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Cash Flow

From Cash Flow Concerns to Acquisition Strategies: Real-World Financial Advisory in Action

Earmark Team · September 9, 2024 ·

“How do you deliver $2,000 to $8,000 per month in value to your advisory clients?” Many CPA firm owners looking to get into high-level advisory services are looking for an answer to this question. Marcus and Rachel Dillon, hosts of the “Who’s Really the Boss” podcast, answered this question in a recent episode. In short, they take a carefully tailored approach that combines industry knowledge, relationship management, and adaptive communication.

The Art of Tailoring Client Advisory Services

Effective client advisory requires a structured yet flexible approach to client meetings. Marcus, who provides outsourced CFO services for several clients, outlines a framework that allows customization while covering crucial bases: connection time, priority investigation, financial analysis, strategy discussion, and action planning.

“Those five points give a structure to the meeting. Otherwise, the clients might direct the meeting the whole time and let you sprinkle in some words of wisdom,” Rachel explains, highlighting the importance of having a structure, especially with new clients.

The key to successful advisory meetings lies in thorough preparation. Marcus describes his process: “I have a Chrome browser pulled up just for the client. I’ve got three tabs open from the client’s QuickBooks Online file, so I’ve got their balance sheet through today, their P&L, and their AR aging because that’s usually a talking point.”

However, flexibility is equally crucial. As client relationships mature, the approach can become more fluid. Marcus might focus more on immediate concerns or recent financial changes for established clients while still touching on all key areas.

Case Study: Navigating Growth in a Marketing Agency

To demonstrate the power of tailored advisory services, Marcus and Rachel shared a case study of a marketing agency client with an annual revenue of $3-3.5 million. This client was considering acquiring a vendor to bring research capabilities in-house.

Marcus tailors his preparation for this client: “They use Google Sheets, while we use Excel.. So we’ve had to find that balance. He’ll keep his internal stuff and invite us into his Google Sheets for the projections.” It is important to consider disruption to firm workflows when determining if or when to go outside your standard tech stack based on an individual client’s needs.

The advisory meetings focus heavily on cash flow management and acquisition planning. Marcus notes, “We’ve seen pull back in that industry over the last year and a half to two years in response to the overall economy.” To address this, Marcus uses a combination of tools, including QuickBooks Online for historical data and a specialized cash flow tool for 90-day projections.

A key challenge is balancing the focus between core business operations and the potential acquisition. It’s easy for the owner to focus so intently on the acquisition that he neglects sales. But Marcus addresses this by emphasizing the importance of maintaining sales efforts and closely monitoring accounts receivable, even as the client explores growth opportunities.

Case Study: Managing Cash Flow in a Dental Practice

The Dillons’ second case study focuses on a dental practice with an annual revenue of $2.4-2.5 million. This client was experiencing cash flow concerns, presenting a different set of challenges than the marketing agency’s.

Marcus approaches this client’s situation with a deep understanding of the dental industry. He explains, “I looked at distributions and at the P&L. I know collections in his industry are a little bit soft since people aren’t doing some of the elective procedures. But production was about the same and collections were only down about $5,000 compared to last year.”

The advisory approach involves a careful balance of personal and business financial considerations. Marcus knew this client took significant distributions from the company to pay for a home remodel. Marcus notes, “Having that data, I was able to say, ‘Okay,  you’ve pulled out $200,000, in distributions. Did all that go to that remodel project?’ Yeah. Pretty much.” By highlighting how personal financial decisions impact business cash flow, Marcus helps clients understand their financial situation.

Strategic advice for this client includes considering price increases, focusing on AR collections, and considering a membership program as an alternative to accepting traditional dental insurance, where reimbursements continue to go down for doctors and the cost to the insurer continues to increase.

Building Relationships Over Time

Marcus emphasizes the importance of building relationships with clients over time: “It takes about a year, probably a year and a half, to really get comfortable with a client, meeting on a quarterly basis. So I would say 4 to 6 meetings in, you get to know the other person on the other side of the screen and can anticipate their points of concerns.”

As relationships deepen, advisors can anticipate client needs, provide more nuanced advice, and adapt their communication style to best suit each client. For example, Marcus notes that with long-standing clients, he can often predict their concerns before a meeting, allowing for more targeted and efficient discussions.

Key Takeaways for Financial Advisors

So, what can accountants do to replicate Dillon Business Advisors’ success in having advisory-focused client conversations?

