Welcome to Escaping the Accountants Trap podcast. It's a podcast to help accountants, CPAs and bookkeepers escape what we call the accountants trap, where the only way to get paid more is to work more hours or take on more low value and high demanding clients. So how do you escape the trap? Well, one way is the topic of this episode.
We're going to discuss how to scale your practice through outsourcing your team. So to help with the discussion, I've invited Lawrence Witham, a VP at QCs Global. Lawrence, welcome to the show. Thanks, Adam. Yeah, very nice to be here. Yeah. So QCs, you essentially outsource accountants to other accountants. So explain explain how that works. Yeah. So we, right now we work with over 350 CPA firms in the US.
Right. And then I work with about another 600 in the UK. And what we do is we provide staff to the accounting firms in order to allow them to keep scaling the business, obviously combating a bit of the staffing shortage, but also anyone from a solo practitioner to a large firm can look for outsourced talent in order to again focus on high value services.
For example, make sure that they, giving more time off to internal team members as well, and create a bit more functionality as a firm and and act a bit more like a business rather than, an accounting firm that's, a bit of a traditional way of doing it. We'll say, yeah, I love that. So, you know, you hit on a several, several reasons why accountants should outsource.
You know, you, you know, there's a staffing shortage, not having to be the business, the solopreneur it really you can outsource functions to your team. What are some other reasons why accountants should outsource certain functions in their business? And then what types of functions should they be? Outsourcing. Yeah. So, and again, this is where every firm sort of has to dig down into really what they do very well first.
Right. So it's a lot of things can be outsourced. I would say you want to keep a lot of the higher skilled services in-house. Right. A lot more a, a focused, consulting based services in-house. However, there are obviously outsourcing firms, not just internationally, but domestically as well. That can help add value to your business by adding certain outsourced services that can be consulting based, right, such as CFO level services.
And so forth. You don't necessarily, as a firm, have to do everything yourself, right? So you can create partners to do that. But a lot of the work that we're doing is more on the bookkeeping, the tax preparation side of things. A lot of the audit support work, and I would say up to about senior accountant level type of service.
And the idea is that then they can have the review internally, right? They can have all the client communication internally done. And but it's saving at least a good 50%, 60% of the product project time, by giving it to an outsource provider. Okay. So how does the process work in terms of, you know, let's say an accountant wants to outsource some of their tax or bookkeeping work to somebody.
How does that process normally work? And how do you how does an accountant get around the idea that they're sort of abdicating a lot of the the responsibility to somebody that's not even on their team? Yeah. So, and again, I would say that a lot of providers do it differently. Right. Okay. However, one of the more common themes from the outsourcing world, especially when you're working with international Outsourcers, is whether that's in India, Philippines, Mexico, South Africa, there's a bunch of different areas that are better for certain services as well.
However, the big piece is actually treating them like they're a member of your team, right? So okay, no special way you have to do it. You can add certain levels of extra security if you would like, but typically a lot of the outsourcing firms are actually more secure than a lot of the CPA firms are because they've built their business on that security side of things.
That makes sense. However, it's a very much like it's got a lot easier since Covid because now CPA firms have worked virtually previously, they were all very much, hey, come in the office, do it now. It's just like that, right? It's you've got your virtual network set up, you create an access point into your network. You can restrict access just to the software that is being utilized.
And a lot of the times the outsourcing provider adapts to whatever you're using. So if you're using QuickBooks online, they've got experience using QuickBooks online. Same thing with the tech side Pro effects or the CCH suite of services. They'll use that specific software as well. So it's not like you're having to change anything. It's really taking them on like you're taking on a new employee, right?
But the benefit is you've got a bit more flexibility. Sometimes you only have to pay for a certain amount of hours. Now, sometimes you can be flexible with the amount of tax returns that you can provide them. And you're not fixed to a specific cost, right. So you've got a bit more flexibility over that. Yeah, that makes sense.
