David Leary

The 40% Solution: Reclaiming Your Time as an Accounting Firm Owner

Blake Oliver · August 11, 2024 ·

As accountants, we’re no strangers to long hours and busy seasons. But what if there was a way to reclaim a significant chunk of your time without sacrificing the quality of your work?

I recently sat down with Kwame Agyei, founder and CEO of Appoynt, on The Accounting Podcast to discuss just that. Kwame, a former accountant himself, shared his idea of the “bottom 40%” solution, which could offer a new perspective on managing our firms.

Understanding the “Bottom 40%” Concept

The bottom 40% refers to the tasks that, while necessary, don’t directly contribute to your core services or business growth. These might be administrative duties, data entry, basic bookkeeping tasks, or even managing your calendar and inbox. The key is to identify those tasks that:

Take up a significant amount of your time
Don’t require your specific expertise
Feel like they’re “dragging you down” or preventing you from focusing on more important work

By pinpointing these tasks, you’re not just identifying time-wasters – you’re uncovering opportunities to delegate, outsource, and ultimately reclaim your time to focus on what matters most in your firm.

Once you’ve freed up this time, you have two options: take on more work to grow your business or use that time to improve your work-life balance. The choice is yours, but addressing your bottom 40% creates the opportunity to make that choice in the first place.

Common Tasks to Consider Outsourcing

Now that we understand the concept of the bottom 40% let’s explore some specific tasks that many accounting firm owners might consider outsourcing. Outsourcing can often provide significant time savings and efficiency gains in these areas, allowing you to focus on higher-value activities.

Virtual Assistant (VA) Services

A virtual assistant can handle a variety of tasks, including:

Email management
Calendar scheduling
Travel arrangements
Basic data entry
Document preparation

The beauty of a VA is that their role can be tailored to your specific needs. At about $1,000 per month for 20 hours a week, it’s a cost-effective solution for many small firms.

Accounts Receivable Management

With the right service, you can automate the process of chasing invoices, using customized workflows based on your preferences. This could include sending reminder emails, making phone calls, or even adjusting the approach based on your relationship with each client.

The potential impact is significant. For example, Kwame says that one firm increased its collection effectiveness from 63% to 78% and reduced its Days Sales Outstanding (DSO) from 23 days to just 12 days. This not only improved cash flow but also enhanced client relationships by ensuring consistent and professional follow-up on outstanding invoices.

Overcoming Hesitations About Outsourcing

Outsourcing can feel like a big leap, especially for accounting firm owners used to handling everything in-house. However, many of the common concerns about outsourcing can be addressed with proper planning and due diligence. Let’s into some of the most frequently cited hesitations and how you can overcome them, according to Kwame.

Security Concerns

As accountants, we deal with sensitive financial information daily. Reputable outsourcing companies address this by using virtual machines with data servers local to the client’s location. This means your data is kept on secure servers in your country, adhering to local data protection laws.

Trust Issues

Building trust with an outsourced team takes time. Start small and gradually increase responsibilities as you build confidence. Communication is key, especially in the early stages. Share your thoughts and concerns freely to help your outsourced team understand your preferences and work style.

The Long-Term Impact of Outsourcing

As you become more comfortable with outsourcing, you’ll likely find more tasks you can delegate. What starts as offloading a few simple tasks can snowball into a significant transformation of your workday. You might start by having a VA manage your calendar, then progress to letting them manage your email inbox, and eventually have them draft responses to routine client inquiries.

This evolution allows you to shift your role as a firm owner. Instead of getting bogged down in day-to-day tasks, you can focus more on strategy, client relationships, and business growth. Alternatively, you can use that reclaimed time to improve your work-life balance.

Practical Steps to Get Started

Here’s how you can get started:

Identify Your Bottom 40%: Log your activities for a week. What tasks are eating up your time but don’t require your specific expertise?
Start Small: Begin with something simple like having a VA manage your calendar or upload expense receipts.
Choose a Reputable Provider: Look for an outsourcing company that understands the unique needs of accounting firms and has robust security measures.
Communicate Clearly: Over-communicate early to help your outsourced team understand your preferences and work style.
Be Patient: Give the process time to work. Significant improvements often become apparent after about three months.
Gradually Increase Responsibilities: As you become more comfortable, start delegating more tasks.
Monitor and Adjust: Regularly review the performance of your outsourced tasks and make adjustments as needed.

The 40% solution isn’t a magic bullet. But it is a powerful tool that can help transform your accounting practice. By identifying and outsourcing the tasks that are dragging you down, you can free up time to focus on what matters – whether that’s growing your business, improving your services, or simply enjoying a better work-life balance.

