Will Farnell of Farnell Clarke and Peter Jarman of PJCO Accountants, two of the most advanced digital firms, share their thoughts on how book keeping plays such a jugular role in their firm.
They share the nitty gritty details about what they do and how they do it.
How their team's are so fully engaged in the process and how well they are deeply connected with their clients.
The discussion starts on the topic of book keeping but soon morphs into an even more important debate about client relationship work, team skills development and more.
The commoditisation of accounts may well be a threat to the accountancy profession but not at these two firms.
"You know, I very quickly found out that it was quite easy to move up a £3000 fee into a £15,000 fee.
By incorporating bookkeeping, once you've incorporated the bookkeeping into the offering, then you start to get an awful lot more touch points with the client "
Connect with Will Farnell
Connect with Peter Jarman
TRANSCRIPT - unedited
[00:00:04] Peter Jarman: [00:00:04] it was quite easy to move up a 3000 pound fee into a 15,000 pound fee by incorporating bookkeeping into that offering.
[00:00:14] Will Farnell: [00:00:14] I think there's a number of drivers why firms have got to stop and think about what the future looks like and what are the core service lines going forward? We're already seeing huge commoditization of a vendor view accounting.
[00:00:27]We've got the banking sector coming in and, and beginning to provide tools certainly for, for kind of the most micro businesses that will let them have that bank account and their bookkeeping. And we're not far off the point at which, so I give them the ability to file a tax return from within those platforms as well.
[00:00:46] Paul Shrimpling: [00:00:46] Welcome to humanize the numbers series of podcasts with the leaders of the accounting firms. Actually the building or have built a firm of the future. Now you'll hear key [00:01:00] insights, key skills and habits that are underpinning the success of these firms. Now insight, skills, and habits that can underpin the success, the future success of your firm on this podcast, I'll be introducing you to we'll find Ella final Clark in Norridge and Peter Jarman of PJ co in Brighton.
[00:01:20] And we're going to be discussing and diving deep into what they do to ensure that they've got a process of daily or weekly bookkeeping that brings them closer to their clients, creates a working environment that really works for their team. And engages with our team in such a way that they've got high degrees of motivation and zeal for what the firm is doing.
[00:01:41]So let's dive into that podcast interview with pizzas and live
[00:01:52] Will Farnell: [00:01:52] morning. My name is willful now. I set up a back in 2007. We are farm out Clark and we are based in in [00:02:00] Norfolk here in the UK. We are about 50 people now two and a bit million revenue. We were probably one of the first hundred percent cloud practices globally back in 2009.
[00:02:11]So we've kind of lived and breathed tech for 10, 11 years played a big part about growth and not necessarily all of it, but it certainly contributed to to that And we've looked at how we combine people, process and technology to deliver really efficient clients on a very big advocate of daily bookkeeping.
[00:02:30]So looking forward to getting into the conversation with both of you today and a couple of years ago wrote a book called the digital fam, which is intended to be a blueprint for accounting firms and bookkeepers that are looking to use technology to change what they do and how they do it to deliver better experiences for clients.
[00:02:49] Paul Shrimpling: [00:02:49] Brilliant. Thanks. Well, brilliant. Be to give us your background.
[00:02:54] Peter Jarman: [00:02:54] Hi Paul. Yes, thank you for the invite. My name's Peter Jarman. I run an accounting practice [00:03:00] called PJC JCO based in Brighton on the South coast of England. We're a two partner 20 employee from a turnover around a million pounds. And we haven't been in the cloud space as long as we'll we probably entered it about five or six years ago when we made a strategic decision to change the way our practice operated.
[00:03:22]As a firm, we only use QuickBooks online. We use one bit of cloud software and we're experimenting quite heavily with lots of business apps to help small business owners. In terms of bookkeeping. We're working our way into that space. I wouldn't say we're as far as well in that. But we do see that our future is having bookkeeping as one of the core services we offer to all small business customers.
[00:03:50] Will Farnell: [00:03:50] Brilliant.
[00:03:51] Paul Shrimpling: [00:03:51] If I give you my perspective and why I wanted you guys on the call, it's because over the last 18 years, I've worked with exclusively with accounting firms, [00:04:00] helping them improve their internal processes around the camp's production, how best to work with their team to drive the three level per team member, if you will, or profit per team member higher.
[00:04:12] And recently received a text message from a client that I've worked with over the years to say that small firms are practitioner. Turnover just last, last financial year turnover, 545,000. And it just achieved a net profit of 260,000 which was his best year ever in terms of profits.
[00:04:28] And one of the one of the reasons for that is the shift that he's taken his from from old school bookkeeping to wards, more and more of these clients been on daily or weekly bookkeeping and therefore making the process of generating a set of accounts much faster, which more efficient and therefore much more profitable.
[00:04:49]And so for, for me, it seems as though that may be there's there's a future in this. Let's get the bookkeeping on a
[00:04:56] Will Farnell: [00:04:56] regular, maybe
[00:04:59] Paul Shrimpling: [00:04:59] just [00:05:00] maybe.
[00:05:00] So would you With that, with that perspective on the future, what is it, what is it you think? Or why is it you think that the daily bookkeeping piece or the weekly bookkeeping piece is so important for the future of your firms? If not the profession, I want to start with you to begin with Peter.
[00:05:16] Cause you're in the mix there. Whereas when it looks as though he's, he's already got his master's degree
[00:05:20] Peter Jarman: [00:05:20] in it. Yeah. Yeah. I mean, are they, you say weekly bookkeeping, daily bookkeeping. I think in the first place it's bookkeeping. I mean, most accountancy practices in the UK have always treated bookkeeping as a secondary product.
[00:05:35]And I think it's becoming obvious that it's one of the key products that we sell. You know, I can I, I very quickly found out that it was quite easy to move up a 3000 pound fee into a 15,000 pound fee. By incorporating bookkeeping into that offering. And the other thing about once, once you've incorporated the bookkeeping into the offering, then you start to get an awful lot more touch [00:06:00] points with the client.
[00:06:01]You have a lot more conversations about how their business is doing, and you can actually start to build a better small business for them because of the number of touch points you have. Certainly I find now with the clients where we have got weekly to be fair daily and in some cases, instant bookkeeping.
[00:06:19] And I think, you know, in the end we will probably agree in the end, we'll get to instant bookkeeping. You know, we have an ice cream parlor where we've got instant bookkeeping on ice cream sales and that's made a real difference to the business owner there and also a real difference to us understanding how his business works.
[00:06:36]And in doing that, we're much more able to offer lots of other products around, around that business and grow the fees. So I think that the whole bookkeeping space is a space that we should all be looking at and trying to expand them. Yeah. Aye. Aye. Aye.
[00:06:51] Paul Shrimpling: [00:06:51] Aye. I can't do anything other than agree with you, Peter there's.
[00:06:54]There's a film I was speaking to last week and they they have seen a profound uplift in the number of clients wanting their [00:07:00] bookkeeping service over the last 12 months, really when they started to focus on it. Partly because they're asking questions in terms of how the, the business owners whether the business owners want up-to-date information, as opposed to historical information.
[00:07:13] That's, you know, two months, three months now, books in nine months and sold and they found it relatively easy. It's been like putting, pushing an open door, really with their clients to almost take over that bookkeeping element. And they've seen, okay. They don't quote 3000, say up to 15,000 pounds of feed dived into the the bookkeeping piece, but they have seen a significant uplift in their scale of the fees with those clients.
[00:07:36] But like you say, the intimacy that they have with, with that particular client in their ability to help them. So I'm seeing exactly the same thing. What would, what are your thoughts on just that general bookkeeping piece? Well, yeah, I think, I think the start
[00:07:49] Will Farnell: [00:07:49] point is there's a, there's a mindset challenge as, as Peter alluded to and I set the phone up in 2007 accountants traditionally have the views of bookkeeping as [00:08:00] being low value low margin, if any margin to deliver it, it becomes too expensive for an accounting firm to deliver it.