So it's definitely more scalable because you can scale up scale down when needed depending. So and of course I'm assuming the other benefit is that you don't have to have the, the carrying cost of a full time employee. You don't have to, you know, you can you don't have to carry that burden year. Right. Exactly. I mean, it's a fixed cost typically.
Right, with the firm you're paying them as a provider. Right. In the USA you've got this X amount of dollars, right. It could be on average $3,000 per month. Right. You don't have any payroll cost to that. You don't have any 401k plans that you have to contribute to. You don't have any H.R. Sides of things, right? The actual business, it's all out for you from the outsourcing firm perspective.
So it's literally just one fixed cost per month. So it both saves on a it's generally more cost effective. But B it's when you look at the hidden savings as well, there's quite a lot there to okay. So I'm assuming the the the outsourced accountants they mainly focus on transactional compliance work. And then the accountant who's hiring the outsourced person, they focus, like you said, on, you know, customer customer service and higher value services like business advisory, CFO services.
Is that typically what you see with your clients? Right. That's, exactly. It's, they're really doing more of a review internally and then finalizing any type of projects going back to the client, doing a bit more of the interaction piece. We do a lot more of the back end services again, gradually, once they were couldn't have worked with the same person for years.
That could change. We become a bit more client facing in some cases. But the first step is definitely just outsource more of the back office side of things. Got it. So we all know that the accounting sort of industry is changing. What, you know, in your experience working with accounting firms, what separates sort of the good accounting firms, the ones where clients flock to and want to work with?
The, the accounting or bookkeeping firms that that are just sort of stagnant or even dying. So, I mean, the good thing is the industry is definitely in high demand, right? Even with everything going on in the in the world right now. Right. It's obviously with the deadly recession looming as such, we don't know. And nobody's going to say it necessarily straightforward, but it's, accountants are always in demand, whether it's a good economy or it's a bad economy.
I mean, that's the that's the good thing about the industry. So there are very few that really are doing very badly. And there's a lot of opportunities for even smaller firms now to take on, because what you see in the bigger firms is that culling clients, right. And, and most firms are now culling clients. So they're actually not having enough staff to cope up with the work.
So they're now categorizing them into ABCd clients. They're now taking off some of the D clients. And again they generally accountants like the clients to some extent. Some of them they don't like as much, but they have a affection to them. So they'll actually refer them to another firm that's a small elephant that is accepting new clients. So it's becoming more of, a waterfall effect to some extent as well.
So there shouldn't be many firms doing badly. Right. But the ones that are, the ones not out there actually communicating with even their own peers, right. In the industry. And again, but the ones that are doing are killing it right now are the ones obviously out there in the market. They're they're doing digital advertising, right? They're really showing themselves and just building a bit of a brand around themselves, especially in that community, and then spreading out, because everybody's looking for it.
Everybody's looking for a simple approach to do it. They don't like the the hourly touch a button and say, listen, I'm going to clock you in for every hour now, they don't like that anymore. More of a fixed price model they typically like as well. So I see a lot of firms, both from large to small.
Now focusing on that. Yeah, a bit more. Yeah. I agree, in our experience working with a lot of accountants, it seems like the accounting firms that are doing really well are the ones where they show their clients and potential clients that they really care about helping their entire business, not just focused on compliance or transactional work. They really want to help the entire business grow and be their sort of go to financial person advisor.
I would say advisory, and just being in front of the clients is probably the number two most talked about thing in the industry right now. Right? It's it's really based on again, I go to a lot of conferences throughout the year. And I would say again, number one concern is staffing. Number two concerns talked about topic is advisory.
And what the concern is that typically firms don't know how to do it, how to get into it. And really it starts with having a conversation with the client to see what they need help with. Right. And then being able to utilize some relationships to now find a solution for them and help them with that. Just doing that is X amount more valuable because at the end of the day, the accounting firm is a trusted advisor to that professional, just like a lawyer is right.
