the industry or number of transactions.”

The primary differentiator between the plans is the level of advisory services included. Clients on the Essential plan receive annual CFO meetings, while those on the Premier plan have quarterly meetings, and Elite plan clients benefit from monthly CFO interactions.

The Benefits of Subscription Pricing

Subscription pricing offers several advantages for both CPA firms and their clients:

Predictable revenue: Firms can better forecast their income and plan for growth with a subscription model.
Simplified client relationships: By clearly defining the services included in each plan, subscription pricing reduces the need for constant negotiation and scope creep.
Improved cash flow: Regular, recurring payments help to smooth out the peaks and valleys often associated with project-based work.
Enhanced client retention: Subscription pricing encourages long-term relationships and provides ongoing support and advisory services opportunities.

By adopting a subscription pricing model, CPA firms can create a more stable and scalable business while providing their clients with the clarity and support they need to succeed.

Aligning Pricing with Value

To effectively align pricing with the value provided to clients, DBA conducted a thorough analysis of their internal data and considered their desired profit margins and business goals. This process involved examining write-ups, write-downs, services provided, and team capacity to understand the resources required to serve clients effectively.

Marcus says that DBA worked backward to get to the pricing. He says, “To get to that point and know what we wanted to charge, we reverse-engineered how many clients we wanted to serve on an ongoing basis. And our max limit is 150 client relationships. Beginning with that in mind and knowing the size of the business and the size of the team that we wanted to work with, the amount of profit that we wanted to make – that’s how we started to engineer pricing and make sure it was in line with market and the value we could bring.”

This process relied on considering their desired profit margins and the size of the business they wanted to build. By setting clear goals and working backward, DBA could create a pricing structure that supported their long-term vision for the firm.

The Importance of Data-Driven Pricing

CPA firms looking to align their pricing with the value they provide should consider the following steps:

Analyze internal data: Examine write-ups, write-downs, services provided, and team capacity to gain a clear picture of the resources required to serve clients effectively.
Set clear goals: Define your desired profit margins and the business size you want to build, and use these goals to guide your pricing decisions.
Conduct market research: Gather data on competitor pricing to ensure that your fees are competitive while still reflecting your unique value proposition. Consider engaging a consulting group to perform secret shopping and obtain quotes for comparable services.
Continuously monitor and adjust: Regularly review your pricing and make adjustments as needed based on market changes, service offerings, and client base.

By taking a data-driven approach to pricing, CPA firms can ensure that their fees accurately reflect the value they provide and support their long-term growth and profitability.

Communicating Value through Pricing

One of the key challenges many CPA firms face is effectively communicating the value of their services to potential clients. This is particularly true for firms offering comprehensive support and advisory services, as clients may not be accustomed to paying for these offerings. As Rachel notes, “When I was conversing with people, they weren’t expecting the price that I would say. A lot of the people that were finding us, either by referral or just Google search, were mostly looking for a tax return and tax savings. They hadn’t experienced someone pricing all of the services that they’re going to need for the entire year, plus one of those services being advisory. So they just weren’t expecting it.”

To address this challenge, DBA decided to publish their pricing on their website. By providing transparency around their fees and the services included in each plan, DBA could better communicate the value they offer and help potential clients understand the comprehensive nature of their support.

Publishing pricing also had the added benefit of streamlining the sales process. By allowing prospects to self-qualify based on their budget and needs, DBA reduced the number of initial conversations with clients who were not a fit for their services. This freed up time and resources to build relationships with clients who were more likely to benefit from their offerings.

Tips for Communicating Value through Pricing

If you’re considering publishing your pricing or looking for ways to communicate the value of your services better, keep the following tips in mind:

Be transparent: Clearly outline the services included in each pricing tier and the value clients can expect to receive.
Highlight the benefits: Focus on the outcomes and results your clients can achieve by working with your firm rather than just the features of your services.
Use case studies and testimonials: Share success stories from past clients to demonstrate the tangible impact of your work.
Offer a range of options: Provide different pricing tiers or service packages to cater to your target market’s diverse needs and budgets.
Be open to customization: While published pricing can be a helpful starting point, be prepared to create custom plans for clients with more complex needs.

Embracing Value-Aligned Pricing for Long-Term Success

By analyzing internal data, considering desired profit margins and business size, and conducting market research, DBA developed a pricing model that communicates the value of their services and supports their long-term growth.