[00:08:06] So clients won't buy it. And that, and that's the start point. And in fairness, that's the view I had in 2007 and we didn't do bookkeeping. It wasn't until 2009 where we started to see what was possible with the technology we started to use. But even at that point, it wasn't until we started using receipt bank in 2011, that the penny finally dropped and we recognized how valuable that service line and how profitable that service line could be.
[00:08:34]But in terms of the bigger, the bigger picture I think there's a number of drivers. Why firms have got to stop and think about what the future looks like and what are the core service lines going forward? We're already seeing huge commoditization of a vendor view accounting. We've got the banking sector coming in and I'm beginning to provide tools certainly for, for kind of the most micro businesses that will let them out of [00:09:00] their bank account and their bookkeeping of one app.
[00:09:02] And we're not far off the point at which they give them the ability to file a tax return from within those platforms as well. So we're seeing a huge amount of change, but I think more importantly is the culture and the societal shift in terms of differing expectations. And Pete Peter talked about client touch points.
[00:09:22] So when we talk about client touch points, we're talking about delivering better experience and. Professional services can no longer sit there and say with special services and papers, they've got to pay us, they've got to do it. We have clients and customers, how you want to position them have choice.
[00:09:39] It's really easy for anybody to go to Google and say, find me an account and invite know in knowledge. What can we do to sat asked all apart, what is it that we can do to demonstrate that we can deliver the kind of experiences that the consumers that used to get in from the likes of, of, of Amazon and Apple.
[00:09:59][00:10:00] And it's really easy to be better than another the accountant, but that shouldn't be our benchmark. So client experience is key. What are clients really want for sale on accounts? And so what I think clients want buy them what they really want. And we have to have data. We have to understand how, how we support our clients.
[00:10:17]And they need. Data to make decisions. And the technology now lets us deliver that it didn't before. So I'm not this isn't a bash accountants that I haven't been doing this stuff, the technology. If we look at the fact that if you're doing bookkeeping on a regular basis, you you've got to have three accounts or you got to have a general ledger in the cloud.
[00:10:36] So it's really only since receipt bank started to get any real penetration in 2013. So we're only talking 70 days for a fairly slow reactive market to catch up. But the technology is now that there's a level playing field. Everybody can be as, as as efficient and as effective as us all or Peter's firm because the technology is there for everybody to use.
[00:11:00] [00:10:59] Paul Shrimpling: [00:10:59] Yeah. So it's just that cultural willingness to adopt it. But just want to pick it. You started that started talking about the commoditization of annual accounts. Yep. And yet the, the evidence I'm seeing across on the grounds, I work with a cross section of 35 40 firms. There's not much of an indication that there's yet that commoditization of, of annual accounts, but you're convinced that that that's
[00:11:22] Will Farnell: [00:11:22] here now.
[00:11:23] I think there's those Glade to price transparency, which generally leads to commoditization. So we've, we've seen a shift over the last. I is also of, of kind of the the, the guys that talk about pricing talking about, do you put your price on your website? Do you package your menu base? You couldn't do this stuff until you had consistency in the way you deliver services.
[00:11:47]But we're seeing more and more people we've, we've flipped it again. Now we've, we've moved away again from having price on websites, rents that period while we did. But we've kind of moved that to a point where we give indications and fee [00:12:00] levels to, to kind of filter out. But as people can shop around and as you get people I mean, we used to look at conscious as a visual note chronic Dre world because they only doorstep, but we used to, we used to look up crunches that the cost leadership strategy at 69 quid a month, whatever it was in 2010, when we were kind of looking at what they were doing painting with to a point yeah.
[00:12:24] Now. There's this paper that I pushing lower fees than that. So there will, there will be price sensitivity. So what do we all of this about recognizing a, if not a commoditization, already a move towards commoditization that we've got to get back to articulating what we do for somebody to pay a premium for what we deliver.
[00:12:47] Paul Shrimpling: [00:12:47] Yes. And Peter, is that, is that, is that what you're seeing around the ability to use Will's worth that articulating of the value is easier or better or stronger with the bookkeeping piece, then annual [00:13:00] accounts in isolation? Is that what you're seeing or what, what's your views on that? I
[00:13:02] Peter Jarman: [00:13:02] think that the closer you can get to be in the firm that the client, the customer really wants the easier the pricing question is certainly at the moment, I don't think we really find pressure on annual accounts.
[00:13:15]I think if we're offering the right sorts of service and, and that's the whole package, you know, the right sorts of people talking to the right sorts of clients at the right speed, with the right speed of reply and that sort of thing. If all of that's in place, I don't see that there is a real. Desire by the clients to push you know, make price, the key indicator.
[00:13:37]Certainly for, for most of our clients, I would hope, and I seem to find that it's really them value in what we're trying to do for them and then wanting to work with us. So I think price is, is vital if it's a commodity. But we're not trying to really offer a commodity here. We're trying to offer a whole package.
[00:13:55]And that package includes people. And you know, people buy from people don't they? [00:14:00] So I think that. Getting the people bit in it eliminates a lot of the the pricing issues. Yeah.
[00:14:09] Paul Shrimpling: [00:14:09] analogy or of, of, or reference point where you've got people in process. So you get the process, right. And, you know, that's what this conversation is about.
[00:14:16] As much as anything is coming out, the process around bookkeeping, right. That enables the people value part of the delivery to be seen as genuinely valuable. You know, I've taught argued with supervision for 18 years, about the humanizing, the numbers piece, you know? Yes. Accountants are the numbers experts, but what we've got to do is humanize those numbers.
[00:14:40] So it means something to the business owner. And assist their decision-making their confidence and certainty about the future and in an environment where economic certainty is taken a bit of a hit in the last few months that, that, that confidence and certainty that an accountant can bring to the party [00:15:00] through their services is, is, is potentially massively valuable.
[00:15:04] And it's interesting, you know, I know we've, we've spoken during the lockdown and I've spoken to tonight 200 conversations with different firms over the last 12, 13 weeks. It seems that the whole profession has stepped up in terms of its closeness to their clients because it's been absolutely necessary.
[00:15:22]However, there's two class of business owners out there. One who've got access to relatively up to date data, and those that haven't, and it's the ones who've got the the, the up-to-date bookkeeping who can, you know, use a fluidly or a float, or one of the other apps that enables them to see the future performance of the business, if you will, rather than just historically.
[00:15:42] So do you want to give us a piece on, on, on your, on that, that forward looking piece, that book people keeping enabled as well? Yeah, I
[00:15:48] Will Farnell: [00:15:48] think before I do that, that point that that you just made there about the CLA firms talking to their clients more I think if there's anything that anyone can take from this kind of lockdown period I've spoken to lots of [00:16:00] firms and we've talked about, have you grown and, and all this kind of stuff.
[00:16:03] And they've said, well, no, we haven't grown, but our clients really appreciated all the stuff we've been, we've been doing for them. So we've built lots of Goodwill. And, and there's something in that because we're talking about we, we're going to talk about daily bookkeeping and why we do it.
[00:16:17]One of the reasons that I wanted to do it is it increases number of client touch points. So it means that we're talking to 60% of our clients as a minimum, once a week. Now, if, if firms are going to take anything from this lockdown period, it's that point that many of them will have said we've created a really good Goodwill with our clients during this period.
[00:16:38]Why have they done that? Because I've been talking to them every two weeks when the government have given an update. So look at the effect, talking to a client has it, doesn't have to be follow schemes updating, or you can go and get bounced back loud. It's just a conversation. So look for reasons to have regular conversations with your clients, you will build client [00:17:00] loyalty, you'll build value in the relationship.
