Originally posted on 6 Jan 2014
Most accounting firms and businesses spend too little time thinking and planning says Gary Boomer in an article this month in accountingTODAY. What little time they do spend thinking may be classified more as worrying, rather than thinking at a high level. You can read the article here.
Dan Sullivan, founder of the Strategic Coach, urges entrepreneurs to think at a higher level. He says that most thinking is done regarding things, people and thoughts. Real breakthroughs to difficult problems come when you think about your thinking.
If this sounds too philosophical, please continue: you will find several areas in firm management where we all need to think about our thinking, rather than things, people and thoughts. Of course, technology comes into play as it touches everything we do personally and professionally in today’s microchip environment.
The author provides five examples where, if you change your way of thinking, you will come up with a different result than if you only think about things, people and thoughts.
An example of different thinking
First, however, is an example of different thinking that is currently changing the educational system and will probably impact our profession in the area of talent development. Many of you may have heard of Sal Khan and the Khan Academy. He was born in New Orleans to a father from Bangladesh and a mother from India. He has three degrees from MIT (a BS in electrical engineering, a BS in computer science and an MEng in electrical engineering and computer science). His thinking is changing the world with the Khan Academy. Khan’s cousin Nadia asked him to help tutor her in math using Yahoo’s Doodle notepad. Other cousins needed help, so he moved to the YouTube platform. Today he distributes through the Khan Academy.
He compares our current education system to building a multiple-storey building where the foundation and basement are scheduled to be complete at the end of 90 days before work on the upper stories proceeds. At the end of 90 days, due to weather, the foundation and basement are only 80 percent complete. Rather than complete the foundation, work proceeds on storeys one, two, three, four and five. Ultimately the building collapses.
Do some research here and learn more about Sal Khan’s success and listen to the personal testimonials.
Gary Boomer suggest five challenges which, in most firms can improve service, cash flow and profitability: simply by thinking about your thinking and changing your existing processes. A good question often is all the stimulus necessary to change your thinking.
1) How do we reduce WIP and Receivables by 50 percent while improving our own bill payment and cash flow?
Bill payment and collection should be automated using ACH payments [BACS in the UK], rather than checks [cheques] and credit cards. We are in a digital world of banking. This is done through education of your administrative team and clients. It requires an upfront conversation with your clients and inclusion in the terms of your engagement letter
2) What services do we need to provide our clients in order to increase revenues 10 times from our top 25 clients?
Package and price multiple services from all service categories (compliance, performance and strategic). This also occurs when you have upfront conversations with clients allowing them to select services from a menu of items. Payment terms should be designed so you have no WIP and accounts receivable.
3) How do we improve retention and attraction of top talent?
Learn your unique abilities and those of your team members. By doing so you will be more productive, reduce burnout and be happier. Everyone has unique abilities, yet too often in firms people are placed in areas of responsibility that do not match their unique abilities. Services from the three service levels (compliance, performance and strategic) require a team approach and different skills. The tool Mr Boomer uses is the Kolbe Index (see my Blog on this) and the use of a synergy report. It will also improve communication within your firm as it defines how people like to communicate.
4) How do we reduce cycle time to seven days or less?
Project management and workflow related to tax return preparation should be evaluated. The process should be more important than the people performing the process. (This same thinking can apply to multiple processes in your firm.) Evaluate the entire process, from gathering the information, scheduling, preparation, review, delivery and billing. Apply the principles of Six Sigma (define the system, measure key aspects, analyse the data to determine cause and effect, improve processes and control processes). You will probably find that you have steps and loops in your processes that create backlogs or are no longer relevant. Use someone from outside the process to evaluate the process in order to reduce justification and resistance to change. If Six Sigma interests you, please read my blog on the subject.
5) How do we focus on higher-value client services, rather than the accuracy of clients’ accounting records?
Collaborative, real-time accounting platforms can provide accurate and timely information that flows directly into tax and financial reporting packages. What you know about technology may be outdated. The accounting ecosystem is now comprised of multiple developers just like the Apple ecosystem. The ability to develop a roadmap and integrate multiple applications into an accounting system is the new challenge.
The purpose of this article is to motivate you to think about your thinking. It is not about providing all of the action steps. Mr Boomer strongly encourages you to prioritise the five ideas and focus on your highest priority. If you are a larger firm, you can use the task force approach to address multiple areas simultaneously. Change isn’t easy. It requires planning, communication, engagement, accountability and trust. The higher the trust, the less time required.
Gary Boomer, CPA.CGMA, is the president of Boomer Consulting, in Manhattan, Kansas.