Are you ready to unlock the full potential of your CPA firm? Start by examining your current pricing strategy and identifying opportunities to better align your fees with the value you provide.

To learn more about aligning your pricing strategy with service value, listen to the full episode of the “Who’s Really the Boss” podcast featuring Rachel and Marcus Dillon. Their insights and experiences offer valuable guidance for any CPA firm looking to transform its approach to pricing and increase overall firm value.

Rachel and Marcus Dillon, CPA own a Texas-based, remote client accounting and advisory services firm, Dillon Business Advisors, with a team of 15 professionals. Their latest organization, DBA | FIRM, supports and guides accounting firm owners and leaders with free resources, education, and operational strategy.

How Professional Service Firms Can Leverage Financial Data for Strategic Success

Earmark Team · May 8, 2024 ·

In today’s data-driven business landscape, professional service firms that fail to leverage financial data for strategic decision-making risk falling behind the competition. As the old adage goes, “you can’t manage what you don’t measure.”

In a recent episode of the Best Metrics podcast, Marcus Dillon, founder of Dillon Business Advisors, shared his insights on the importance of utilizing financial data and metrics to guide strategic decision-making in professional service firms. With over 20 years of experience in the industry, Dillon has seen firsthand how leveraging the right metrics can make all the difference in a firm’s success.

Throughout the episode, Dillon emphasizes the role of financial storytelling in interpreting data and communicating insights to clients. He also delves into the specific metrics and KPIs that firms should track, such as liquidity ratios, revenue per headcount, and monthly recurring revenue. By aligning these metrics with the firm’s goals and client objectives, Dillon argues that data-driven insights can translate into actionable strategies that optimize performance and deliver value to clients.

So, how can your professional service firm unlock the power of financial data to drive strategic decision-making? Let’s dive in and explore the key takeaways from Dillon’s insights.

First, Establish a Strong Financial Statement Foundation

When taking on new clients, it’s essential to thoroughly evaluate their financial statements to establish a solid foundation for data-driven decision-making. As Dillon explains, “Once you have full confidence in the numbers… then you can start dissecting and comparing and looking at metrics and KPIs.”

This process involves looking for potential issues and asking questions to verify assumptions. It’s common to encounter discrepancies between a client’s perception of their financial performance and the data. In these situations, it’s important to be prepared to have difficult conversations and explain the reality of the situation.

Some key steps in evaluating financial statements for new clients include:

Reviewing the balance sheet and income statement for any red flags or inconsistencies
Comparing the client’s financial performance to industry benchmarks and their historical data
Asking questions about the client’s business model, revenue streams, and expenses to gain a deeper understanding of their financial situation
Verifying the accuracy of the financial statements through documentation and third-party confirmations

By thoroughly evaluating a new client’s financial statements, you can establish confidence in the numbers and lay the groundwork for effective data-driven decision-making. As Dillon notes, accurate and reliable financial data is the cornerstone of effective strategic decision-making for professional service firms.

Once you have a strong foundation, you can dive deeper into the specific metrics and KPIs that will help drive your client’s success. But without that initial due diligence, you risk making decisions based on faulty assumptions or incomplete information.

The Importance of Tracking the Right Metrics and KPIs

Once you’ve established a strong foundation by evaluating a client’s financial statements, it’s time to focus on the key metrics that will help drive their success. Dillon notes that professional service firms should focus on key metrics to optimize performance and deliver client value.

Some key metrics that Dillon recommends tracking include:

Liquidity ratios: These ratios, such as the current ratio (current assets / current liabilities), can help you assess your firm’s ability to meet short-term obligations and maintain financial stability.
Revenue per headcount: This metric can help you understand how efficiently your firm utilizes its human resources and identify growth opportunities. By tracking this metric over time, you can help clients make data-driven decisions about hiring, training, and resource allocation.
Monthly recurring revenue (MRR): For firms adopting subscription-based models, MRR can provide a more predictable and stable revenue stream, making it easier to plan for the future.
Work-in-progress (WIP): Tracking WIP is crucial for understanding a firm’s financial health and identifying potential cash flow issues.
Billing and collection metrics: Understanding how quickly a firm is billing and collecting payment can help identify areas for improvement and ensure a healthy cash flow.
Profitability metrics: Tracking gross and net profit margins can help identify areas for cost savings and revenue growth.

Professional service firms can leverage financial data to guide strategic decision-making and measure success by tracking the right metrics and KPIs. But as Dillon notes, it’s not just about the numbers themselves. It’s about the story they tell and how you use that information to drive meaningful change in your business.

