Offshore Staffing: Is it for everyone?
What motivates a firm, big or small to recruit a full-time employee, thousands of miles away from their current office?
Declining profit margins and rising costs of operations have made offshoring more appealing to both the large and small-scale businesses.
The principal reason to outsource a staff relates to an increase in the efficiency and a reduction in wages all the while maintaining the same quality of work.
It also provides a flexibility in one’s allocation of resources to achieve the firms optimal value.
Several challenges
Large businesses have been exploiting the service to achieve their competing edge when contesting on a global platform.
However, the SME sector have faced several challenges when it comes to outsourcing, be it a process, one staff or a team.
A major drawback in remote staffing is identifying the need for offshoring itself and allocating the resources efficiently.
Delegation is the only major cost when it comes to hiring a remote staff. However, managing employees oversees has become simpler and trouble-free when the partner firm holds accountability in both parts of the world.
As technology has greatly helped in promoting and facilitating remote staffing, an offshore team located 10,000 miles away is no different to one on another building.
A data security plan should be developed, covering the transfer of data, levels of access and network security measures to ensure the reliability of the information that is being communicated.
With economic development in various parts of the developing world, there is greater access to global talent at a very affordable price, even for a startup.
Successful businesses adapt swiftly to the market changes in adjusting themselves among their competition. Offshore staffing grants more freedom to the employees, both in-house and remote with less emphasis on where the job is done.
Exel Solutions will be on Stand 152 at Accountex, 1-2 May 2019.
How Futrli reimagines the small business landscape
Hannah Dawson is the Founder and CEO of Futrli and has just been named as part of the Maserati/Sunday Times top 100 entrepreneurs to watch. Futrli is a UK-based tech scale up whose Classic product supports 1,100 accountants and over 45,000 small businesses worldwide. They are Xero’s Practice app of the year and won a place on this year’s Tech Nation Upscale 4.0 programme, where the likes of Monzo have thrived before.
Futrli has been building a new platform over the past two years that complements Classic’s traditional forecasting and reporting capabilities. The platform reimagines how a small business works and succeeds every day, and with launch imminent, Hannah’s full steam ahead, but excited to talk with Accounting Insight News before her session at Accountex 2019 at ExCel.
AIN: Hi Hannah. Let’s take a brief trip down memory lane - tell us about founding Futrli...
HD: Futrli was born from my own experience as a small business owner. I was working in hospitality, running a pub in Devon. There were some simple things around the business’ financials that were far harder to get a handle on than they should have been, such as getting an up-to-date overview of our cash flow. Then I was landed with a hefty tax bill I didn’t know was coming, because the information on running the financial side of a business was so lacking. It nearly closed the company’s doors.
I needed a way to run the business with eyes on the future, not just the present or the past. Making decisions was difficult and full of risks because I didn’t have all the relevant information in one place when I needed it. So after doing some research, and realising there was a significant gap in the market for this specific type of software, I founded Futrli.
AIN: And how’s Futrli evolved since you founded it?
HD: Nearly five years later we have 100 people with offices in the UK, Australia and New Zealand. Futrli Classic has done brilliantly and we’re incredibly proud of where we’ve got to. But we’re only just getting started.
We are nearly ready to launch our preview release of our AI driven smart platform for small businesses. It has a range of products that have been designed after careful research and design, which solve the most pressing pain points that small businesses face (and the accountants that support them). There’s no gold standard for the tools you use to run a small business. Our platform is this.
AIN: Why do small businesses need help?
HD: Despite all the technology available in the marketplace 50% of small businesses fail in the first five years. Something is broken. Classic is used for bigger small businesses and their reporting needs, but for the 90% of small businesses that don’t prepare monthly management reports or rolling forecasts, numbers are often a scary thing. They don’t have finance or analyst teams interpreting the data they generate every day - they need help.
The new Futrli platform is for the 90%. It discovers information; interprets it into real words and prioritises the most important things that need to be actioned every day: simple!
Whether that is something within non financial data sets, future cash flow issues or getting paid by your customers.
The benefit for our accountants it that Futrli Platform makes it quicker, easier and extremely cost-effective for accountants to service the remaining 90% of small businesses that they simply don’t have the time to get to.
