Ep. 30 Paul Meissner 5ways Group Chartered Accountants

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Heather: I’d like to start off by asking you what’s the most dangerous thing you’ve ever done?

Paul: Dangerous. I’m not much for danger to be honest. I’m not…it’s probably…as an accountant saying the most dangerous thing they’ve ever done. I’ve done some pretty dangerous things skiing. Snow skiing’s probably as close as I come to danger. So I’ve jumped off a few cliffs that I probably wasn’t supposed to according to the rules but that’s probably about the most dangerous I have, and landed it and walked away luckily.

Heather: Oh good. Very good. It is always interesting to hear accountant’s perspective on danger and I think clients prefer you to be danger adverse.

Paul: Definitely in our work life, yes.

Heather: So Paul you’re the founder of 5Ways Group. Can you describe what your business does for our listeners?

Paul: Certainly. 5ways Group is 100% cloud based accounting firm. We offer full fixed price services. We don’t do timesheets and we bundle all of our accounting fees into a monthly fee and offer pay by the month. The firm is very much built around compliance. I think that’s such an important area for small – medium businesses, the tax compliance and also helping them as we become now very much business managers as well.

Heather: So where does the name 5ways come from?

Paul: It comes from an old slide I saw at an old seminar and to me it wasn’t so much what it represents in terms of the actual 5ways, which they are grow, create, manage, protect, plan which I’m still lucky enough to remember. To me it just represented that we were more than just tax. We were more than just doing the bank reconciliation or filling in forms. You know accountants represented more than that.

Heather: So how many people work at 5ways?

Paul: So currently there’s two staff, myself, we have another…we have a 5ways South Yarra which is another satellite office which has one Director and one staff in it and we’re about to launch – this is probably the first time I’ve said it publicly – we’re about to launch 5ways migration. A migration agency service which my wife is a registered migration agent so it’s exciting times.

Heather: Very exciting. So whereabouts are you based? You’ve got an office, a satellite office in South Yarra so for our overseas listeners that’s Melbourne. Is that correct?

Paul: Melbourne, Australia yes. Whenever anyone asks me where I’m based I always say the cloud. But no, Camberwell in Melbourne, Australia.

Heather: Both of them in Melbourne.

Paul: Yes, exactly.

Heather: So what do you want to achieve with 5ways?

Paul: I think about 2½ years ago when my son was born I had…I won’t say an epiphany, but a wonderful realisation that we’re more than just business and I think I spent many many years burning the candle at both ends and working ridiculous hours and sort of I guess being busy for the sake of busy and after my son came along and that was such a wonderful time that I think I really decided I wanted to set the amount of money I wanted to earn. I didn’t want to take a pay cut by working less but I wanted to fit that into 4 days a week if I could. And so really what I did do is went out and really looked at what clients I wanted rather than just taking on any clients and I’m probably, you know, almost too picky now, but we really focus on taking the clients that want to work with us and that we want to work with and I think that’s really important rather than just growing and getting bigger and putting on more and more staff. Because I think anyone who’s got multiple staff definitely knows that it’s a challenge.

Heather: Absolutely. So do you perceive that you have…are focussing on a niche?

Paul: I don’t think so, I don’t think it’s a traditional niche. It’s not a traditional niche of a vertical or a horizontal or whatever other direction and I always lose track of which ones which, but we don’t have specific industries. We are 100% Xero and that was a conscious decision when I started the firm, god nearly 5½-6 years ago, Xero was the only game in town and it was just sort of one person in Australia. If I started a firm from scratch now I couldn’t be a single vendor I don’t believe, but because I started so long ago and it’s what the firm was built around-

Heather: -back in the olden days, hey.

Paul: Yeah and I could still do it. And look I don’t {0:05:42.1} I guess about Xero. I mean we all sort of know that it’s pretty good, I am a QuickBooks certified whatever you call it and I do sort of keep my eye out just for that, but yeah I guess our niche is Xero and clients definitely find us because of that.

