I recently had the opportunity to catch up with 3 of the profession's hands on experts in BPO and Outsourced CFO. Peter Cullen (Core Performance Consulting) and John and Laura Redmond (Redmond Accounting) shared their views, experience and opinions on the Outsourced CFO/BPO businesses. This topic is of particular interest to me because it seems that many of our readers have the ability to morph their businesses from bookkeeping and accounting practices into Outsourced CFO and/or BPO practices because you know the numbers and you know the technology.
IA: Before we go too far down the road, will one of you define Business Process Outsourcing (BPO) for those who may not be familiar with the term?
PC: I'll take it.
BPO services work best when the Accounting firm sets the system up for the client base they will support. Standardizing on two ( preferably) to three (at the most) platforms is usually best, since each platform ( be it QB, XERO, Intacct, SAGE, Thomson Reuters, etc....) also carries with it a host of other inter-related products and services that must be integrated into the accounting platform in order to provide a full service. This includes bill payment, invoicing, time & expense, income tax, reporting module, incl. KPIs, performance management, forecasting (cash flow as well as tax planning), document management and client portal. These are the absolute minimums your must be able to support if you are considering the BPO business.
IA: So the BPO arrangement is an end to end solution including the technology you mentioned that ultimately drives the financials. Are your businesses structured as BPO or CFO?
JR: The outsourced services we offer focus on Controller services to design, implement and manage web-based accounting systems. These systems empower client's staff to perform much of the daily & weekly transaction data entry, or we do it for them. We reconcile, review, close and analyze results, giving our clients the business intelligence they need to make decisions. We do not advise on capital structure, investment strategy, business planning or these types of CFO services.
PC: We are definitely a hybrid of the two currently. For our very small clients we do the BPO work and manage the daily accounting processes and tasks, as well as the monthly CFO type services. For our larger clients ($5-$10 Million in revenue) we do just the CFO services. This really stems from the evolution within our practice, training, scale and systems. I have always wanted to build a BPO practice, but you must build out your infrastructure first to get it right. With the BPO business model you are managing daily accounting transactions virtually for your clients. This requires a team effort. You have to have the right people, with the right skill set, the right mind set and pay scale to manage the different aspects in processing daily accounting tasks. This is very different (more involved) than what is required for a monthly management meeting, tax forecasting or planning for M&A.
IA: Did your business migrate to the BPO/outsourced model or did you start out as such?
PC: We migrated and I wish I had been smart enough to do it sooner. I wish we did not have to learn so many painful lessons and wish we had built the infrastructure sooner.
LR: We started out as outsourced accounting, and have since specialized in monthly Controller services.
IA: What was your biggest challenge in starting the outsourced business?
LR: Managing workflow is the biggest challenge, so we created the AERO Workflow app. AERO manages work for multiple clients by multiple staff at varying frequencies. It provides managers with a birds-eye view of the real-time status of work, and provides staff with their work assignments, steps and resources to perform the work, etc. If you are looking at turning a practice into BPO, you have to get your workflow down first.
PC: Agreed. Building systems and workflow are critical. What's more, is that you have to be able to build these before you have the clients and the revenue. If you try to build them on the backs of your clients you will under deliver and you will lose clients. We did.
IA: How big is your team?
PC: We currently have a staff of 7 and will ultimately build to 15 or 20, at which we will be able to support 50-70 BPO SMB clients.
JR: We are a staff of 6 located on both coasts. We use web based apps and GoTo Meetings to stay connected and work very closely together. AERO allows us to assign work to appropriate staff. We are all QBO certified and fill different roles based on our expertise and strengths. Since technology is changing so rapidly, each staff member chooses a "Chief" role twice a year and becomes the firm's resident expert and contact - I am currently the "Google Apps Chief".
IA: What accounting solution(s) do you support?
JR: We have been using QBO since 2005. We've had clients on QB Desktop, Netsuite and Peachtree. We moved to QuickBooks only in 2010 and in 2011 moved all clients to QBO.
PC: We support QB Desktop, QBO and Xero. Desktop is shrinking and QBO is growing. Xero is about 30% of our overall business.
IA: Do you have other certifications? If so, how does this help your business?
PC: Yes. We are Xero, Freshbooks, Wave and Method certified. Having these other certifications gives us an advantage because it puts us way out in the front of the curve on these compared to our competitors who may just be dipping their toes in the water.
JR: Yes. We are certified in QBO - and co-author the ProAdvisor certification training. We are also certified in Method, Bill.com, and Expensify and long-time users of Intuit Online Payroll and Google Apps. We are experts using, configuring, and troubleshooting these apps...and work in them every day.
IA: Tell me about your Method practice:
JR: We partnered with two top Method developers as Cloud Consultancy. AERO Workflow app was built using Method when we outgrew our excel spreadsheets. Method lets us automate work and tailor it to a specific business, allowing us to offer unique solutions for customers. Method's tight integration with QuickBooks allows us to extend the power of the GL into other areas of a business, such as sales and operations. Our ability to customize/personalize a solution brings powerful automation and efficiency to small businesses.
IA: Final question: What would you share with anyone who is currently considering migrating to a BPO/Outsourced CFO business?
JR: Join your fellow peers and colleagues at conferences, meet-ups, membership groups, webinars, LinkedIn groups, etc. This industry/profession has a fantastic support system for sharing and troubleshooting everything from software expertise to business development to client fulfillment best practices.
PC: Read my blog posts on Intuit Accountants Blog. It's called Peter's Practitioner Corner. You can find it in the "From The Experts" section.
IA: And of course, subscribe to the Intuitive Accountant newsletter and read our website on a regular basis!
Thank you Peter, John and Laura. Your experience shows and the information you shared will certainly be beneficial to anyone interested in turning their practice into an Outsourced CFO or BPO business.
Laura Redmond is a cloud accounting expert. She is the founder of Redmond Accounting Inc, offering cloud-based Client Accounting Services and QBO Pro's Consulting Services and co-founder of Cloud Consultancy LLC, offering business automation solutions for MethodCRM. Laura is a member of the Intuit Trainer Writer Network, co-author of QuickBooks Online certification, Advanced Certified QuickBooks ProAdvisor, Advanced Certified Method Developer, and creator of AERO Workflow Management app.
John Redmond is Founding partner of the firm, John brings experience from the financial investment sector. He manages sales and operations for the firm's client accounting services and consulting business. John is a Certified QuickBooks ProAdvisor, Certified Method Solution Provider, Bill.com Expert, and firm ambassador for the Expensify Accountant program.
Peter Cullen is head of Core Performance Consulting. Core Performance Consulting's (Visionary Accounting for YOUR BUSINESS) serves our Customers as follows: we set-up and implement your QuickBooks software as a Real-Time financial management system. We teach you how to properly maintain your financial records, we work with your accounting staff, and show you how to read and understand your financial statements. The goal is to advise you to better manage your Company, take advantage of opportunities you may have and assist your decision making so you will achieve your personal and financial goals. We are confident that our business finance, tax planning and performance improvement ideas will guide you to be more productive and profitable in your business and personal lives. You will also find that our passion is to make real the promise of managing your Company with "Real-Time Information" using the latest in online accounting and financial management technology tools available to business owners.