[00:17:02] So that for me is probably the biggest single takeaway for firms from what's been otherwise and fairly kind of intense period of time. Yeah.
[00:17:13] Paul Shrimpling: [00:17:13] Can I just interrupt that? It's that you talk to your clients of your clients once a week, was that prior to lock down.
[00:17:19]Will Farnell: [00:17:19] Yes. Yeah, that's, that's absolutely the daily bookkeeping process because we're today in terms of the way we run our processes is we are I wouldn't go as far as I would in bookkeeping daily, but we're processing transactions daily.
[00:17:33] So the way that our process works, our team come in. The first thing they do every morning is that clear their receipt bank transactions. They, they have a block of clients are looking after it might be 25 clients each they'll clear the receipt bank transactions. They'll dive into zero. They'll do the bank reconciliation, then move onto the next one.
[00:17:50]And we, we average four minutes per day per client. Is, is kind of the metrics that we're working to. Now, that's an average. So I was I was doing a mentoring [00:18:00] session with an accounting firm in our office about a year or so ago. One of the team went out and got some lunch and they brought the lunch back in and we were just talking about data processing at that point in time.
[00:18:10] And this was one of our young apprentices. He was a 19 year old lad. And I, I asked him how many clients do you look after on a daily basis? It's about 25 as normally, how long do you spend on your receipt bank and bank rec every morning. And he said, normally it's about 45 minutes. So you don't have to be an accountant to work out the 25 clients.
[00:18:27] 45 minutes is less than four minutes per day. But it's, but it's an indicator of of the way that the process we've adopted is, is a really efficient way to deal with that. So do that every day. At the end of the week, we, we effectively go out to the client and say, Hey, Fred, we've got a bunch of, of information missing to get you bookkeeping up to date.
[00:18:48] So the week, can you let us have these these basic paperwork? We'll encourage them to get them back to us Monday. So pretty much by Tuesday morning, the client's looking at an upstate set of records for, for the week before. But it's, [00:19:00] it's facilitating that conversation. And I always use the analogy going back to 2007 when our first out FastPass night recruited with somebody to pay.
[00:19:08]And it was, it was in the days where most firms did annual payroll for directors because there was no RTI. So you'd do it in March for the payroll. We would do payroll every month and we'd email a pacer every month. Because it created a touch point. And what happened is clients would send an email back, say, yeah, thanks a while I think about it.
[00:19:28] I've got this challenge and we trigger and instigate conversations. So,
[00:19:32] Paul Shrimpling: [00:19:32] so it's the An hour a day, per team member covering off their client bank of 25 clients in terms of processing triggers a call once a week around any queries of stuff that's missing or, or things that are uncertain about. And therefore the client's experiencing that weekly, a weekly dialogue with final Clarke.
[00:19:48] What, what's your process around that? Peter, by the way, will I want to pick up on a couple of things on that and I just want to get pizza's views on how his processes works.
[00:19:57] Peter Jarman: [00:19:57] Yeah. I mean, I think, I think that the starting [00:20:00] point is you've got to think about bookkeeping. It isn't what it was. I mean, I'm sure will doesn't do traditional bookkeeping anymore.
[00:20:08] Bookkeeping that you've got to do. We call the smart bookkeeping and we get all of our team to try and work out ways of actually. Getting that bookkeeping, getting that data into the systems and accurate quicker. Because I think that, you know, the starting point why most accountants didn't want to be in bookkeeping is they didn't want to earn 25 pounds an hour and pay someone 15 to do it.
[00:20:31] I mean, it just wasn't economic to do that. And so I think the key is if you're going to do bookkeeping, you've got to do it really smartly and do it smartly. You've got to do it a lot quicker if you're only 25 pounds an hour or say 150 pounds for a bookkeeping piece, but you can do it six times quicker.
[00:20:50]You can suddenly earn 150 pounds an hour out of it. So it's very much a matter of using all those apps that were around. Using the [00:21:00] automation in those apps to get bookkeeping done quickly and smartly, and certainly, you know, the receipts bank, but the auto entry, the, the rules in the, in receipts bank and the, and the bank reconciliation using all those things.
[00:21:13] So that, that full minute look at the clients becomes vital. You get good data out of that. So I think, you know, the very first point is thinking about what bookkeeping you're actually doing. And certainly
[00:21:28] Paul Shrimpling: [00:21:28] fundamental system change around that. So again, that, and so your processes internally, do they mirror what Will's doing in terms of that sort of daily processing in, or how are you doing
[00:21:40] Peter Jarman: [00:21:40] it? Yeah, I mean, we, we do pretty much the same thing. I wouldn't say that every day we go into every client and check receipt bank and reconcile the bank.
[00:21:48]But that will be done every week across the clients that we offer the bookkeeping package for. And for some of them we're still not at the point book, we're offering all of those bookkeeping packages and that might be done every month. But [00:22:00] I think. Echo Will's point there. You know, we all learned that by offering payroll monthly, by sending payslips to to customers monthly, it created directly 12 touch points instead of one certainly for our contractor clients by sending them at their payslips every month we eliminated the need to compete with crunch at 69 pounds an hour.
[00:22:22] We could, we could charge an awful lot more than that for similar sorts of similar sorts of clients, because we were having conversations with them once a month. And they saw us as part of their overall wealth management package for all intents and purposes.
[00:22:39] Paul Shrimpling: [00:22:39] One of the messages that I felt like the proverbial stook record is that is one of what, what firms do to get to be part of a client's inner circle.
[00:22:50] As opposed to just being a transactional you know, part of that business. And as soon as you do things that put you in the client's inner circle, so [00:23:00] that they see you in that heart and their mind is important to their business, then a price becomes less of an issue. The, their openness to hearing what you're saying you know, becomes more relevant, more likely so that you can help them better.
[00:23:14] And part of that is the regularity of the contact with that you two are both talking about. But I've just, I've just, I'll just challenge myself here. There's a, there's one thing to have a call once a week or once a month, Peter around the bookkeeping pieces. Well, that's not necessarily a deep conversation in terms of the decision making that that business owner has got to take on a week to week or month to month basis.
[00:23:35] Hey, how, how has this up-to-date bookkeeping? Whether it be. Monthly weekly or daily. How's that influencing those deeper conversations that where the, the real value in the relationship, whether accountants sets,
[00:23:49] Will Farnell: [00:23:49] I think that we, we can look at the, the key possible out of the last. Five years.
[00:23:56] Peter Jarman: [00:23:56] it it's, it's
[00:23:57] Will Farnell: [00:23:57] been a buzz word cause it's a buzz word to sell [00:24:00] software. If, if we're really kind of candid about it. But I mean, I. Panoramic counting as, as long as perhaps you guys have because I went into it, like, of course that's not ending day we've come. Right.
[00:24:15] as long as I can remember accountants have called themselves accountants and business advisors. So it's like, what's, what's changed. So what's really changed that all of a sudden, we've all got to stop being accountants and we gotta be advisors. So I've, I've defined advisory when I talked to to, to audiences and, and my own family, of course as advisors, we will be doing advisory as a fan.
[00:24:34] When every client we've got picks up the phone and asked every question of God that's there. And how do we do that? We have really great relationships with our clients. How do you get really great relationships with your clients? You talk to them regularly and they build a relationship. You build a relationship on trust and credibility and, and all of those other things.
[00:24:51] So, so those weekly conversations that often that don't move only, it might just be an email, but we are, we are creating a [00:25:00] conversation in some form keeps us front of mind. For our clients. So when, when they do have a problem and I know this, we should be proactive and this is a reactive. But if we're talking to our clients regularly, we're front of mind.