Heather: So what does your ideal client look like then Paul?

Paul: Our ideal client is someone who is running a small-medium business, probably got some…a rental property maybe, you know family or a group of families that are together in businesses, they definitely use Xero, they want to embrace other online systems and they like to work online. You know I think that’s a distinction there. There are still some clients out there that will only ever deal face-to-face and I think face-to-face is really important but you want to make sure that clients can appreciate that you can give them probably a faster service if its remote, even Skype video. But also they just want to be open to discussing things with you. You don’t want them to view you as that once-a-year do my tax and I’ll never want to speak to you again. You know you don’t have to be their best friend or this guru business advisor to them but you just want them to be able to feel confident to pick up the phone and ask you things and tell you things about their business. And I think it’s that sort of expanded relationship. Even if it’s not necessarily expanded services or expanded into advisory, it’s just you want them to have that open and honest nature with you.

Heather: Yeah absolutely, that’s excellent. So I have some questions from our listeners who were keen to hear from you and it will lay a good foundation to understand how your business actually operates. So you’ve mentioned you operate a 100% cloud accounting firm.

Sharon Pocock from the UK has asked, “what accounts production and tax software do you use as she believes there isn’t any in the UK that’s cloud based yet”.

Paul: And I think there isn’t in the UK. Until we had Xero tax here in Australia I guess the conservative accountant in me when I ever said that I was 100% cloud I always sort of bristled a bit inside because I was actually 99.9% because I still had a laptop in the corner running tax software. The accounts preparation, because all of my clients in Xero, I just use Xero. The Xero special purpose accounts and the accounts that they’ve done. You know while they can be clunky they’re great. I find that it puts them together in a great pack – the accounting firms logo goes on it and there’s a contents page. So definitely I do all of my accounts in Xero and even some of my clients, a couple of my self-managed super funds or some other rental property type clients if they’re in an entity and they don’t necessarily have a Xero file, I will give them a Xero ledger just purely so I can do the end of year financials in that format. It’s interesting, I can’t remember where the UK are up to with Xero with their reporting, but I actually kind of like reporting 1.0 because I really enjoyed all the layout features that allowed me to really create as many different layouts as I wanted. So for accounts preparation we’re Xero and for tax we’re Xero Tax. And that really was the last piece in the puzzle for us luckily.

Heather: Fantastic, thank you for that. So I have two questions from Ali Borazjani, who is a Xero Advisor in Tasmania. First of all he starts off by saying that he heard you speak at Xerocon and that you were a really nice guy and have an impressive firm. That was very nice Ali.

Paul: Thank you.

Heather: He’d like to hear your thoughts on add-on integrations. Firstly, what are your thoughts on completing integrations internally vs outsourcing.

Paul: Mmm this is a great question. I sort of feel that there’s two parts to this question. The first part is what to do with the ever increasing number of add-ons and really how to get your head around them and the second part is whether or not to get hands on in turning them on or not. So the first part first I think a lot of people that ask me, so you run a 100% percent cloud firm you must use so many of the add-ons. I think people get quite shocked to find out that I don’t actually use a lot of add-ons. Not because they’re not great, not because I don’t see it. I have a very hard and fast rule that you should never turn on a process or a system unless it’s really going to create some good efficiency. Sometimes I feel that now we are almost turning on extra systems just to turn on a new gadget or a new system. So I often kind of have, I’ve just found that I’ve had the clients that don’t necessarily need a lot of add-ons. Having said that I guess I’m talking to sort of other cloud heavy firms so I think your average firm would still think I’m having 38 different add-ons or something that I use across all my clients is a lot, but I guess I don’t consider that a lot. I think the really interesting thing that’s happening in our industry is a lot of accounting firms are getting into that cloud integrator space. Definitely that’s a growing space and I think that at 5ways we will do it, we will get involved in the integration where we actually believe we have the knowledge where we’ve had previous clients who have used that system and we feel comfortable doing it and by being comfortable to integrate it I mean not wasting time. Not feeling like we’re just going to chew up time and have to relearn it to then teach it. Outsourcing I tend to go and the integrators will probably shoot me for saying this, but I tend to go back to a lot of the add-ons because I think that generally they tend to be quite hungry in terms of helping your clients get onto their product. You know as much as a sort of an independent integrator. I think a lot of small-medium businesses can probably get by with help from the integrator, sorry the add-on themselves. The bigger clients when you’re looking at very detailed inventory setups or those kind of things, some POS in retail, there’s a couple of industries there that tend to be quite heavy in terms of the integration. You know you really should consider an integrator or you should recommend to the client…see I don’t, I make it the clients decisions. I don’t want to bring…I think recommendations are really hard and it’s something I guess I’ve sort of struggled with over the 6 years because you don’t want to bring some in and then just layer the cost and layer the complexity on top of a client. I’m a very big believer in giving the client the options in terms of look, this add-ons now made to be super simple in terms of setting up and in terms of running, but you want to make sure you’re doing it properly. So you sort of give them the options of how much you think they can get going themselves, where the integrators sit in and really empower them to make the decision.