The platform does the heavy lifting, every client knows exactly where they are today, and when there is a question about what to do next from the small business, the accountant is given an opportunity to service a client who would have gone unnoticed before or would have not been deemed the right fit for advisory.
Advisory will finally be democratised and Futrli accountants will be deemed heroes! Depending on whether you use the free or pro version of each product will dictate the opportunity for the accounting firm. Pro gives deeper information so that even more heavy lifting is done and there is a richer base for advisory opportunities to present themselves.
AIN: And what’s the first product to be launched?
HD: The first product to launch is Flow. Flow helps small businesses who are stressed about not getting paid and how much they owe by using the power of AI to understand customer and supplier habits. There are lots of payment chasing apps out there but what’s missing from many customer focused products is that there is no actionable detail. We’ve got risk assessment, dependency levels, customer ranking (who are your top 10 and worst for x/y/z), and because the platform doesn’t just pull data, it pushes it too, smart workflow is created as you can create invoices/bills etc directly from the platform and straight into Xero and QBO.
Layered over the top of it all is the AI driven predictive element. It’s all well and good having credit terms, but when will your customers actually pay you? Flow gets to the heart of the problem and gives you solutions.
AIN: And there are free features too?
HD: Yes! Our smart daily newsfeed for your business. We all consume information every day by scrolling until we are caught up: think Facebook, Twitter, LinkedIn - so why not one for your business? Pulse is where you login to the platform. It’s where information from all activated products is prioritised and the next best action is recommended. It’s very cool!
If the status quo of software for the 90% is broken, let’s reimagine a new way with the smartest workflow, for every data source and pain point, so that small businesses are de-risked, de-stressed and can focus on why they went into business in the first place!
AIN: What does the future hold in store for Futrli?
HD: We’re really excited about all the products on Futrli Platform. After we’ve launched Flow and Pulse, our free newsfeed, next in line is Predict. This is forecasting totally re-imagined.
It helps small businesses who are uncertain about the impact of their decisions, by combining their knowledge with AI-driven predictions to forecast their future, and again the most amazing workflow has been created to ensure it’s something a small business will actually want to do every day.
Then we have Playground. It helps small business teams who are tired of juggling multiple data sources and making decisions in silos. It brings teams and information together to deliver coordinated and faster decision making and execution. It’s a world first and takes funnel to a whole new level!
We’ve got more products up our sleeve for later in the year, but you’ll have to interview me again to find out more!
21 practical networking tips for accountants
Networking is a great skill to have, whether it’s for winning new business at Accountex … or for life in general.
But it’s a talent that, for many, doesn’t come naturally. Fear not.
“Your network is who you know. Your reputation is who knows you,” says Rob Brown, business development expert.
“I’m often asked what one skill, quality or talent, if mastered, makes everything else easier. The answer is NETWORKING,” adds Rob.
Rob has created 21 practical networking tips to help you get the most from the massive and potentially overwhelming phenomenon that is Accountex. It will help you to...
- Get on the radars of the right people and have the right conversations
- Prep properly for maximum impact and efficiency while you're there
- Make the very best of your precious time and efforts for maximum ROI.
Check out the tips HERE.
Getting serious about an advisory role for accountants
There is a lot of stuff and nonsense talked about advisory.
I’ve been an advisory partner in a top 10 firm and a 100% new business director in a regional practice plus I’ve worked in big corporate world for a large leisure company and been FD of an SME M and E contractor.
I currently run F3C Advantage and we work with accountancy practices that want to get serious about Advisory - by providing them an Advisory delivery platform called CAS – the Complete Advisory Solution.
So, I reckon I’ve got a pretty good fix on what clients want from accountants plus a pretty a good fix on what accountants feel about Advisory and why to date so many dabble rather than get serious.
OK, let’s get into our helicopters and rise up, look at the big picture, make sure we can see the whole forest and not just a few trees.
Now looking down from our helicopter, let’s keep it simple, what is advisory? The best explanation I have found of advisory is helping clients to:
- Move forward
- Protect and improve their personal positions
- Protect and develop their businesses
And when we accountants help clients we are “facilitating INSIGHTS to INSPIRE clients to INNOVATE and make changes”.