And the more they can help with, the better. Yeah, absolutely. I mean, and that's I mean, at the end of the day, each person in your accounting firm, you only have so many hours to work with. So you can't take on a lot, you know, you can't take on you can't scale your practice by taking on a limited amount of clients because you have a you have limited amount of time.
So the one thing you can do to scale your practice is raise your fees. And the only way to do that is by offering something higher value, something that not every accountant is offering, not every bookkeeper is offering, and that is business advisory services, while at the same time, and this is the beauty of outsourcing, that the while at the same time giving the client what they need, which is bookkeeping, slash auditing, slash tax work, and you can outsource that at it in a scalable way to, you know, something like your company or, you know, the other companies out there.
But the idea is that you're able to add on to your team, to do the stuff that is in the minds of a customer. The minds of a client is sort of low value, but is absolutely it's a compliance work, right? The compliance with it has to be done no matter what anyway. Right. But it's working with staff, right?
Outsourced staff to do so. Right. Working with this technology out there as well. Right. And that's the other piece to some of these outsourcing firms that they know a bit more about the technology, because they're doing stuff in such large volumes that they've invested a lot in the technology aspect to it. So where firms have typically gone about their day to day and they don't necessarily have the same manpower as some of these outsourcing firms do.
Yeah, yeah, that makes sense. I want to get to technology in a second. But staffing, you know, you've mentioned a couple times that there's a shortage in staffing in especially in the accounting industry. Why do you think that is? So again, I'm not to quote me on the numbers specifically, but there's less interest coming into the profession.
Right? So in general. So there's actually a decline in the number of accounting graduates, year on year for the past about ten years. I believe, from my understanding. Okay. Information given by the AICPA, I can't remember the exact number, but it's tens of thousands of a decline. Right. In terms of just people going into that profession now.
And then same thing with getting the CPA degree. Right. So the CPA licensing is actually going down. Yeah. And then you have the baby boom effect. Right? So now a lot more professionals are leaving the industry. And again, they may stay in on a part time or a small time basis, but there's now become a lot more options for them to either a consult on a fractional basis or be, just do their work from a tax or an audit or an accounting perspective on a freelancer basis.
And there's sort of some, some different companies popping up which allow them to do it where they can just get fed work. Right. They don't need to now go out and do a business development for it. They can literally just be fed different projects, and they can do as much or as little as they like, similar to the Uber side of things, where they can go out and drive if they want to or if they don't want to.
They can not pick up a job that day. Right. So it's becoming a lot easier to do that. Yeah. Yeah. I mean, that makes sense. The barrier to entry to starting something like that is so much lower than it was. I mean, as long as you have a computer and a zoom and zoom and internet correct access, you can connect with clients all over the world.
But that also creates almost like the opposite effect that even though the accountants are not flocking to, you know, accounting firms, you have a bunch of independent people out there and there's it creates a lot of a noise in the marketplace for business owners know they turn to how do they know what to look for? How do you know?
Because, you know, hiring a bookkeeper or an accountant is not something that most business owners wake up and put on their number one to do list. It's just it's a necessary evil. So how would you how would you suggest to those accountants and bookkeepers out there that that they, that they, they know they need to break through the noise?
You know, how would you suggest they do that? What are what are some tips or strategies to do that? I mean, there's two fold here. I mean, number one is, is the staffing side of it. Right. And when it's in terms of attracting talent to their firms. Right. So just even to cope with the work that pieces is being different.
Right. Being again going to not just going to the the colleges to do your typical sort of bouffant stuff like that and try and get some college grads coming in and things like. Right. They need to attract some of the good, experienced talent into their firm. And in order to do so, you've got to start differentiating yourselves.
And, and again, part of that is coming into that advisory world, right. And offering these services where now we're not just teaching you to do this. We don't just want you to have X amount of bookkeeping on your plate. Right? We want you to start moving up that value chain, essentially, and teaching them those skills and soft skills as well.