So, take a hard look at your daily tasks. What’s in your bottom 40%? And more importantly, what could you achieve if you reclaimed that time? The answer might just revolutionize your practice – and your life.

Want to explore this topic further and hear more insights from Kwame Agyei? Listen to the full episode of Th e Accounting Podcast, where we explore these ideas in greater detail. You’ll gain even more practical tips on implementing the 40% solution in your firm and hear real-world examples of how outsourcing can transform your practice.

The IRS Tidal Wave: How Tax Pros Can Ride It to Success

Blake Oliver · July 31, 2024 ·

“The IRS tidal wave is here.” That’s how CPA Trendlines described the latest surge in tax enforcement, and they’re not exaggerating. After years of pandemic-induced leniency, the Internal Revenue Service has resumed its collection efforts.

The IRS isn’t just targeting average taxpayers. They’ve also set their sights on bigger fish, focusing on high-income individuals owing significant tax debts and wealthy individuals who haven’t filed taxes for years.

For millions of Americans, this enforcement surge spells trouble. But for intelligent tax professionals, it’s an ocean of opportunity. This wave of IRS activity, powered by billions in new funding, creates challenges and possibilities. Those who adapt quickly can turn this surge into a lucrative new service offering.

In a recent episode of The Accounting Podcast, we explored the full scope of the IRS’s actions, examined how they’re spending their increased funding, and mapped out practical strategies for accountants looking to expand into tax resolution services. Let’s dive in and see how you can turn this IRS tidal wave into your next big opportunity.

The Scale of the IRS Enforcement Surge

The numbers behind the IRS’s enforcement surge are jaw-dropping. We’re looking at a full-scale offensive that targets millions of taxpayers across the board:

Over 11.3 million non-filers are in the IRS’s sights
More than 15 million taxpayers with outstanding balances are facing scrutiny
1,600 high-income individuals owing significant tax debts are under investigation
Over 100,000 wealthy individuals who haven’t filed taxes for years are being targeted
Hedge funds and real estate partnerships are facing increased audits
The IRS is even cracking down on the misuse of corporate jets for personal travel

How serious is the IRS about these high-value cases? They’ve assigned 1,500 officers to handle those 1,600 high-income cases. That’s nearly a one-to-one ratio. As my co-host David Leary quipped, “If you cheat the government of a significant amount of money, you’re going to get a personal IRS agent just for you.”

This isn’t just tough talk. The IRS’s enhanced enforcement has already yielded $1 billion in collections. And they’re just getting started.

How the IRS is Spending Its New Funding

The fuel behind the IRS’s enforcement surge is a massive influx of cash from the Inflation Reduction Act, which allocated about $80 billion to the IRS. This funding was then reduced to around $57.3 billion. But they’ve only used about 10% of that money so far. This enforcement wave is just beginning.

Let’s break down how they’ve spent that initial $5.7 billion:

$2.3 billion for operations support
$1.4 billion for taxpayer services
$1.3 billion for system upgrades
$691 million for enforcement activities

Despite all the talk about increased enforcement, the IRS has spent the least on that. The IRS is playing the long game, investing in infrastructure and services to make future enforcement more efficient and effective.

We’re already seeing improvements. The IRS is getting faster at responding to correspondence. Two-thirds of tax professionals report it takes over 90 days for a substantive response from the IRS. That might sound slow, but it’s down from 81% previously.

What does this mean for tax professionals and their clients? Expect the pace of enforcement to increase as more funding is used. The IRS will have more resources to pursue non-filers and those with outstanding balances. But here’s the real opportunity: millions of taxpayers will need help navigating audits, settling back taxes, and negotiating with the IRS. Are you prepared to meet this demand?

Riding the Wave: Offering Tax Resolution Services

It’s time to consider adding tax resolution services to your practice. But how do you structure this new offering? I recommend a subscription-based model.

Here’s why: tax resolution isn’t a one-and-done deal. It often takes months, even years, to fully resolve issues with the IRS. A subscription model allows you to provide ongoing support while ensuring a steady revenue stream for your firm. For clients, it offers predictable costs and ongoing protection against IRS issues.

This approach is a significant shift from traditional hourly billing. You can decide how many tax resolution clients you need on a subscription to cover the fixed cost of hiring people to provide this service. So it doesn’t have to be about billable hours anymore.

Here’s how to implement it:

Designate a person or team specifically for tax resolution work.
Calculate how many clients you need to cover costs and generate your desired profit.
Estimate the average time each client will require per week or month based on typical notice frequency and response needs.