It’s all about the clients.
It starts by helping clients clarify what is most important to them. As we know clients are not all the same and they want different things. Never assume clients are clear about what is important to them.
When we help clients clarify what’s important to them this enables us to fully understand their personal and business goals and aspirations. Not only is this essential to ensure we are providing best advice but it’s one of the three things that all client surveys over the last 30 years or more have identified that clients want from their accountants
- To show they care and are in it for the long haul
- To bring new ideas
- To understand me and my business
The Success Gap Model is an excellent way of illustrating what is important to a client or prospect. Some measures of success will be financial – the pound note – others will be non-financial – the smiley face. Do you know all the pound notes and smiley faces for all your best clients?
How can we help clients achieve their pound notes and smiley faces?
Every time you look a client square between the eyes think – what’s the plan, their plan? Have they got a clear plan? Does it go beyond just numbers?
Being the person who has helped the client put their plans together is a powerful position to be. Being in the room when the decisions are being made establishes you as their MOST trusted adviser. You want to be more than just someone who helps them with implementation or solves ad hoc problems.
An annual planning event with your best clients is a great place to be and is core to Advisory.
In today’s fast-moving world not everyone wants to take a day out, so be flexible, break it down into bite size chunks. Two hour sessions are probably optimal going up to maybe half a day. The client experience is everything – when they leave you they should be thinking, “that was great and I want more”, not “that was great but I’m exhausted”! Regular client Advisory meetings with the reference point being the client plan that you helped them put together is also core to Advisory – and will result in new recurring income streams plus project spin off work.
So how do we get serious about Advisory?
Well I was the 100% new business director in a regional practice that tripled in size in two years and I have seen other firms achieve great results. How? The answer is – organise and structure advisory just as you have probably already organised and structured everything else in your business – with systems and process.
We know that good process provides
- Leverage and scale
- Consistency and quality control
- Accelerated learning and development
Most firms whether they are large or small have written or unwritten processes for how they deal with accounts and audit work or tax work. Let’s call them standard operating processes or SOP’s. Few have SOP’s for Advisory work. The successful firms have SOP’s for Advisory.
Accepting that most firms seek to be better at the WIN
W - Winning new clients
I - Increasing client spend
N - Nurturing client relationships for retention
Then successful firms develop standard operating processes
W – SOP to differentiate to attract new clients
I – SOP to broaden the services the clients buy
N – SOP to protect and develop client relationships
If you want to get serious then systems and processes are essential as is the development of SOP’s. You could create your own process in your head or you could look to bring in a proven process from outside – make sure it is client centric and can be deployed in a way that fits you and firm’s priorities.
So how does this work in practice?
I was talking with a small firm before Christmas with two partners. Partner number one has started as the champion but the plan is to involve a new director who joins them after Easter thus creating a pod – the champion model becomes a pod model. The long-term plan is build the advisory revenues and integrate advisory across the whole firm but in the short term it is champion to pod.
The firm in question reckon the have 200 or so business clients and they have segmented and targeted the top 20%. Post year end or pre year end meetings are being held with each of these clients over the next 12 months using one of the CAS tools specifically designed for such meetings. The plan is to migrate a proportion of these clients from being primarily compliance to being compliance advisory. Forty client meetings piggy backing off existing meetings over 12 months they believe is very manageable.
Supplementing this will be a process for handling prospect meetings. The plan is to attract compliance advisory clients and advisory only clients. And then migrate some of the advisory only clients to become compliance advisory clients.
Draw yourself three columns. Left hand column is your C clients. The middle column is your CA clients and the righthand column your A clients.
This firm is serious, it is organised, it’s deploying process in a way that suits them and they are making their life easier by using a delivery platform.
John will be speaking at Accountex on 2 May in the Business and Finance theatre at 11am.
Sole trader to limited company - an essential guide
Incorporation involves the disposal of an existing self-employed or partnership business to a new entity ('person') in exchange for shares in the company.
Any assets of the business (eg the business's premises) are transferred to the company which then carries on the business as successor to the former self-employed owners. The transfer of assets will automatically trigger a CGT charge at market value because the purchaser and disposer are connected persons.