Heather: That’s really interesting. I know personally I found that big organisations have invited me in, sat me in a boardroom, explained their business processes to me and I’ve gone you need this, this, this and this to do that. You need this to do that, you need to this to do that and I kind of jot it all down and they take down all the names and then that’s it. They’re happy to go off and actually do it themselves and I think you articulated that well. A lot of these add-ons are offering you a really good service for doing the implementation so-

Paul: -it’s really interesting Heather, I think one of the things and I’ve spoken to a few of the cloud integrators and people that are sort of coming in and out during the time and I think it’s really interesting that for me the value for clients is in selecting them and reviewing the process. You know that’s the bit I think offers businesses a really great result. The bit that doesn’t necessarily, and I guess as a percentage of time spent, the actual integration is quite low level grunt work. I really get a feel for that, things go wrong and you’ve got endless .csv files you’re trying to crunch into a different format and this upload breaks and that download breaks and some software you can’t get stuff in and out of. It’s crazy. It’s really interesting that we seem to have this reall glut of people offering this really low price grunt work service and nobody’s, not nobody’s I shouldn’t say that, but you know not focussing on going in and saying well I’m not going to implement it. I’ll give you a report saying this is what the suite of services, or at least an option on the suite of services and then you can go away and you’re free to…we may have an integration arm, but you know I think it’s really funny that that sector to me just doesn’t seem to get where the value is for clients.

Heather: Yes our reviewing business processes and even just talking to anyone about your business processes can actually help you articulate and see more efficiencies in them just from someone else looking inside. So the accountants always the really good person to turn to when you’re thinking about doing that.

Paul: And funnily enough we haven’t gone down the integrator path but a lot of our conversations now with clients revolve around things that bug them about their processes or what do we use for tasks. You know I guess they know that we’re sort of, we use those online systems and those gadgets and that kind of stuff, and reframed a lot of the conversations we’ve had with clients around efficiency and away from the pure accounting.

Heather: So I’ll go on to the second question from Ali Borazjani which sort of compliments what we’ve just been talking about. Do you, or how do you, bill for researching add-on options for clients and how do you keep up with all the add-ons?