  1. Invest in industry-specific knowledge to provide contextual, relevant advice
  2. Build solid and lasting relationships with clients that go beyond numbers
  3. Develop a flexible advisory framework that can be tailored to each client’s needs
  4. Continuously adapt your approach as client relationships evolve

Listen to the full “Who’s Really the Boss” podcast episode featuring Marcus and Rachel Dillon for more practical tips for elevating your advisory services. You’ll hear firsthand accounts of client interactions, learn about specific tools and techniques for enhancing your advisory approach, and gain valuable perspectives on building a successful advisory practice. Whether you’re just starting to offer advisory services or looking to take your existing practice to the next level, this episode offers actionable insights you won’t want to miss.


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, Collective by DBA, is a community for accounting firms to get operational support in strategy, structure, and systems.

The Two Metrics That Can Double Your Accounting Firm’s Value in One Year, According to a Top Broker

Blake Oliver · May 29, 2024 ·

What if you could double your accounting firm’s value in a single year? Brannon Poe, a broker who’s handled over 500 firm sales, says it’s possible with the right strategic changes. 

In a recent podcast interview, Poe revealed that firms of any size can transform to maximize value and position themselves as attractive acquisitions by understanding what buyers want. The secret, he says, lies in mastering two key metrics.

We’ll unpack Poe’s road-tested insights on the levers of firm value and see how one traditional practice achieved a staggering valuation increase with clever strategic shifts. Whether you aim to sell soon or build a more valuable business, Poe’s wisdom will show you the way.

The Two Metrics That Move the Valuation Needle

Want to supercharge your accounting firm’s value? Brannon Poe says zeroing in on two key metrics can have an outsized impact.

1. Cash Flow to Owner  

“I always tell people, I’ve got two metrics. If you focus on these two metrics alone, you will increase the value of your firm,” Poe explains. “Cash flow to owner is probably number one.”

Your bullseye? For firms under $1.5 million in revenue, pushing cash flow to 50% or more of revenue. To calculate it, add your profit, owner compensation, and owner perks. For example, if your firm earns $1 million in revenue and your cash flow is $500,000, you’re right on target. The higher your cash flow margin, the more attractive your firm looks to buyers.

2. Owner Hours

“Owner hours is the other thing,” says Poe. “If you want the owner hours to be lower, lower is better – at least under 2000. But I have seen very well-systematized virtual firms get into the 500 mark for an owner. So you’re creating a real business at that point.” 

Minimizing owner hours reduces key-person risk and makes your firm more transferable. Buyers hesitate to acquire firms dependent on grueling owner hours, but a firm that runs smoothly with minimal owner involvement garners premium offers. 

Poe notes that adopting subscription pricing can drive progress on both fronts. Steady, recurring revenue and systematized work help boost margins while trimming owner hours. 

By lasering in on lifting cash flow and reducing owner involvement, firms of any size can transform into highly valuable, transferable assets. Next, we’ll see how one traditional firm put these principles into action to stunning effect.

From Surviving to Thriving: A Case Study in Strategic Transformation

The story of one husband-wife firm perfectly illustrates how powerful Brannon Poe’s value-boosting principles can be – even for small, traditional practices. 

Starting Point: A Traditional Firm in Need of Change

When the owners first approached Poe, they ran a classic mom-and-pop shop generating $1.2 million in annual revenue. Feeling overworked, underpaid, and unsure if they could keep going, they turned to Poe for help.

The Transformation Game Plan

Working with Poe, the owners implemented three key changes:

  1. Fired unprofitable clients: To free up much-needed capacity, the firm shed about 100 clients that drained time and resources but delivered minimal profits. 
  2. Raised prices: As Poe puts it, “If you don’t like your practice, keep increasing the prices until you like your practice.”
  3. Embraced subscription pricing: Transitioning clients, especially bookkeeping customers, to a recurring subscription model provided a steady, profitable revenue base.
  4. Launched advisory services: The firm created packaged advisory offerings and bundled them into subscription plans, enabling premium pricing.

Stunning Results in Just One Year  

The transformation was dramatic and swift. In just 12 months, the firm:

  • Increased annual revenue to $1.6-1.7 million
  • Expanded margins as new recurring revenue flowed to the bottom line  
  • Reduced owner hours while increasing employee pay
  • Landed an all-cash deal at their full $2 million asking price

The Power of Strategic Transformation

This firm’s journey embodies the incredible potential of Poe’s approach. By lasering in on profitability, recurring revenue, and owner efficiency, they morphed from a floundering traditional practice into a high-value strategic asset – in just one year. 