Aligning KPIs with Business Goals for Maximum Impact

Tracking the right metrics is only half the battle – to leverage financial data for strategic decision-making, professional service firms must align their KPIs with their business goals and client objectives.

To align your KPIs with your business goals, identify your client’s 1-year, 3-year, and 5-year objectives. What are they trying to achieve, and how can you help them? Once you clearly understand their goals, you can select the metrics to help track progress and identify areas for improvement.

One common pitfall to avoid is focusing too heavily on “vanity metrics” like top-line revenue. While these metrics may look impressive on paper, they don’t always provide a clear picture of a firm’s financial health. Instead, focus on sound business metrics like cash flow to owner and net operating profit. These metrics provide a more accurate picture of a firm’s profitability and sustainability.

Some key considerations when aligning KPIs with business goals include:

Identifying the metrics that are most relevant to the client’s industry and business model
Setting realistic targets and benchmarks for each metric
Regularly reviewing and adjusting metrics as needed to ensure they remain relevant and actionable
Communicating the importance of each metric to all stakeholders, including employees and clients

By aligning KPIs with business goals, professional service firms can ensure that their data-driven insights translate into actionable strategies that drive success for the firm and its clients.

Case Study: Aligning KPIs with Business Goals in Action

To illustrate the power of aligning KPIs with business goals, let’s look at a real-world example from Dillon’s firm. One of their clients, a mid-sized law firm, had been tracking top-line revenue as their primary metric for years. While their revenue had grown steadily, the firm’s partners consistently worked long hours and felt overwhelmed.

By digging deeper into the firm’s financial data, Dillon’s team identified a key issue: the firm was taking on many low-margin cases that were consuming a disproportionate amount of time and resources. By shifting its focus to metrics like profitability per partner and average case value, the firm could make data-driven decisions about which cases to pursue and how to allocate resources more efficiently.

As a result, the firm was able to reduce partner workload while maintaining profitability, ultimately leading to greater satisfaction and work-life balance for the partners. By aligning their KPIs with their business goals, the firm achieved success on its terms and created a more sustainable model for the future.

Mastering Liquidity and Cash Management for Financial Stability

Effective liquidity and cash management are essential for professional service firms to maintain financial stability and make strategic decisions. As Dillon points out, “I personally don’t want more than a 50/50 split in cash and accounts receivable, just because I want the client to be more in control of their money than their customers’ financial habits driving the decisions of our client.”

One key metric to track is the current ratio (current assets / current liabilities). Dillon recommends maintaining a current ratio of 2:1 to ensure sufficient cash for opportunities and expenses. This means the firm should have two dollars of current assets available for every dollar of current liabilities.

Another important aspect of cash management is monitoring accounts receivable aging. Dillon suggests a 50/50 split between cash and receivables to maintain a healthy balance. This allows the firm to have enough cash to cover expenses and invest in growth opportunities while ensuring that receivables are being collected on time.

To maintain accurate financials and avoid overestimating available cash, it’s important to write off bad debt regularly. This helps to keep the firm’s financial statements accurate and up-to-date and prevents the firm from making decisions based on inflated cash balances.

Finally, implementing policies and procedures that encourage faster invoicing and payment collection can help to improve liquidity and cash flow. Some strategies to consider include:

Offering incentives for early payment, such as discounts or loyalty programs
Implementing automated invoicing and payment systems to streamline the billing process
Regularly following up on overdue invoices and establishing clear payment terms with clients
Conducting credit checks on new clients to assess their ability to pay on time

The Benefits of Effective Liquidity and Cash Management

By mastering liquidity and cash management, professional service firms can reap several benefits, including:

Improved financial stability: With sufficient cash reserves and a healthy balance between cash and receivables, firms can weather unexpected expenses or slow periods without experiencing financial strain.
Greater ability to invest in growth: When a firm has strong liquidity, it can more easily invest in new opportunities, such as expanding services or hiring additional staff, without putting undue stress on cash flow.
Enhanced decision-making: With accurate, up-to-date financial information, firms can make more informed decisions about resource allocation, pricing, and other strategic matters.
Stronger client relationships: By implementing policies and procedures that encourage timely payment, firms can foster stronger, more positive relationships with clients and avoid the strain of overdue invoices.