However, there are reliefs which, if possible to claim, can reduce or at least defer the CGT chargeable.
Incorporation relief
A claim to incorporation relief (IR) will defer ('roll over') any CGT charge however the conditions are very specific, namely that:
- the business transferred must be as a 'going concern'
- all of the assets of the business (with the possible exception of cash) must be transferred
- the consideration for the transfer of the business assets must be satisfied wholly or partly by the issue of shares to the sole trader/partnership
Where the consideration is fully satisfied by the issue of shares, the CGT charge is deferred until the shares are eventually sold. If the consideration is only partly satisfied (the balance possibly being in cash or as amounts left outstanding on the directors' loan account), then the gains 'rolled-over' are restricted to the value relevant to the shares with the balance becoming immediately chargeable to CGT. Chargeable gains are calculated and treated as reducing the base cost of the shares; the lower the base cost the higher the potential CGT liability on the eventual disposal of the shares.
All of the assets of the business must be transferred for the claim to succeed. This means that if there is a business property then the owner must transfer the property into the company, which may not be what is wanted or be possible. In addition, should property be transferred then Stamp Duty Land Tax may be payable calculated by reference to the market value of the property on the value of transfer.
Entrepreneurs’ relief
As the sole trader or partnership business will have ceased trading on incorporation, a claim to entrepreneurs’ relief (ER) may be possible should assets be transferred. Under an ER claim the CGT charge is reduced to 10% provided that the gain together with any previous gains that benefited from ER does not exceed the lifetime limit of £10 million.
With this relief not all of the business or all of the assets need to be transferred. However, the individual must have owned the business for at least a year (two years as from 1 April 2019) and the assets used in the business itself.
ER cannot be claimed on a gain arising on the transfer of goodwill to a close company where that company is a 'related party' to the seller (i.e. an individual who controls or has a major interest or is a participator or associate of a participator). It is only ER on goodwill that is affected by the 'related party' restriction.
'Hold-over' relief
If IR cannot be claimed, it may be possible to claim 'holdover relief'/'(gift relief') on the gains that arise on transfer on an asset by asset basis.
This relief applies to disposals of chargeable assets used in a trade where the disposal is not an 'arm’s length' transaction. As such, the relief is commonly used in the transfer of a business to a company because it allows the debtors and creditors to be retained by the sole trader outside of the company thus allowing the company to commence with no left-over debtors or creditors.
The condition for the relief is that the asset must have been used in the trade throughout its period of ownership by the trader transferor. The CGT charge is deferred until the asset is sold.
AccountsIQ keeps spot in Fast 50 rankings
AccountsIQ, the Cloud based financial management software company, ranked 21 in the 2018 Deloitte Technology Fast 50, a the 50 fastest growing technology companies in Ireland.
Rankings are based on average percentage revenue growth over four years and AccountsIQ have now ranked in the Fast 50 for the fourth consecutive year.
AccountsIQ’s CEO, Tony Connolly, credits the company’s growth to continual focus on product innovation. “We are thrilled that AccountsIQ have ranked for the fourth year running, as one of the fastest growing technology companies in Ireland.
"This tops off a fantastic year for AccountsIQ having recently been awarded the UK's Enterprise Accounting Software of the Year 2018. We have added a lot of new customers, and we are on course to achieve 45 per cent revenue growth in 2018.”
Tony says: “AccountsIQ have a strong commitment to product innovation and also to listening to our customers, getting their collaboration and feedback in making AccountsIQ the great product it is. There has been huge uptake of cloud solutions in the last few years and we are very thankful so many companies are seeing the advantage of cloud and adopting our platform.”
Connolly continues, “We are in such good company in the Fast 50, with dynamic growing companies like Spearline Labs, SilverCloud Health and XSellco who took the top spot this year, all using AccountsIQ. These high-growth tech companies are great examples of the sort of clients adopting AccountsIQ, who need the functionality, sophistication and scalability to handle the rapid growth they are experiencing. AccountsIQ has always enjoyed a unique position in the technology sector as being a great fit for fast-growing businesses, particularly as they expand internationally."