Consider offering tax resolution as a discounted subscription to all tax prep clients, not just those facing issues. As my co-host, David Leary, pointed out, “Most won’t ever need it because they’re already working with you.”

This approach turns tax resolution into a form of insurance or preemptive protection. It’s a win-win: clients get peace of mind, and you have a new, steady revenue stream.

Of course, implementing this model isn’t without challenges. You’ll need to price your subscription carefully to ensure profitability, and clients used to traditional billing methods may resist. However, the long-term benefits—both for your firm and your clients—make it worth considering.

Are You Ready for the IRS Tidal Wave?

This isn’t just about surviving a temporary storm—it’s about positioning your practice for long-term success in an era of increased IRS scrutiny. The firms that adapt quickly to this new reality will thrive in the future.

To get the whole picture and arm yourself with all the knowledge you need, listen to this episode of The Accounting Podcast. You’ll get more in-depth analysis, practical tips, and strategies to help you ride this wave of change.

Is the Secret to Solving the US Accountant Shortage Hiding in Argentina’s Economic Turmoil?

Blake Oliver · July 23, 2024 ·

In a recent episode of The Accounting Podcast, we stumbled upon a surprising solution to one of the biggest challenges facing US accounting firms today: the talent shortage. Believe it or not, it’s coming from a country known more for its economic struggles than its accounting prowess.

I’m talking about Argentina, and if you haven’t considered it a source of accounting talent, you might want to think again. The strategy here is called “nearshoring” – a close cousin to offshoring, but with some key advantages.

While offshoring typically involves outsourcing work to distant countries like India or the Philippines, nearshoring focuses on partnering with professionals in nearby countries, often in similar time zones. This approach aims to combine the cost benefits of offshoring with the collaborative advantages of working with a geographically and culturally closer team.

Let’s break this down and see why Argentina might answer your staffing woes.

Time Zone Alignment: The Game-Changer

First, let’s discuss the elephant in the room regarding offshoring: time zones. We’ve all been there, trying to schedule calls at ungodly hours or waiting overnight for responses.

As Nicolás Villafañe, a partner at South Offices, pointed out in our podcast, “Timezone is a very, very huge challenge when working with Philippines or India. In South America, you’re mostly aligned. You can actually have people working on their daytime and the exact same time as Americans.”

Imagine having your offshore team working the same hours as you. No more late-night calls or day-long email delays. It’s like having a remote team just down the street, not halfway across the world.

This time zone alignment doesn’t just make scheduling easier. As Nicolás explained, “The overlapping of the working time is what gives you that sensation that you actually are building a team the same as if you had them two blocks away.” This real-time collaboration fosters a sense of team cohesion that’s difficult to achieve with traditional offshoring.

Beyond Cost Savings: Argentina’s Secret Weapon

Now, I know what you’re thinking. “Blake, we’ve heard about offshoring before. It’s all about cost savings, right?” Well, yes and no. While nearshoring to Argentina can save you 30-40% compared to US costs, the Philippines offers around 50% savings, and India provides the most significant cost reduction at about 60%.

However, as Nicolás pointed out, these deeper cost savings come with trade-offs in quality and time zone differences. The real value isn’t in the cost savings. It’s in the quality of talent you’re getting for that price. Argentina’s economic challenges have created a breed of accountants unlike any other.

As Nicolás explained, “The quality of the professionals in Argentina is actually quite high because of our problems. It’s not that something that we’re proud of, but it’s the outcome. The outcome is that if you if you learn how to navigate through the Argentinian economy, Argentinian accounting, you tend to be very good because you’re you have to reskill yourself every day.”

These accountants have had to navigate hyperinflation, rapidly changing regulations, and economic instability. They’re not just number crunchers; they’re financial ninjas.

And get this: in Argentina, you need to be a CPA to do any kind of accounting work. Even bookkeeping. That means you’re getting CPA-level expertise across the board.

Perhaps because of this, accounting is the second most popular profession in Argentina, right after law. This creates a large talent pool for US firms to tap into, ensuring a steady supply of skilled professionals.

Cultural Alignment: The Secret Sauce

Here’s where it gets really interesting. Cultural differences can be a massive headache when working with offshore teams. But with Argentina, that headache largely disappears.

Latin American culture aligns much more closely with US culture than, say, Indian or Filipino culture. This means better communication, fewer misunderstandings, and a team that feels like, well, part of your team.

This cultural alignment, combined with the time zone compatibility, creates a seamless working relationship that’s hard to achieve with traditional offshoring.