Paul: Very good question. Keeping up with add-ons. Look it’s very hard. That is a constant struggle and I don’t think you need to as much as everyone sort of says you do. I guess I will sort of explain that. I will preface this with the fact that because of the way our firm is built so purely around Xero we do get a lot of add-ons, I get emails every other day and offers of coffee and Skype meetings so they come to me rather than me having to go to them. But I guess in terms of considering it, look I always kind of give it a 5 minute…I ask myself a very quick question and if I can’t find the answer I almost stop and discount that as an add-on. You know what is it, what does it do, who does it suit and what does it cost. I think in sort of 5-10 minutes, you know I don’t want to get into how you use the system or what the client…I mean you want to have a look at screenshots in there as well but I think you can get a little bit of a feel for it by just asking those simple questions. You don’t have to set up a trial, you don’t have to get right into it until you look at it. So that’s if I was just keeping abreast of add-ons that’s what I’d do and that’s the sort of quick look I’d have. What I also find has been the most powerful thing for keeping up with add-ons is just purely waiting until the client had that problem, waiting until the client needs inventory and then going out and going right, inventory side by side lets go. Let’s speak to them all. Speaking to them is great. You can glean as much information as you can off the website but just tell them you want a contact. You want someone to call you. You’re an accountant, Xero partner and they’ll pretty much jump on the phone almost too quickly. For the add-ons the other thing is one of the most powerful things is going to Xerocon. I know the add-ons don’t like being in a line next to each but as a user god we love it. We just go right, I’ve got a 20 minute break, I’m going to go left to right and we’re going to talk to all of them. So you consider them side by side and you can actually compare apples with apples because that’s something we often don’t get to do.

Heather: Yes absolutely. Two points there, sometimes at Xerocon it’s worth just doing the add-ons and not going to some of the conference event things they offer just so you can go and have decent conversations. The other thing is like Xerocon was back in August and we’re in November and what they didn’t have in August they might now have actually built in and rolled out because they’re evolving so fast so you do this big review and then it changes so you kind of have to be open. Don’t you agree that you have to be open to what there might be available to them?

Paul: Absolutely and I’ve been tripped up by that as well. You know I’ve spoken to add-ons when they’ve spoken to me and I’ve gone oh yeah, I remember that you didn’t have this and they’re like that was 6 months ago and 6 months in add-on software is massive. I just wanted to get the second part of that question which was how to charge for it. Because I didn’t want to not answer the question fully. The interesting thing about our firm, and this sort of gets a little bit into the whole no time sheets thing, but all of our clients as part of their fixed fee have an amount that I charge them per annum for unlimited tax advice, unlimited advice really and it’s just those 5 minute conversations and what I find is because I’m charging all my clients that fee and some use it well and some use it poorly. You tend to win across the board. It is the first part but the second part is, every time our client calls us we have a chance to impress them, we have a chance to…I don’t upsell but that’s what you are doing effectively by helping them, so I don’t think if you’re not comfortable charging for a set service, and I guess this comes down to off-the-cuff conversations that I have with clients around their process and what they might use and a quick oh well these are the add-ons in the market, well that comes under the unlimited advice. If they say that sounds good can you come in and give us…and actually spend a half day with us and look at the way we actually do stuff, which I have for clients. I’ve kind of sat with their accounts person and looked at the way they do things. You know you can charge a daily rate or whatever and that becomes a separate job and clients are pretty good at that, especially if you give them some good outcomes. But to package it up as a…I have in the past packaged it up as a half a day review and we’ll come back to you with our thoughts-

Heather: -business process review package-

Paul: -exactly.

Heather: Excellent. So you so that you charge for unlimited support for tax, those 5 minute tax questions so if we can analyse that with your different clients assuming that you may have some teeny tiny clients and some really big clients, do you charge different amounts for these guys?

Paul: Yes, absolutely. And this is the really interesting thing and I think it’s not so….it was back when fixed fees were just coming on. There were some wonderful conversations I had with the other terrific cloud based, fully cloud based fixed fee firms and we always had this wonderful debate – is your fee truly fixed or is it, are your packages fixed and is it really a you select your package and off you go or is it a bespoke package based on a lot of different factors. What the client was charged last year. You know what the level of complexity and those kind of things and it was really interesting. There were some firms out there that basically just they were the packages, they were the costs and just select a package, work through the process, they don’t even talk to them almost and they’re signed up as clients before they’ve even spoken to someone in the firm. I kind of believe that that would really limit it. All of our packages are…none of our clients are on the same dollar amount package.

Heather: Oh wow, that’s amazing.