Effective liquidity and cash management is not a one-time task but an ongoing process that requires regular attention and adjustment. By staying on top of key metrics and implementing best practices, professional service firms can ensure they have the financial stability and resources necessary to make data-driven strategic decisions and achieve long-term success.

Putting It All Together: Leveraging Financial Data for Strategic Decision-Making

Throughout this article, we’ve explored how professional service firms can leverage financial data to drive strategic decision-making. There are many pieces to the puzzle, from tracking the right metrics and KPIs to aligning those metrics with business goals and mastering liquidity and cash management.

But how do you combine it to create a cohesive, data-driven strategy? Here are a few key steps to consider:

Start with your goals: Clearly define your firm’s goals and objectives before diving into the numbers. What are you trying to achieve, and how will you measure success? By starting with your goals, you can ensure that your financial data is used to support your overall strategy.
Identify your key metrics: Once you have your goals, identify the key metrics that will help you track progress and make informed decisions. This may include a mix of financial metrics (such as liquidity ratios and revenue per headcount) and non-financial metrics (such as client satisfaction and employee engagement).
Establish a data-driven culture: To leverage financial data for strategic decision-making, it’s important to establish a culture that values data and encourages its use at all levels of the organization. This may involve providing training and resources to help employees understand and use financial data and regularly communicating the importance of data-driven decision-making.
Use financial storytelling to communicate insights: As Dillon notes, financial storytelling is a powerful tool for communicating insights and driving action. By weaving together financial data with non-financial factors and presenting it clearly and compellingly, you can help stakeholders understand the story behind the numbers and make more informed decisions.
Continuously monitor and adjust: Finally, it’s important to remember that leveraging financial data for strategic decision-making is an ongoing process. Your metrics and strategies may also need to change as your firm grows and evolves. By continuously monitoring your data and adjusting your approach as needed, you can ensure that you’re always making the most informed, data-driven decisions possible.

Unlocking Your Firm’s Potential with Financial Data

As we’ve seen throughout this article, there are many pieces to the puzzle regarding leveraging financial data effectively. From tracking the right metrics and KPIs to aligning those metrics with business goals, mastering liquidity and cash management, and using financial storytelling to communicate insights, there is no one-size-fits-all approach.

But by taking a holistic, data-driven approach to strategic decision-making, professional service firms can unlock their full potential and achieve new levels of success. Whether you’re a small, local firm or a large, international organization, the principles of leveraging financial data remain the same.

To learn more about how your firm can leverage financial data for strategic decision-making, be sure to listen to the full episode of the Best Metrics podcast with Marcus Dillon.

The Two-Question Framework Every CPA Firm Owner Needs for Strategic Decision-Making

Earmark Team · May 8, 2024 ·

CPA firm owners are constantly bombarded with new opportunities, from taking on new clients to investing in cutting-edge software. But how can they decide which opportunities are worth pursuing and which will only lead to headaches and wasted resources?

In this episode of the “Who’s Really the Boss?” podcast, hosts Marcus and Rachel Dillon dive into a powerful framework for making strategic business decisions. By consistently asking two key questions – “Does this simplify my life?” and “Does this increase the value of my business?” – CPA firm owners can cut through the noise and focus on opportunities that will truly move the needle for their firms and their lives.

Introducing the Two-Question Framework

Marcus introduces the two key questions that form the foundation of the decision-making framework:

Does this make my life easier? and
Does this increase the value of my business?

The questions are meant to be widely applicable to various life and business decisions. Rachel refines the first question from “Does this make my life easier?” to “Does this simplify my life?” to emphasize the importance of long-term simplicity over short-term ease.

Applying the Framework to New Client Prospects

Rachel and Marcus discuss how the two-question framework can guide the evaluation of new client opportunities.

First, ask, “Does this make my life easier?” In other words, can the work be delegated across the team, or does it rely solely on the owner?

“We would only bring on prospects as clients if they were going to be served by a team approach, where any one person isn’t the full service provider for that client,” Marcus emphasizes.

Then, ask, “Does this increase the value of my business?” When considering taking on a new client, that question could become, “Is the engagement a profitable long-term relationship or a one-off project?”

By applying the two-question framework, CPA firms can focus on clients that will simplify operations and contribute to long-term firm value.

Using the Framework for Software Investments

The two-question framework can also help cut through the hype around new software and determine if it will truly add value to the firm.

Marcus and Rachel discuss their experience of moving away from over-engineered reporting tools that clients didn’t value and focusing time on client conversations instead. They highlight the importance of considering the ongoing support and future team’s ability to use the software.