[00:25:14] So when they have a problem, they say like, we're going to go find out and see what they think that opens the door to the conversation. But whilst we're talking about bookkeeping and a lot of cases, the client will call back. So yeah, I can't find that Sage and you start to have a conversation, but we know we get to know what keeps our clients awake at night, what their challenges are just because we're building really great relationships with them.
[00:25:37]If you don't, if you don't have those conversations, if you talk to a client once a year, you're never going to have a relationship with that client. It's always going to be a commoditized service. Because it's transactional we've got to move away from, from transactional relationships. And, and the way we do that is by working hard to build something that isn't the transactional relationship.
[00:25:58] I mean, it comes, it comes [00:26:00] back fundamentally to simple things as well, like your business model. So the subscription model which drives every other part of our life. So we subscribe to everything and our clients should be subscribing to our services. So if you bill annually, you're creating a mindset of of a transactional service.
[00:26:21]Whereas we want to be billing clients, a fixed monthly fee. It's a subscription. It's there when they need it. So if these other things that drive the perception of the client relationship. Yeah.
[00:26:36] Paul Shrimpling: [00:26:36] So the the, that, what you're saying is, I think in summary, the, the regularity of the contact every week drives the intimacy.
[00:26:43] The intimacy means that the client doesn't hesitate to pick up the phone or zoom in order to have a conversation about something more fundamental and missing with sleep. It's just the I'm trying to avoid a metaphor, but it's, it's hard to avoid it in that it, you know, Wedding anniversary [00:27:00] 32 years last week.
[00:27:01] How did that happen? I don't know. All credit to Kate for sticking out with me. The, prior to the wedding, there was lots of points of contact that ultimately results in you know, just normal life. And, but then there's some big issues show up and it's in the big issues where the depth of the relationship comes from at a really deep level.
[00:27:19] But you get deep just because there's a regularity that I think is what you're saying. Yup. What are your
[00:27:23] Peter Jarman: [00:27:23] thoughts on that? Yeah, I think you have to actually do this across the whole firm, because if you're going to talk to all the clients every week and it's just you talking to them, you're going to spend all day 24 hours a day talking to every client and you're going to do nothing apart from talk to them.
[00:27:41] Getting that getting that across the whole firm. Certainly, you know, we, we try to get every one of our members of staff to have conversations with every client. And a lot of that is doesn't have to be deep tax or accounting issues or bookkeeping issues. It just has to be, you know, Where are you going on holiday?
[00:27:59]How's your [00:28:00] dog getting on after visiting the vet? You know, how are your children at school? It's all those things that bring out the, the business problems. When you start to talk about just general life with your, with your clients coming out from that, you get the business problem, you get the them at some stage say into our, our, you know, our new trainee that knows nothing about putting a commercial property into a SAS, but it comes out really like to do something with my building.
[00:28:25] I'd like to buy that building next door, and then that. Message gets floated up to to the right person within the organization. Great. So I'll
[00:28:33] Paul Shrimpling: [00:28:33] on that one. D does that really forgive my feet on the street like you guys have? So I have that helicopter view of all the firms that I work with. Do you really get a business owner?
[00:28:43] Who's been having a conversation with one of your team about the visit that the dogs take to the vet, and then, then that later that that results in a conversation around putting the, you know, buying a building and sticking it in their SAS.
[00:28:56] Peter Jarman: [00:28:56] I think that's the easiest way to get to that point. You know if, if [00:29:00] you don't have those initial conversations, you don't start to pick up on those things.
[00:29:04] And to be fair, I would say I've done a few find this as well. Well, but often it's so sexist and they were, the wife of the business owner is the person that's chatting to our staff every day or every week. And she's saying I'm really want to get my husband to buy that building next door. All, you know, we keep looking at that building next door and she might be saying this to the the person that's processing their receipts, bank receipts.
[00:29:30]But that message will then get passed on to the portfolio manager or to myself or caravan to sort of react to that. So certainly I think that those sorts of messages do come through that way. And I think now talking about people, because in the end we're dealing with people's wealth. They might have businesses, they might have successful businesses, but in the end, we're looking after their, their, themselves, their lifestyle, their families, that's where we find that he ended up, how well are we going to look after those people?
[00:29:59] Paul Shrimpling: [00:29:59] Yeah, it's [00:30:00] interesting that marketers would say that categorize accountants as a business to business organization, as opposed to a business to consumer organization, when actually the reality is it's business to people, your reference earlier pizza, it's people to people go on. Will you wanted to respond to pizza?
[00:30:20] I've got, I
[00:30:21] Will Farnell: [00:30:21] think that it's honestly, right. I mean, when we look at the success that we have now, with the way we deliver daily bookkeeping, we had the technology since 2011. But. It didn't work as well. In 2011. It does now. And the reason for that is that it's, it's also about the structure and it's about the process and it's about the white people.
[00:30:45]So it's, you've got to get the balance right in the triangle of people, process and technology. And I think the big thing for philosophy that was our breakthrough was the structure in terms of, of how we structured our client management teams. And, [00:31:00] and that that's been the byte, that's been the key in terms of making sure that we we're having regular contacts with clients, but it's the same people having those conversations.
[00:31:10] And as data says, if, if Peter ally we're going to try and have that conversation with every client we've got 600 business clients, 600 limited company clients. There is no way I could talk to 600. Limited company clients once a week, it just would not work. So when we asked to one of the challenges for certainly smaller practice owners is letting go and the fear of letting go of that control and that, and other people do some of this stuff.
[00:31:35]But it's fundamentally critical and I'm sure Peter will, will share that. That view is how to, how do we put the controls in place to make sure that we can let a 19 year old plaintiff this loose on our clients?
[00:31:48] Paul Shrimpling: [00:31:48] Yeah. There's that there, there is that nervousness for sure. Well about you know, the, that silo of the relationship, it's mine.
[00:31:55] It's not yours. I know you work with me, but it's mine. [00:32:00] You know, this is about us serving our clients, you guys serving your clients and you can't, like you say, Peter, you'd be on the phone or zoom all day, everyday 24 seven. If you were to have weekly conversations with every client and your client back.
[00:32:15] And therefore there is little choice if you're serious about having that weekly rhythm to the relationship piece, but to delegate that away to the team, build a process that supports that you use the word control. Well, I'm not sure you mean control, dear. Just it's a confidence in the processes. That's a way of looking at it.
[00:32:36] Will Farnell: [00:32:36] Yes. Yeah.
[00:32:39] Paul Shrimpling: [00:32:39] That's the Sheltie sound. So Will's given
[00:32:40] Will Farnell: [00:32:40] the same.
[00:32:43] He hasn't grown up controlled yet. That's the trouble,
[00:32:49] Paul Shrimpling: [00:32:49] but if I can just on that people from Peter, so we've got and you mentioned in young people as well. Well, so we bring these people into the practice or any, anybody in the practice and with [00:33:00] them focused on that daily bookkeeping or daily processing, weekly bookkeeping up to date, weekly conversation with client.
[00:33:09]And then the husband brings up the fact that he's interested in buying an extension on the, the, you know, the building next door, for example, or the wife has mentioned that as well. You really have process in place that ensures that every one of those opportunities gets flagged further up the pipe for a more meaningful conversation with a business owner.
[00:33:29] Peter Jarman: [00:33:29] But what I wrote to do that is relatively simple. We, we reward our portfolio managers. I can't put funny on me, which is based on the income that they create the income that they run in the first place. And then the extra income that they create is very much part of their bonus package.
[00:33:46] So it's in their interests to spot these opportunities. Bring them to us and, and create extra fees out of, out of that. Because they have a much nicer Christmas with a much bigger bonus. So [00:34:00] that that's in the back of their mind all the time we're set to them targets of their annual fees. And that's the, the ongoing bookkeeping and accounts, but also how much, how much extra, extra can you work out of that portfolio?