Is another big one from the CPA world. So there's there's that aspect in and somewhat making the profession a little bit more sexy and appealing to the younger generation as well. To that extent. And then you have the vice versa role of now getting clients right and, and making some noise in the marketplace. And part of that is niching down right is finding, yes, which area you enjoy.
Your firm is very good at. You've got a good client base and and really just focusing on it. Right. It's you're able to become and focus on new technology right in that area. That will be tenfold more impressive to the clients, like working with the CRM systems that they're working with work and implementing certain accounting systems into there, rather than just using your QuickBooks online and and not connecting them.
All right. And also just by you understanding what's going on in the business line and the specific industry, you become more of an advisor to them immediately because you understand the numbers and you can relate them to the actual industry. Right? Yeah. So it's, it's a twofold there. I think I see a lot of firms doing that.
A niche down, some niche down a little bit too early, I think, before they're like, all right, I've got a few clients in this area. Let me just focus. But that's not necessarily how it works. Right. You need to be able to have enough clients and grow to a point where now you start segmenting. Yeah, this is a big opportunity in this industry.
For example. Yeah, we tell people all the time that you do need a niche, but not in the for the reason that most people think. Most people think, well, I need to become an expert at working with roofing companies that do commercial roofing. And because I need to understand that industry, the the better way to look at it is I need a niche to roofing companies to target the roofing companies and get their attention.
Because if you come to a roofing company owner and say, I am an accountant for roofing companies that can help roofing companies have a growing and more profitable and successful business that will appeal to that roofing company owner. Way more than just saying I am an accountant. Correct. And so once you attract them, then you can appeal to them by saying you're going to help them have a successful business, and then they sign on to your your business advisory service.
And then you can also upsell them to your accounting, tax, bookkeeping service and then utilize somebody like you to outsource those functions. So now you have that roofing company's entire, financial, you're the roofing company's entire financial go to guide. And you have not only the business advisory, now you have the their bookkeeping, service and their tax service and, and you can dramatically scale your business because now, especially with outsourcing, you can you can really do it all and be that person's stop.
I mean, that's the big thing, right? Becoming the one stop shop. Right is the is what people want as well, right? If they can come to you for all their financial needs, that's what they'll happily do, right? And it's Yeah. So some firms are doing it. Well, some firms, most firms, I would say, have a lot to work on in that fashion.
Yeah. But it's definitely, the way to keep moving up the value chain. Yeah, absolutely. So, Lawrence, an accountant listening, saying, yes, I, I would like to explore what it would look like to find a outsourced, you know, accountant or bookkeeper, somebody just help where do you suggest they go? So again, partially it's talking to well, I would suggest come to me, right.
Come to me and have a chat. Right. And again, it's not about using our services necessarily. Right. This it depends on what you're looking for. Right. It depends on whether you're looking for, auditors, tax people, accountants. It depends on the level of service. Right. And and again, if we can't do it, there are definitely providers out there.
Right. We are looking for a preferred provider in a different multiple groups across the US. Right. And so and I've got plenty of references to give for different sized firms as well using us. However, it's it's definitely one of those things. Talk to your peers as well. Right. I guarantee you'll be surprised now how many firms, especially since Covid, are now trying it for the first time.
Right. And that's both from a solo practitioner up to large firms. They're all I say, all I would say now easily 80% of firms are doing it in some capacity. Wow. Wow. Okay. Well so you'll be able to help them navigate where they should go and give them advice. So how can people contact so you can look me up on LinkedIn?
Again just search. My name is here or you can give me a call as well. I don't know if giving a call is the best immediately, but I'll give me a text. But, I can definitely give you that information if you want. Afterwards, along with my, okay. Along with my email address. And they can definitely reach out to me email, phone or LinkedIn.
Perfect. All right. And then, so we'll put those that LinkedIn in the email in the show notes. Lawrence, thank you so much for being with us today. Appreciate it and know great to speak with you and, and again, look forward to working with you guys in the future as well. Everyone and to everyone listening or watching.
Thank you so much for spending the last few minutes with us as we discussed how to escape the accountant's trap. Bye for now.