Regarding the latest trend, AI chatbots, Marcus says, “I am not on the forefront of use of AI. I am not an early adopter, but I’m an adopter somewhere in that cycle. The reason why is I just don’t have enough time in the day, or I don’t enjoy investigating the use of AI in multiple different ways. That doesn’t give me joy. That doesn’t simplify my life.”

The framework helps firms invest in technology to streamline operations and enhance client service rather than chasing shiny objects.

Evaluating Potential New Service Lines

In the episode, Rachel challenges Marcus to apply the two-question framework to adding wealth management as a new service line.

While adding a new service line could increase firm value, Marcus notes that it may not simplify operations in the short term due to the learning curve and client acquisition needs. He emphasizes assessing if a new service line aligns with the firm’s overall strategy and client base.

“If I’m going to add wealth management, does that make my life simpler? Probably not in the beginning because we would maybe have to go out and acquire a different type of client,” Marcus explains.

The two-question framework brings rigor and structure to evaluating any potential new service offering, ensuring strategic fit and long-term value.

Embracing the Power of “No”

Of course, using this framework also means being willing to say “no” to opportunities that don’t pass the test. This can be challenging, especially in the early stages of building a firm when every client and every dollar of revenue feels crucial.

However, as Marcus and Rachel’s experiences illustrate, learning to say “no” to the wrong opportunities is just as important as saying “yes” to the right ones. By being selective and strategic, you can free up time and resources to focus on the clients, projects, and initiatives that will truly move the needle for your firm and your life.

A Roadmap for Strategic Growth

At the end of the day, the two-question framework is a powerful tool for CPA firm owners who want to build businesses that not only thrive financially but also support the lifestyle and well-being of their leaders.

By consistently asking, “Does this simplify my life?” and “Does this increase the value of my business?” you can cut through the noise of endless opportunities and make strategic decisions with clarity and confidence.

So the next time you’re faced with a shiny new prospect, a cutting-edge software tool, or a potential new service line, take a step back and put it to the test. Your future self – and your future firm – will thank you.

For more insights on navigating the challenges of running a CPA firm, listen to the full episode of “Who’s Really the Boss?” and subscribe to the podcast for future valuable discussions.

AI’s ‘Killer Function’: Personal Agents That Work for You

Earmark Team · May 6, 2024 ·

Sam Altman, the creator of ChatGPT, says that helpful agents will be AI’s ‘killer function,’ integrating deeply into our lives and acting as extensions of ourselves.

It sounds like science fiction, but you can start doing this now! In this clip from Episode 383 of The Accounting Podcast, I demonstrate how to create an AI agent using Central, a new feature of Zapier.

AI agents are a massive leap over today’s AI chatbots. Most popular chatbots can’t act autonomously. If you sign up for ChatGPT or Claude, you have to prompt it for everything you’re doing – copy-paste between whatever’s in your life and the bot. It’s a big hassle and wastes a lot of time.

But if you turn a chatbot into an agent, you give it the ability to act independently. Imagine a virtual assistant who can automatically respond to all the daily routine questions you get bombarded with.

For example:

| Hey, can I get an update on my tax return?

| When can I expect my financial statements?

| Please send a copy of your W-9 (or we won’t pay you)

Your AI agent has you covered, firing off personalized responses faster than you can say “accounts receivable.”

Or imagine an AI agent with access to your calendar that responds to meeting requests with the best times for you to meet based on your detailed instructions.

Sure, we have apps like Calendly, but these apps are limited and impersonal. For instance, I like to bunch my meetings, and Calendly doesn’t do that. I could tell my AI agent always to try to fit new meetings before or after an existing meeting. And it could do this by replying on my behalf to emails rather than me sending a link.

This is a big deal. Think about it – how many hours do you spend each week on repetitive tasks or answering questions? Now, you can start to automate them.

Zapier has built a tool, Zapier Central, where you can create your own AI agents triggered by the thousands of apps that already connect to Zapier.

I’ve been experimenting with having Central draft emails for me. I built an agent called “Email Assistant” and gave it access to my Gmail account. Then, I created a “behavior” with instructions to monitor my inbox for emails from our podcast contact form.

We get daily emails from listeners of The Accounting Podcast, and I read and respond to every single one. There are a few things that are annoying about the process.