Rethinking Outsourced Accounting Talent

So, let’s recap. With nearshoring to Argentina, you’re getting:

1. Time zone alignment for real-time collaboration

2. High-quality, adaptable talent forged in the fires of economic challenges

3. Cultural compatibility for smoother communication and integration

And you’re saving a chunk of change, too.

But this approach isn’t just about cutting costs or filling seats. It’s about gaining a strategic advantage in an increasingly competitive industry. While other firms are struggling with talent shortages and quality issues from traditional offshoring, you could be building a dream team of highly skilled, culturally aligned professionals who work in sync with your US operations.

In a world where finding and retaining top accounting talent is becoming harder by the day, Argentina might be the ace up your sleeve.

Ready to dive deeper into the nearshoring revolution? Listen to the full episode of The Accounting Podcast.

How an SEC Internship Led to a Thriving Career In Forensic Accounting

Blake Oliver · May 29, 2024 ·

Think working at the Big Four is the only way to make it big in accounting? Think again. Cody Turley’s story might just change your perspective.

On a bonus episode of The Accounting Podcast, Cody Turley, a CPA and CFE currently working at the SEC, challenges the notion that Big Four experience is the only route to success in accounting. He shares his experience to demonstrate that working at top organizations in industry or government can provide equally valuable experience and open doors.

The Power of Non-Traditional Accounting Internships

Cody’s path began with an unconventional internship at the SEC. And it wasn’t that difficult to get.

“So I really liked the show Suits,” Cody recalls. “And at one point they get in trouble with the SEC. And that just kind of peaked my mind about forensics. I should go and look at what that is. And I just applied online, and I got a call back and that’s it. That’s how I got that internship.”

Cody’s internship at the SEC exposed him to high-level tasks and responsibilities, such as reviewing complaints against companies of all sizes. The SEC’s name recognition also helped open doors for Cody in his subsequent career, even years after the internship.

A Government Job Doesn’t Mean Slow Advancement

After the SEC internship, Cody landed a job at the Arizona Corporation Commission. In his mid-20s, he was leading a forensic accounting team. “A year of experience, and I’m testifying, which just doesn’t happen at [public accounting] firms,” he shares.

Leading a team of more experienced employees was challenging but rewarding for Cody, as it provided opportunities to learn from their experience while guiding the team. His age did not hinder his ability to lead effectively, demonstrating that leadership skills and expertise can be developed early in one’s career, even in a government role.

Navigating the Complexities of Government Roles

Cody then returned to the SEC. His current role involves investigating offering frauds such as Ponzi schemes, tracing assets, and reviewing audited financial statements to identify errors. He collaborates with auditors and companies to investigate potential issues, often through subpoenas and interviews.

One of the challenges Cody faces in his role is interacting with large accounting firms. However, he emphasizes the importance of focusing on the learning process and gathering information rather than trying to be “better” than the firms in every instance.

How to Land a Government Accounting Role

For accounting professionals interested in exploring government roles, Cody offers some practical advice based on his own experience.

He suggests applying online, as hiring tends to be more merit-based than the private sector. This levels the playing field for candidates who may not have extensive industry connections but possess the necessary qualifications and skills.

Cody also highlights the benefits of working in smaller teams within government agencies. These teams can allow for rapid skill development and increased responsibility compared to private accounting firms’ more structured and hierarchical environments.

A World of Possibilities: Future Career Options

Cody’s government background has created many potential future paths, including moving up in government, transitioning to state-level roles, or pursuing opportunities like internal audit at major corporations. His skills are highly transferable and sought-after.

“The biggest company I’ve received an offer from was Disney at one point to be on one of their internal investigation teams,” Cody reveals. This highlights the value that the private sector places on the skills and experiences gained through government accounting roles. His background in investigating financial crimes and navigating complex regulatory environments has equipped him with a unique skill set that is highly sought after by businesses looking to strengthen their internal audit and compliance functions.

The Bottom Line: Finding Your Own Fulfilling Path

Cody’s experience shows that there is no one-size-fits-all approach to building a successful and fulfilling career in accounting. While the Big Four path may be the right choice for some accounting majors, future CPAs need to explore the full range of options available and find the path that aligns with their unique interests, skills, and goals.

Whether it’s pursuing government roles, seeking out industry positions at top companies, or exploring specialized fields like forensic accounting, there are countless ways to build a rewarding career in this dynamic field. The key is to remain open to new opportunities, seek diverse experiences, and never stop learning and growing.

So, if you’re ready to take control of your accounting career and explore the exciting possibilities that await you, listen to the full podcast episode featuring Cody Turley. His insights and experiences are sure to inspire you and provide valuable guidance as you navigate your professional journey.

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.