“We plan to capitalise on the trend towards cloud solutions and have significant growth plans for 2019. We are investing in expanding our team in all areas. We feel passionately that delighting customers helps underpin growth and therefore customer success is a key focus of this investment. Our recent accolade of being awarded the UK's Enterprise Accounting Software of the Year 2018, beating big brands like Sage, SAP and Exact, was mainly due to user voting, so customer satisfaction is core to our values and will continue to be a central theme as we grow”.
Details of the final Technology Fast 50 ranking list are available to download here.
AccountsIQ updates software platform
AccountsIQ, an award-winning supplier of accounting consolidation and business intelligence solutions, has announced a major product update to their software platform, as a result of feedback from their customers and the AccountsIQ community.
AccountsIQ recently won a ranking in Deloitte Technology Ireland’s Fast 50 for the fourth year running, recognising the company’s growth in turnover, and a reflection of the its commitment to innovation.
The General Ledger Journals functions in AccountsIQ have been redesigned to help create efficiencies and improve accuracy in month end processes, and to save the finance function time.
Typically, end of month accounting procedures can be cumbersome, repetitive and lengthy, especially journal adjustments or month end journal routines, often taking up valuable time and resource which could be better used elsewhere, and which might be prone to human error.
Gavin McGahey, AccountsIQ chief technology officer, says: “The new features will create significant time savings at month end. We are really pleased to add these new enhancements, as many have been requested by customers. The first part of this upgrade has been released globally and we’re looking forward to add even more time saving features over the next couple of months.”
How cheap clients create absolute chaos in your accounting firm
Honestly, it doesn't matter what kind of business you're running, if you have clients who pay you low value, it creates chaos both from a mindset perspective, and from an operational perspective ... but we'll get to that in a second.
Why do cheap clients create absolute chaos? There are a couple reasons. In fact, there are a lot of reasons, but I'm going to look at the main ones.
First, let’s define what a cheap client is...
I had a conversation with a firm owner and she had 52 clients. They were paying such low fees, it was incredible. I was shocked. She was intelligent, quick and very entrepreneurial. But she was selling herself short for $100 per hour and less than $1,500 for complex tax returns.
My clients they charge $1,500 MINIMUM. Actually, it's rare that I speak to my clients and they charge at that level. I won't allow it.
Usually, for project work they charge $8-$15,000, depending on what they offer, depending on the specific transformation they offer to the client.
I digress.
This lady was offering like $50-$100 per accounting client, 52 clients. Man… managing 52 clients obviously isn't easy. You can put systems in, but to what extent could you evolve your systems if they're paying you $50?
Let alone finding, recruiting and training the right people to operate it. To what extent can you get the most quality staff if they're paying you $50?
There are two types of accounting businesses. One that's built with a TONNE of clients making X revenue. For example, 52 clients charging $50 per hour. Or – type two - 10 clients or five clients charging $3,000 per month.
Same amount total revenue, different number of clients and therefore different systems. One business is in Absolute Chaos. The other is running smoothly.
- The Number One Reason Cheap Clients Create Chaos Is Because You Lack The Financial & Time Resources To Put In Good Systems
Systems run businesses, people run systems.
Read that line again…
Without good systems in place, finding good people is impossible The person may be a brilliant employee… but how can the operate without a system to operate by.
So, what happens?
YOU – the owner - end up doing all this work, you're the owner, you're supposed to be working on your business, not in your business, and you find yourself doing lots of client work trying to make your staff do client work, and you can't really invest in the systems you need, right?
Now, you need more staff to take the work off your hands. But, to pay for the staff, you need more clients to bring in more revenue to justify employing new people. So you get more staff, you get more cheap clients.
That just becomes a chaos firm. I call it The Chaos Cycle.
- The second outcome to having those low-quality staff is the mindset.
When I was talking to this lady, she had 52 clients, all paying around $50 - $100.
She didn't understand that there are other types of clients.
I remember five years ago where I started my finance advisory firm, and I was charging 8K minimum because the service I was providing warranted me charging that amount. But you see, she was selling accounting, selling bookkeeping, selling tax. These are commodities.
…And as a result, your value is based on the price. Your value is based on the commodity that you provide instead of the transformation that you provide. Focusing on client transformation and results is what increases the value of a client. Or said differently,
Focusing you accounting package on client transformation and results is what increases YOUR value to the client and thus, your pricing.