The email comes from a different email address than the listener’s, so I have to copy/paste the listener’s email into the “To” field.
I have to add my co-host to the CC field so he’s in the loop.
I have to draft the email, which typically includes similar phrases. For instance, I start by thanking the sender for listening and writing in.
I tend to sign off in the same way every time, but I still need to type it because I don’t always use the signoff, and I don’t want it in my email signature

To get the Email Assistant to do all this for me, I gave it the following instructions:

When I receive a new email from TAP Contact Form, do the following:

– Create a draft reply in the same conversation thread
– Find the submitter’s email in the body and add it to the “To” field of the reply
– Draft a reply in the voice of Blake Oliver
– Start by thanking the sender for listening and writing
– Sign off with ‘Best, Blake’

Only draft replies to emails from the Tap Contact Form. Ignore emails not related to this.

Here’s what that looks like in Zapier Central:

When I do this task manually, after sending my reply, I copy the sender’s original email into my database of potential stories for my podcast (so I don’t forget to read it during our Listener Mail segment). Fortunately, my database, Notion, connects to Zapier. So, I added the instructions for my Email Assistant to get the AI to do that for me, too:

Then, please create a new database item in Notion. For the item’s name, make a name for the item that represents the topic of the message. Briefly summarize the listener’s question or comment in the notes field, and then put the listener’s name, email, and message in the body of the page.

This behavior triggers when I get a new email from the contact form. Then, it can create draft replies and database items in Notion through actions I’ve configured. Those are the only two things it can do – it can’t send the email to me. But it could if I wanted it to.

Here’s the agent thinking through what to do with a test email:

It worked!

Using AI Agents in Public Accounting

That got me thinking about how you could use AI agents in an accounting firm.

Let’s say that you’re tired of responding to requests from clients for information on how their tax return is going. You could create an agent with a behavior that says, “Every time I get an email asking about the status of a tax return, draft a reply letting the client know the status.”

But how would the AI agent know the status of the tax return? By connecting it to a spreadsheet – or perhaps your practice management software, if it’s sophisticated enough to work with Zapier.

Zapier lets you connect multiple data sources, such as Airtable, Google Sheets, Google Docs, Notion, etc.

Imagine if you had a Google Sheet where you tracked every tax return and the status of that return – not started, in progress, expected delivery date, any issues, etc.

You could then connect that data source to this AI agent and instruct it: “When a client asks about the status of their return, check the tax return spreadsheet and draft a reply with the status, who is working on it, and when we expect to complete it. Also, if the spreadsheet says we’re missing information, reply with a list of what we still need.”

You may need to add more detail about what columns to look in for each piece of information, but you get the idea. You’re programming the AI agent in plain English.

Using AI Agents in Corporate Finance

Here’s an example of how you could use an AI agent in corporate accounting. The Accounts Payable team. How often do they get the same email inquiries from vendors or customers?

Let’s say a vendor is asking about the status of the payment. Your email agent could watch for those emails and then automatically draft replies, letting them know when they will get paid or if something is holding up payment. You just have to connect your AP system to Zapier or sync the data to a spreadsheet that Zapier can watch.

You could create another behavior where if a customer requests a W-9, the AI agent sends an email with the signed W-9 attached. That’s one you could consider fully automating because it is low risk. You could choose to allow the agent to send the email without review.

Potential Uses Go Way Beyond Email

An important thing to note is that you don’t have to use this for email. This is just how I’ve been playing with it. You can trigger these agents with actions in thousands of apps. And these AI agents can then do stuff in thousands of apps.

There’s also a scheduling feature. This means triggers can be time-based, not just based on what happens in another app. You could schedule a behavior to run every day, every hour, every month, or every week.

Maybe that behavior is asking for a status update from your team on a particular project. For example, “If I haven’t received an update in so long, email the project owner and ask for an update.”

Now that I think about it, my own CEO job might be the first thing I automate.

AI Agents Are Happening Now

I don’t want you to think these AI agents are perfect; they are far from it. It’s brand new, so there will be things that don’t work right.

This behavior I showed you here is the one of three that worked well. The other two had some issues. So, don’t lose hope if you create an AI agent that doesn’t work exactly right. It’s going to take some time for these agents to work perfectly.

The important thing to take away from this is that AI agents aren’t just some far-off, futuristic concept – they’re a reality already starting to transform how we work right here and now.

I’ll keep sharing what I learn about AI agents, so subscribe to The Accounting Podcast and follow our LinkedIn page to see what I come up with.