[00:34:14]Where can you find the extra fees and, you know, spotting those real opportunities that our fees that we wouldn't have spotted that we really you know, praise our employees over, you know, when someone finds something like that, cause you know, the opportunity to put assessing place where they wouldn't have normally thought about it.
[00:34:30] And it wouldn't have come up in a conversation that, you know, the partners would have had with those clients at any stage that we would reward very well.
[00:34:39] Paul Shrimpling: [00:34:39] Oh, okay. There's two things there. I want to pick up, forgive me, Peter for saying it this way, please. So you've opted for the bribery approach.
[00:34:51] Let's broaden our team. However, you've balanced that with the recognition [00:35:00] in a public setting for actually spotting an opportunity as well. Is that right?
[00:35:04] Peter Jarman: [00:35:04] Yeah. I think getting a bribery is, is yeah, it's a bit too, a hard word to say, to be fair and stuff. Yeah. Certainly if you can get the portfolio manager with a problem that they haven't had before and they find it interesting, it makes their job that much more interesting.
[00:35:23] It expands their career because yeah, everyone that we've got here, you know, we've got them for a while. And the time that we've got them, all we're trying to do is improve their careers. So not only for us when they spot an opportunity for that those sorts of things, it's for them as well. That's improving their overall knowledge.
[00:35:39] It's improving their career development. So I think probably pretty S slightly too hard to word. I say, it's career
[00:35:44] Will Farnell: [00:35:44] progression
[00:35:47] Paul Shrimpling: [00:35:47] it it's I accept it is too harsh, a word. There's a, it's the reason I'm challenging it is because there's that we want our people to do a good job because they want to do a good job as opposed to wanting to do a [00:36:00] good job, because they're getting paid more for doing the good job.
[00:36:03] It's a subtle but important difference. And I think if what, because the reason I'm challenging it is I've seen many firms try to put in incentive processes, incentive programs for their team, and they've either backfired or they've not worked well. One of the reasons, one of the primary reason, I think they don't work well is because they see them as working in isolation from eight.
[00:36:25] Now let's recognize the fact that actually someone's flying, built that this building needs to be bought and stuck into a SAS. And there's an opportunity there to help the clients. And, and that's happening on a, there's a process around that, which is flagging up the fact that those opportunities have been mentioned this week.
[00:36:41] So I'm curious as to what's going on in the firm, your, for the PTR firm. Well, that actually flags up from those bookkeeping conversations, those other opportunities. What process have you got in place? That's actually filtering those opportunities up the pipe.
[00:36:56] Will Farnell: [00:36:56] So I think, again, this comes back to the structure.
[00:36:58]So we have, we [00:37:00] operate what call pumps each pod now I'm going to give you the, the version that was working three months ago. Cause my team have changed it a bit. And I'm not quite sure what the new bit looks like. But historically what we had is a team of four, a client manager, senior to Chinese.
[00:37:15]That pod looks up to 250 K of revenue in terms of recurring revenue running at about 60% GP and they manage a portfolio of clients ranging from 80 to 120, depending on the mix of clients they've got in that pot. So the manager is responsible for pretty much everything to do with that, with that client And they sit on a bank of desks together when they're in the office and not choosing to work from home or imposed working from home.
[00:37:44]But stuff gets fed through because they work in a very close knit team. So people hear the conversations and if, if a client says there's a, there's a challenge or an issue, then they'll talk to to the manager who will pick it up and either filter it to ask specialists, tax teams [00:38:00] filter up to, to the director team or they will deal with it themselves because they're all capable, qualified a good client managers.
[00:38:09] Paul Shrimpling: [00:38:09] All right. So you got the journey is having those weekly conversations because the pods so close knit, Yeah, they get from those conversations, get flagged up on the opportunities, get spotted by definition. Yes.
[00:38:20] Will Farnell: [00:38:20] Which some people would say we want a series of siloed firms within our firm, but I don't, I don't buy that.
[00:38:26]Is actually just a very, very effective way to structure and scale and accounting firm, because all we do is we bolt on a new pulse. If we, if we have the white culture that our managers enjoy what they do, they enjoy the environment, the culture that we have then type, hopefully they're going to stay in a, not having a reason to want to go anywhere else.
[00:38:49] Paul Shrimpling: [00:38:49] well, I'd argue in favor of that Willem on the grounds that the structure is supporting a high quality relationship with the client and therefore the structures, right? If the structure doesn't support [00:39:00] high quality relationships with the client, the structure's wrong, it's never going to deliver the value that the client actually wants from their accounting firm.
[00:39:06]Peter, what are your thoughts on that? How does, how do you actually, what processes or structures have you got in place to filter them?
[00:39:12] Peter Jarman: [00:39:12] We also have pots and pots as well. Our pods are pods of two people. So we have a manager. We have a a new graduate trainee. And our aim within those pods to people is that that graduate trainee becomes a portfolio manager within two and a half years.
[00:39:31] So we're almost from day one, trying to show these people how to manage clients. And as part of that from day one those trainees are talking. To the clients as if they're going to be their manager. In two years time, you know, they joined our firm because they want to be a portfolio manager in two and a half years time.
[00:39:52] That's our selling point. That's why we can get them to come and join us as well. We can get good quality people to come and join us. [00:40:00] And so they're already bought into the fact that they want to they want to run a portfolio of small business owners affairs. And as part of that, I want to learn.
[00:40:09] They want to understand what they're doing. So they're gonna keep asking questions. And certainly we don't blame anyone at any stage in our politics. If anyone gets anything wrong, if anyone gets anything wrong within those pods says the wrong thing does the wrong thing. There's only in the end one person to blame.
[00:40:26] And that's me for not having the right system in place to control that era. And so I think experimenting and allowing people to experiment all the time. Is the route to get into ask these questions. I'm not having any fear of asking the questions not having any fear about chatting to a client, as I say about their pet or their holiday or their job.
[00:40:50] You know, those things are all part of what we offer because they're going to be the things that draw out those questions. You know, I think that's, that's the key in that,
[00:41:00] [00:41:00] Paul Shrimpling: [00:41:00] that you know, removing fear from making a mistake, therefore people are willing to test, measure, ask a question they otherwise wouldn't have done.
[00:41:08] And if that within the right structure within the pod means that naturally like, well, they're those, those those opportunities is going to be flagged up on there. Yep. No. Very good. Very good. So interesting that this conversation was meant to be about weekly or daily bookkeeping that we spend most of the time on that relationship piece, which is where the value with the engine.
[00:41:29] Peter Jarman: [00:41:29] probably why we're doing daily bookkeeping. It's for the relationship. Absolutely.
[00:41:36] Will Farnell: [00:41:36] On that point. I mean, I think the biggest change that's got to happen, and there's a couple of, of ingesting things that have happened in, in the profession over over the last couple of weeks, particularly focused around the seat bank who have acquired Zambia analytics.
[00:41:51]For those that don't know, Zambia analytics is, is very much about reviewing and checking the quality of your, your general ledger data. So [00:42:00] it's a perfect. Marriage with receipt bank really exciting there equally at the same time, the state of events of the partnership with Futurely.
[00:42:09]I, I think it's, it's kind of a bit more of a, of a marketing partnership. They're, they're looking at integration and things, but it's, both of them are focused on the importance of, of they talk about real-time data. I have a real problem with real-time data because right now we can't deliver real time as much as we'd like to, because real time in minutes, true definition is exactly that.
[00:42:33]And our data is a real-time Mitzi. It's kind of live accounting data. But it's not, it's not real time. But the conversation is about the importance of real time. And I've watched a couple of the webinars that these guys have done talk about what they're doing. And the big thing for me is that it's all great.
[00:42:49] Well, what we've got to do is change the mindset of the firm owners to recognize the importance of, of more update data. And to do that, we've got to shift [00:43:00] from a point of seeing real-time data as an add on service, to delivering some form of up-to-date data as a default service. And that's the point?