So, here's a mindset issue attached to low value clients.
You forget or you never find out that there are businesses out there that need other types of services from commercially and financially savvy entrepreneurs… and they are willing to pay for it.
Every time I speak to an accountant, and I share that my clients are actively charging $3,000 per month or $5,000 - $25,000 per project I get the same response…
"Wow, people really charge that?"
The lady we are discussing was shocked at the lower end. I didn’t even tell her about the 5K per client.
There are people out there that need this set of skills. And, when you work at this level, you can provide and systemize fairly easily.
- I lied… there is a MUCH BIGGER ISSUE GOING ON HERE…
All you accountants, you clever, clever, beautiful accountants out there are probably highly skilled.
You probably been feed the belief that multi-tasking is a good idea. You go out there, you get clients, you get maxed out and then you bring on the staff, they get maxed out.
Then you keep going like that maxed out, maxed out. I've got a tonne of clients who were maxed out when I met them.
This is the kicker guys, they sell different things to different people under different processes.
So now, you are not actually running one business, you're running multiple businesses within your accountancy firm. It's ludicrous.
It will literally burn you out.
I had a call with an accountant the other day, she works until till 1:00 AM for Standard.
When growing your business hurts you, man that's a problem.
Let and me tell you something. It's weird. It's so weird, it took me couple of years to get this concept right, but when they are low value clients, they want more. When they're pinching pennies and they're thinking, "Well, you know that guy down the road is 100 or 90 a month, you're 200. You're a bit on the expensive side."
When they're pinching pennies like that, they're trying to extract as many things as possible, not value, things.
When someone hands you $5,000 to transform something, maybe you do tax resolution, maybe to strategize profitable finance systems. Maybe you do financial modelling. Maybe you're virtual CFO, maybe you do some commercial thinking…
When people hand you 5K for that kind of solution, they want the outcome. They don't care if you click your finger and it takes two seconds. They just want you to get the result that you promised. Nothing else matters, but the chaos clients, or cheap clients, man they are a nightmare.
So imagine having 52 of them. Imagine having 100 of them. Personally, I would find a low bridge and jump off… (I jest!)
The Solution Is Easier Than You Think
So here's a solution. Here's how you change it - positioning.
You do not position yourself as a commodity.
You move to positioning yourself as a transformation provider for one specific thing.
I've got a book here called The One Thing and it's so powerful.
It talks about just doing one thing. Unfortunately, accounting firms are more like supermarkets these days.
Look, I'm an accountant, I'm qualified. I understand accounting very well. It's been a while since I've done it, but I understand it very well and I see accounting firms who have more services than I knew existed.
Focus on ONE thing, ONE transformation. Get good at that one thing and you will be known for that ONE thing.
So where do you start?
You start by designing your core advisory/consulting offer...
I'll be returning to this subject soon!
All hands on Brexit as HMRC slows MTD delivery
HMRC's latest notice reveals that Brexit is taking priority over MTD .... though the digital delivery for VAT remains on course for next April.
The Revenue says: "HMRC have had to make some tough choices about how we use our resources so we can be sure of delivering on our EU Exit responsibilities.
"We’re now at the point where we need to step up our internal preparations to make sure we’re ready for next March. In practical terms, that means putting skilled project teams on to this work straight away. I’m therefore writing to update you on what that means for MTD.
Delivery of MTD for VAT is continuing as planned, but we are slowing the IT delivery of some other elements of MTD relating to Income Tax and Corporation Tax.
Million customers
Work will continue to complete the Income Tax service for the million customers who are eligible to join and the pilot will remain open for those who wish to trial the service, but we will pause work to extend the service to cater for other customer types.
“The introduction of the Making Tax Digital (MTD) service for VAT from April 2019 will be a major step towards HMRC’s ambition to become one of the world’s most digitally advanced tax authorities.
"These changes do not impact our plans for VAT – the majority of customers with turnover above the VAT threshold will still be mandated to use the MTD for VAT service from April 2019 - and the continued prioritisation of the majority of MTD delivery in these challenging circumstance reflects the importance we and Ministers attach to it."