The Roadmap to a Firm That Works for You

This story powerfully illustrates that transforming your firm doesn’t have to take decades. With relentless focus on the right drivers, even tiny traditional practices can utterly rewrite their futures in under a year.

The key is strategically designing your transformation around buyers’ wants: powerhouse profitability with minimized owner dependence. Adopting the recurring revenue model, shedding margin-draining clients, and productizing premium advisory services are shortcuts for getting there faster.

Poe envisions a future where firm owners don’t have to choose between a profitable practice and a livable life. By architecting businesses that thrive without their constant oversight, owners can boost their bottom lines, free their schedules, and create thriving firms that are valuable today – and sellable tomorrow.

If you’re ready to build a practice that funds your ideal lifestyle now while setting you up for a profitable exit whenever you’re ready, the roadmap is clear – and it starts with learning everything you can from the best in the business. Take the first step now by listening to the full interview with Brannon Poe.

Why Accounting Professionals Must Champion Instant Payments

Earmark Team · April 12, 2024 ·

In a world where time is money, businesses can no longer afford to rely on outdated payment methods that hinder growth and competitiveness. The current payment landscape in the US, dominated by checks, ACH, and credit cards, presents significant challenges for businesses, particularly small and medium-sized enterprises (SMEs). As the global economy rapidly adopts instant payment systems, the US lags, creating significant obstacles for SMEs to compete effectively.

This article delves into the urgent need for US businesses to embrace instant payment solutions, drawing insights from a recent webinar, Understanding FedNow’s Impact on Your Clients, featuring Nick Chandi, CEO and co-founder of Forwardly. Chandi argued in the webinar, “As the global economy rapidly shifts towards real-time payments, US businesses, particularly SMEs, risk falling behind their international counterparts unless they embrace instant payment solutions that offer improved cash flow, reduced costs, and enhanced security.”

The Global Shift Towards Instant Payments

Instant payment systems have been gaining traction worldwide, with many countries already implementing or working on real-time payment solutions. Chandi says, “Currently, more than 70 countries have a real-time payment solution available: instant payments. Either they already have it, are working on it, or will have it this year or next year, including Canada.”

The rapid global adoption of instant payments puts pressure on the US to catch up and remain competitive in the international business landscape. This global shift underscores the urgent need for the US to modernize its payment infrastructure to support the growth and competitiveness of its businesses.

The Challenges of the Current US Payment Landscape

The current payment landscape in the US presents significant challenges for businesses, particularly SMEs. Slow payment methods lead to cash flow issues, hindering business growth and stability. Chandi highlights the severity of this issue, stating, “82% of businesses fail due to cash flow problems. Many of these businesses might have been profitable, but they didn’t have the money in the bank account when they needed to do payroll or pay their rent.”

In addition to cash flow problems, the high costs associated with traditional payment methods, such as credit card fees, eat into profit margins. Fraud risks expose businesses to financial losses and security concerns, particularly with checks. These challenges highlight the urgent need for instant payment solutions to improve cash flow, reduce costs, and enhance security.

The Benefits of Instant Payment Solutions

Instant payment solutions offer a range of benefits that address the challenges businesses face in the current payment landscape. These include:

  • Improved cash flow: With funds available in real-time, businesses can better manage their finances and invest in growth opportunities.
  • Reduced costs: Instant payments eliminate the high fees associated with credit card transactions and the processing costs of checks and ACH.
  • Enhanced security: Real-time payment systems, like Fednow, incorporate robust security measures to mitigate fraud risks.

Chandi adds, “I believe eventually it will end up similar to how we handle ACH. There will be some responsibilities on the bank side to ensure both parties are real and there’s no fraud happening.” 

The benefits of instant payment solutions directly address the urgent need for US businesses to modernize their payment processes and remain competitive in the global economy.

The Path Forward

Adopting instant payments in the US is crucial for leveling the playing field for SMEs in the global economy. Accounting professionals and financial decision-makers are vital in advocating for and implementing instant payment systems in their organizations. By embracing instant payments, US businesses can contribute to a more resilient, efficient, and secure financial ecosystem.

To understand the urgent need for instant payments in the US, we encourage readers to watch the full webinar recording featuring Nick Chandi. As an accounting professional or financial decision-maker, now is the time to explore instant payment solutions for your organization and take proactive steps toward implementation. Doing so can help your business clients succeed in an increasingly competitive global market.

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