[00:43:12] So how do we do that? How do we get accounting firms to say what most of our clients by farmers is this? When they have a conversation with a new prospect and start the conversation with the thing that is going to deliver most value to the client, rather than this view, that also what we think the client wants, which is a new accounts without actually having a conversation.
[00:43:35] Then the client says, what can you do bookkeeping? Well, yeah, we could do some bookkeeping for you as well. And this is, this is the impact let's start with, with what we really want to deliver. Wait, shouldn't be.
[00:43:46] Paul Shrimpling: [00:43:46] Can I just dive into that a little bit manufacturing hours you know, run a production company, making furniture for a long time before I started working with the cabinets.
[00:43:56] And one of the the, the, the big buzzwords in the world of production is just [00:44:00] insight. So all your, all your supplies turn up just in time, just, just when you need them. So the frames, the Springs and the cushions would show up the same day or the day before we needed to make that piece of furniture.
[00:44:09] And if you could make it that way, you'd have a low stocks and you'd have a really clean, efficient production model. And if it didn't work all hope, all hell broke loose because you like anything. So I had quite a few of those scares. Yeah. And and, and lost profit weeks. But Hey we, we learned how to build that model and that business.
[00:44:25] I just wonder if there's an I'm asking for this to be challenged actually is the information that business owners want. It needs to be just in time. So when they need to make a big decision, they've got just in time information, or is it that they need data? That's, up-to-date accurate every hour of every day of every week.
[00:44:42] Cause they're not making the big decisions every hour of every
[00:44:44] Will Farnell: [00:44:44] day. No, but often we don't know when they need to make the big decisions. So let's, let's look at COVID. As an example, there were millions of small businesses that needed to make an immediate decision and needed to provide their bank with immediate data.
[00:44:59]We were fine. [00:45:00] So most of our clients, if they want advantage accounts, they had them up to last week. So no problem. We don't know when this stuff comes. And, and I know there's, there's lots of debate about whether we should be doing. Weekly bookkeeping that alone daily monthly is enough, but what happens?
[00:45:16]If you've got a problem on the 30th of the month, the likely of that is your data's 30 days out a date. Cause you haven't got to month end and you haven't reconciled the bank account. So at that point in time, you can't, you can't make that immediate decision. You've got to wait for somebody to get data up to date.
[00:45:35]This is a point we don't know. It doesn't need to be up to date every minute because we know we understand materiality. And if it's the seventh of the month and we've got data up 31st, that's probably fine. Yeah. Yeah, yeah, yeah, yeah.
[00:45:50] Peter Jarman: [00:45:50] Too. What are your thoughts? I think the question is saying, you know, we do book keeping is far, far too simple.
[00:45:57] Bookkeeping has, is an [00:46:00] enormous subject when you start to get into it. So saying, Oh yeah, we're an accountancy firm where we do bookkeeping. That could mean that. We're just going to record down your bank account. We're going to handle that as your expenses. I think it's a matter of building that system in the background of what bookkeeping you actually do, you know, do we start, you know, we can out here, if you take it into the bigger picture, we can start with helping you with your purchase.
[00:46:21] Audrey. Could we help you with your purchasing? You know, could we help you find the right prices for purchasing? Could we help you at purchase order stage? Could we help you match in deliveries and purchase orders? Could we help you match in deliveries, purchase orders and purchase? It always says into receipts bank, into your bookkeeping system.
[00:46:40] And similarly with the sales side, you know, do we start at the till the example I gave you earlier, did we start at the tail and the exact sales you're selling each minute? Do we start the bookkeeping element at that point and sell forwards from there, or, or offer services forwards from there?
[00:46:57] I think bookkeeping is such a big subject that [00:47:00] there's so many arms to it that you can really go off in all kinds of different directions with the clients. And a lot of the clients don't realize, you know, so many of my small business clients you know, Don't even realize that could be a purchase ordering system that could make sure that they were at definitely having the right stuff delivered to the right building site at the right time at the right price.
[00:47:20]You know, and it's getting down to those sorts of conversations with the business owners. So they don't, I think a lot of them don't even know what I want in the first place. And it's for us to build a system of bookkeeping that tells them you know, these are all the options and there are hundreds of different options within bookkeeping for, for services to be
[00:47:38] Paul Shrimpling: [00:47:38] offered.
[00:47:39] Well, you've got, you've got to bring that daily or weekly perspective though, to that Peter,
[00:47:44] Peter Jarman: [00:47:44] each for each stage, you go down that it gets closer and closer to daily. It gets closer and closer to real time. Yeah.
[00:47:51] Paul Shrimpling: [00:47:51] You know, I was watching a a hinge webinar from the States a little while back and they shared a slide.
[00:47:58]And, and it was, it was on [00:48:00] the, on the, on the Y axis, it was the degree of uncertainty, a business owners experiencing all the accountancy firms experiencing and on, on the Y axis and on the X axis, there was the regularity of the reporting. And basically it was just graphing as, as uncertainty goes up, the regularity of the information, the measurements, the KPIs and reporting needs to be more frequent and it's, you know, and, and, you know, w we, you know, we've experienced in the COVID-19 piece and in the economic uncertainty ahead, there's a very, very strong argument that you guys are already doing it.
[00:48:37] You know, this, this podcast, this webinar's about encouraging the profession to get to a place where actually regular rhythm is daily or weekly rhythm is what's going to drive new habits. You know, my piece, I felt rather I go on stage, I'm talking about, it's not just knowledge. It's about. New skill implementing skill.
[00:48:56] What skills that I'm going to turn into habits, habits, don't show up every one for [00:49:00] every quarter or every year they show up every day or every week. And what you guys are talking about is you've got that bit, you will rhythm that's a, and some of your clients have got a rhythm, a habit of, into interacting with you and your team.
[00:49:14]Which I think, which is what I want to do on the call, because I was very aware of that. The, the, the, that, that regularity. But I, I just, I want to steer this to how, how do we actually get Clients into daily bookkeeping. What does it cause? And what are the difficulties and hurdles now? Well, you've taken your business all the way there.
[00:49:30] So I'm going to call to you second. I want to start with Peter. Who's still in the mix in terms of moving or the will, you'll be moving new clients from a space where they're not doing that to where they are doing that sort of we'll, we'll focus on that with you, Peter. What, what, w w how do you do it? How are you, how are you making an ex a longstanding client and getting them to a place where they say yes to let's get you up to date every week or two.
[00:49:54] Peter Jarman: [00:49:54] But I suppose if we go for, go for the easiest ones, let's go for the ones that have got poor bookkeeping. And [00:50:00] they're the easiest ones. The ones that I've got poor bookkeeping generally know that they're poor bookkeepers, and generally they're poor bookkeepers because they don't like doing it. All we have to persuade them to do is let us.
[00:50:13] Take over take over that bookkeeping now, given that they don't like it. The only thing that we have to do in that example is to show them the value of them not doing that, not having that problem of, you know, finding all their receipts in the van and getting them in the house. So then recorded them down on, on QuickBooks.
[00:50:34] We have to take away that problem from them and present our solution to them in a way that they'll accept, they'll see as valuable. And certainly what we found works quite well is to say, right, you know, we're not going to take over your bookkeeping now, but what we're going to do is a real bookkeeping cleanup for you.
[00:50:54] You know, this is going to be getting those records. You've got up to something that you can actually use in [00:51:00] your sales ledger will be something you can use to chase your debts, your purchase ledger. You will be able to use to pay people from and we'll do a bookkeeping cleanup on you. You know, you've run your business for 10 years.
[00:51:11] It's a complete mess in the background. As a couple of thousand pounds, we will sort out all those messages sorting out those, those messages is quite a good thing for our trainees to learn to do and getting them into let's get that bookkeeping cleanup done. Let's agree on a price of it.
[00:51:27] You're not going to be convicted any further, but you're going to have some nice clean books in a month's time. Getting that work done Sort of works, especially at the moment where I'm actually, I don't have, our clients are flush with cash. They've got bounce back loans. They haven't paid their VAT.
[00:51:43]They haven't got to pay their self-assessment. They probably got more money in their bank account than any other time. And they've probably got more money to think about their business than any other time. And so if we can get them nice and clean to go forwards when they do bounce back, Yeah, with a nice clean set of [00:52:00] books they're going to feel in a better position to run their business going forwards.
[00:52:04] So bookkeeping cleanup for us at the moment is really quite an important stage to get the clients into.
[00:52:13] Paul Shrimpling: [00:52:13] Are you getting, are you seeing clients saying yes to that cleanup for that cleanup
[00:52:16] Peter Jarman: [00:52:16] offer? They're saying yes to not only yeah, clients, but other, other accountant's clients as well. And you know, that's quite a as it just seems that a lot of other accountants we'll leave that alone.
[00:52:27] They won't want to go. Yeah. It's only about QuickBooks to be fair, but a lot of other accounts as well, want to go into QuickBooks and clean up those records. But we'll gladly do that and then do it in that we're then very quickly able to show the business owner. This is what your records would look like if they were up to date, can now rely on your sales data.
[00:52:46]We can put something like of target or chaser on your sales, chase your debts now because the records are accurate. And that one-off bit of book. The client status is one off. Let's get up to date as soon as that's happened pretty [00:53:00] quickly. They say, actually, I don't want to do this bookkeeping bit.
[00:53:03] I realized that you're the experts in it. I'm not, I'll give the whole thing to you now. And then you've got the repeatable work going forward. You've also created the value bit in it. And so you're not providing cheap bookkeeping at all. You know, there's no provided specialist's bookkeeping at the end of the day the right sorts of prices because you've eliminated, eliminated a real worry for the business owner.
[00:53:27] So for us bookkeeping cleanup is, is a key bit of this period while business owners, I've got enough time to think about their, their businesses with a view to selling those services going
[00:53:38] Paul Shrimpling: [00:53:38] on, whether that's a prospect or an existing client
[00:53:42] Peter Jarman: [00:53:42] it's it's happening probably more often with prospects than it is with existing clients.
[00:53:47] Paul Shrimpling: [00:53:47] It's a brilliant Trojan horse strategy. He likes to use the military. You know, there's a Trojan horse. If you will, in this all said, which is sort their book keeping out. And then all of a sudden they start to see, you know, the, the, the, the possibilities in terms of [00:54:00] you taking the difficulties and pain away that Just one last thing then Peter, on that is what are the most difficult clients to shift then?
[00:54:06] Peter Jarman: [00:54:06] What do you make the shift from daily
[00:54:09] Paul Shrimpling: [00:54:09] or weekly bookkeeping?
[00:54:11] Peter Jarman: [00:54:11] Is it the ones who think they got out of it, but then not, I suppose the ones that, yeah, the ones that want to keep control of it, even though they know they're probably the hardest yeah, it's the people that have set up in the background, their own little internal systems on Excel spreadsheets.
[00:54:26] So it's a paper in the background or other things, then they will come off. I won't believe the records will show them the right information. That's probably the hardest this to shift. Right.
[00:54:39] Paul Shrimpling: [00:54:39] So how have you shifted those then? Well,
[00:54:43] Will Farnell: [00:54:43] We, we, we, we haven't. So the first point is that we're wanting about 60% of our clients.
[00:54:48] We're doing, we're doing bookkeeping for some do do their own and that's fine as long as they follow up process. So if we've got somebody keeping stuff on spreadsheets, we wouldn't take them on as a client in the first place. So [00:55:00] that that's that's part one is that we, we have a process. We dictate that process to our clients.
[00:55:06] I think this is a really important thing for, for accountants. They, they've got to own the process and Peter and I both agree that in an ideal world, we should own the end to end process, which is a bookkeeping food to some of the tasks, what can be owned. But if we can't own all of the process, we're going to dictate the process of the client follows for the bit that we're not, we're not honing in on delivering So that's, that's kinda the easy bit.
[00:55:30]Then I think it goes back to what I said at the beginning. When we take on a new client, our start point is these are the services that most of our clients buy. And we will price that as the start point. And if it's too much, then we'll, we'll start to talk about what we take out of the proposal and what they do themselves.
[00:55:48]But as long as that stays within the realms of our process, then, then that's. Okay. So that, that's kind of the, the key piece really, but I mean, we, we we've [00:56:00] certainly had the conversation on a number of times now. We haven't done it yet, but we're aging ever closer in the, do we stop taking on clients that won't last to the bookkeeping?
[00:56:10]And I, we get that we might do, we might get to that point whether it's a decision that we tie coming off, our most profitable work now is full outsource finance function, design. Pete talked about 15 grand fees. I think our biggest is, is about 50 K a year for running an outsourced outsourced finance function.
[00:56:30]I mean, that's, that's kind of audit type money and we always decided we didn't want to be auditors' Dell anyway. But it always creates it challenge in terms of your average fee numbers, because an audit kind of pushes, pushes that up. Now we're getting that, doing the stuff that we do really, really well, and we enjoy doing.
[00:56:51] Paul Shrimpling: [00:56:51] Yeah. Yeah. So what you're saying though, well is actually you, you, if, if clients, if the business owner wants won't follow your processes, you won't take them on as a client. [00:57:00] And therefore the there's two possibilities here is they use your bookkeeping service daily, weekly, or they do their own thing, but they follow your rules.
[00:57:09] Yeah. They play your game. And if they won't play your game, you won't work with them and their store. And you, I know from other conversations we had, you still got a high growth firm. Even with those limitations on the sort of clients you could win. Right.
[00:57:25] Peter Jarman: [00:57:25] That's not a limitation on the clients. You can win though, if it will.
[00:57:28] I mean, I think that just directs you directly towards the clients. You can win. I don't see us as a firm. We only deal with QuickBooks clients. That's not a limitation. It just makes it much, much easier for us to spot the clients that we work best with. And there are, you know, there's plenty of enough clients out there for, for me,
[00:57:52] Will Farnell: [00:57:52] it's the,
[00:57:53]Paul Shrimpling: [00:57:53] You know, for years with revulsion clear vision, and one thing I learned from Rob more than anything is [00:58:00] that it's, it's not who you choose to work with. It's who you choose not to work with. That actually influences the success of your business. And what you guys are saying is we've worked out who not to work with.
[00:58:09] Peter Jarman: [00:58:09] Yeah. Yeah.
[00:58:10] Paul Shrimpling: [00:58:10] And so is that an, exactly the same thing that Rob was saying? And I think that's right. So to finish, to wrap up then what, what are your thoughts on what's going to happen with making tax digital and the fact that actually a reporting is going to be an absolute necessity. What, what are your, what, what's your thinking because obviously, you know, daily, weekly bookkeeping is going to facilitate that.
[00:58:28]If you take an annual perspective, you you're going to be in dire straits as a firm. If you've got an annual rhythm and an annual view on the service you deliver and making tax digital comes like a train, you're going to be in real difficulties. What are your thoughts on, you know, the, the relevance of that to the future of the profession and the way you're working, because you're already future-proofed in that one.
[00:58:46] What are your thoughts?
[00:58:48] Peter Jarman: [00:58:48] Yeah. I mean, making tax digital was a little bit of a catalyst get the the cloud accounting and the receipts bank bit working. But it wasn't the key thing. I think the key thing was [00:59:00] accountants actually going out to clients and saying, we can do this for you. And the clients saying, well, actually we're quite interested in that.
[00:59:07]Making tax digital was the legal bit in the background that says, you know, this is happening no matter what. But once we started talking to clients, it became apparent that, you know, a lot of what was being offered by digitalization of the accounting systems and the business apps around it was actually what they wanted in the first place.
[00:59:27]And MTT was just a little bit of legislation in the background that was forced a little bit further down the road. Whether MTD happens quickly or slowly, I think that enough business clients have seen that actually having integrated business apps and cloud accounting and business operations at all working seamlessly in the cloud is a big, big advantage for, you know, a smaller micro owner to compete with big businesses.
[00:59:57] So MTD is. Yeah. It's [01:00:00] to some degree an irrelevance, it will force a few people further down the line a little bit further, but you know, as soon as you see the advantage as a small business owner, you're going to have a better business. And he's
[01:00:11] Paul Shrimpling: [01:00:11] actually gone into appetite is a much, much bigger driver than anything to do with government interference.
[01:00:18] Peter Jarman: [01:00:18] Yeah. If you, if you also looked at the clients that resisted MTD, they're probably the clients that we don't want anyway. Again, it's in the right ones.
[01:00:26]Will Farnell: [01:00:26] Yes, I think, I think MTD had the potential to be a great opportunity for firms, but unfortunately the government kind of backed down a little bit and said, Oh, want spreadsheets, that'd be fine.
[01:00:38]It's going to happen. It's not going to happen quickly. But I think we've got to get to the point where foam starts to look at making change because it's the right thing to do and not because legislation dictates it. My view is we're still only at 20% adoption in terms of, of using cloud accounting tools in the profession in the UK 34,000 firms [01:01:00] in the UK so 7,000 firms or so kind of doing, doing stuff and doing it to at least.
[01:01:07] 60% maybe of its capacity. But it means that 80% and lots of thousands of firms that are still not, not kind of adopting this stuff which means each point is having a conversation with them about daily or weekly bookkeeping, because they haven't got the technology, let alone the process and the people to do it.
[01:01:27] So we want firms to do it because it's the right thing to do because it creates more client touch points. It increases client experience and helps them build a a firm that is going to meet the needs of a new generation of business owners. And fundamentally, that's what we're talking about here.
[01:01:44] We're talking about gen Z who just want to do things differently. And firms have got to adapt and deliver what that generation of, of, of clients really.
[01:02:00] [01:02:00] Paul Shrimpling: [01:02:00] Yeah, fabulous. It strikes me that when we set out to have this conversation about daily, weekly bookkeeping, about the numbers, the detail of which we talked about and some valuable insights there, but actually ultimately what's that what that's proven is that this humanizing the numbers.
[01:02:16] So we want to talk about bookkeeping, the numbers. We spend as much talking about the humanity of the way we work with our team, as well as the humanity, the way we went with our clients. As we have talked about the way we manage the processes and structures around the numbers. And ultimately it is that the humanity, the profession, which actually delivers the value to someone's career and your firm to take your point, Peter or, and to facilitate and assist the decision making business owners are taking, because there's that fundamental strength of a relationship that's coming from that daily or weekly rhythm that's always been driven, if not, absolutely has been driven by that that weekly interaction because of that daily slash weekly bookkeeping piece.
[01:02:57]So last couple of then tell me what's been the [01:03:00] most value for you on this on, on the, in this discussion, Peter, and
[01:03:04] Peter Jarman: [01:03:04] then we'll come to you. Well, For me, it's seeing where we could take our heart keeping function next. Obviously I think Wells, you know, we, haven't got 60% of our clients on a weekly bookkeeping.
[01:03:17] It's how we get towards that or how we get towards a hundred percent of our clients on weekly bookkeeping. You know, I think that is the next stage of our, our process, but I think we've still got some more systems issues in the background to really decide what, what bookkeeping. Is, you know, and also how we're going to make it ourselves real experts in it.
[01:03:40] I think it's a shame. We didn't have a piece from Australia there because I think a bookkeeping in Australia is a regulated activity, as I understand it like accountancy and you know, having that sort of qualification in it to improve that the standards of it and also improve the knowledge base of bookkeeping is [01:04:00] key.
[01:04:01] Paul Shrimpling: [01:04:01] Brilliant. So is it the fact that today it's you a bit of a target as opposed to showing you the route map? Or do you feel as though you've actually got an indication as to what you do next,
[01:04:09] Peter Jarman: [01:04:09] Peter? Yeah, I think it's given me an indication of where we need to go to next. It's given me a spark of idea of what we need to do next.
[01:04:16] That's, that's the key to it. Really.
[01:04:19] Paul Shrimpling: [01:04:19] Thank you very much. Thank you. And well, what's, what's been the most value to you on this set in this discussion.
[01:04:23]Will Farnell: [01:04:23] I think every time I have an opportunity to, to kind of talk about these, these topics, it reinforces the, the clarity around the fact that we, we, we are absolutely doing the right thing.
[01:04:37]Isn't it, it's never, it's never perfect. We, we we, we strive for perfection though. We're never going to achieve it. But it's about how do we continue to innovate? Has a, we how do we continue to make more of those, those client touch points? We've got this great opportunity with client touch points.
[01:04:53] How do we, how do we utilize it? And I think on the, a word again during this, this kind of COVID [01:05:00] lockdown period, I think for the first time ever every member of my team from juniors, right? The way through have it finally clicked. What it is because for the first time ever they've had clients cool.
[01:05:13] And then ask them about something that isn't related to the VAT return or the NDA accounts. So this, this kind of awareness, so these conversations just helped me kind of start to think about, well, where do we go next? What do we do? The, the is constant innovating. And how do we, how do we further enhance the experiences our clients get brilliant for, for
[01:05:35] Paul Shrimpling: [01:05:35] me the most valuable pieces, actually, almost as we've finished this, the fact that the client appetite for this regularity of contact and regularity of up-to-date real time data.
[01:05:49]Is that it's it's, it's, it's not it's not a ghost. It's not okay. Some clients it's there. Some clients it's not there. I get that, you know, and that we've got to [01:06:00] choose which ones we're going to work with. And then if they've got the appetite, they're not going to be resistant to that weekly contact and fundamentally behind the value equation of every accounting firm is the regularity of contact.
[01:06:11] And I've been arguing that for 18 years, when all of a sudden firms are taking notes. And then the last, you know, COVID-19 lockdown piece, everyone realized that actually, I can't tell you how many firms are making all these calls with clients who can't get any
[01:06:24] Will Farnell: [01:06:24] real work done. There you go.
[01:06:33] Paul Shrimpling: [01:06:33] You know what you guys have just confirmed is outside of COVID-19 lock. Then the real work of accountancy is the relationship work. Yeah. And everything else facilitates that. And I liked your, your piece well about, you know, the default service think it was UL. The default service is the bookkeeping.
[01:06:52] And if we have to, we'll take it out. But if we're taking it out, you got to do things in a certain way. Otherwise we won't work with you. I think it's great. Positioning [01:07:00] guys really enjoy this. Thank you very much. It was a shame. We didn't get pizza from Australia and I'll, I'll interview him separately and I will share that with you, of course.
[01:07:06]From the heart of my bottom or the bottom of my heart, I'm not sure which way around that one works, but thank you very much for your your time and your energy as we're here. I think of hopefully she has some really valuable information with a professional when they get to access it. Thank you.
[01:07:19] Will Farnell: [01:07:19] Okay.
Introduction to Will and Peter
Why is the daily or weekly bookkeeping piece so important
Commoditisation of Annual Accounts
Humanise the Numbers
Smart book keeping
What do firms do to be in their clients inner circle
Book keeping clean up services
The right kind of clients
Click the play button below and use the slider on the audio below to get quickly to the chapters in the podcast.