Paul: So we have a package of services and the fee for that client is fixed and it’s fixed per service line but it really is like a fish and chip menu board of services except the prices on the fish and chip board are kind of like a stock exchange where you know, I get to set the price depending on risk and how I’m feeling that day and that kind of thing-

Heather: -how you’re feeling that day-

Paul: -how I’m feeling that day and how I’m feeling about the client. But look I won’t take a client on until I’ve spoken to them. You know I think they should speak to me and understand how I do it and I should speak to them and understand how they do it. So each fee to that client is fixed. I don’t bill on top of that, I don’t think I’ve ever varied the fee unless it was an entirely separate entity or job but sometimes the cost to do one clients tax return or one clients annual unlimited advice of the BAS or whatever, they’re all different costs across different clients.

Heather: Wow so you’ve put a lot of thought into your pricing strategy. Did you come up with it yourself or did you have sort of an expert come in and work with you?

Paul: No just ourselves when we started. I had a business partner who moved onto another cloud based firm and him and I just sort of sat down and really sort of looked at it. And this was late 2010 early 2011 and nobody, I mean all accountants had a white website and nobody had prices let alone packages on their websites. This was a crazy time, you know, we were seen as mad just by putting prices on. But it just worked for us. We just did it I think. Maybe we were younger and not as smart but we just tried. It.

Heather: So do you still have the prices published on your website?

Paul: Yes I’ve always put the word from at the end.

Heather: Oh, okay.

Paul: I think they’re indicative and what it does is just sort of outlines the…it more outlines the services you can bundle but people sort of have a look at them and what it does is it almost pre-qualifies them a little bit. It takes away a little bit of the sticker shock and gets them in the mindset of thinking okay that’s the services and that the price and it does increase as you get services. Then they call you and you say okay let’s talk about what you need and let me build you a package. There’s no such thing as an off-the-shelf package which is why I put the word “from” after the cost.

Heather: Fair enough. Before we were talking about add-ons for clients, what is a recent add-on you’ve discovered that you really like?

Paul: Oh for us or for clients or-

Heather: -for clients.

Paul: For clients.

Heather: Maybe in the last 6 months. Maybe at Xerocon.

Paul: I haven’t had the time to turn all these on but I definitely have found some good ones. I like what Chaser are doing. I still think chasing debtors is mentally anybody getting a system that gives the system permission to speak to your clients is mentally a hurdle that is very hard to get over. But definitely what I like about their model is that you get 2-3 emails sent to you as the person using the system that says these are the people we are going to email. Here’s your chance to stop it. It’s not just we’re going to spam your clients with email reminders. You know I think that the timing of the emails and the warning you get is pretty much if any client gets an email you didn’t want them to get well you’ve missed 2-3 chances to turn it off.

Heather: Yes, yes. Okay, fair enough-

Paul: -I think that that’s really good because it reframes the debate around you’re not worried that anything goes out without your permission. It’s almost like even though it’s an automated debtor chasing service it gives you that very good transparency on what’s…who’s going to be emailed when and why. So if you’ve had a chat with them and said you won’t chase them you’ve got that. You’ve got two chances to turn that off.

Heather: Yes, yes. And you don’t like…when I do it there are some people you just don’t chase because you know they pay but you know they go to like Amsterdam for 4 months of the year so you’re just like whatever, it will come in.

Paul: Yes exactly.

Heather: So I have another question from a listener. This ones from Victoria Berry who’s a Xero Advisor in Queensland and the exact phrasing is “how does he manage gathering client information that isn’t already in Xero?” So I’m interpreting perhaps what is your customer management database or what’s that looking like.

Paul: Yes. Gmail. Unfortunately it’s one of those things that’s very hard. I’ve dabbled with Xero Workpapers. We used it when it was Spotlight Workpapers. We’ve turned it on, we’ve turned it off. We’ve turned it back on for BAS only. We’ve turned it off, we’ve turned it on. You know I think it’s what works for you that’s important. It’s got to fit in with the way you work and the way your clients work. We’ve had a lot of problems with the Workpapers being another login system. Had to log into Xero and had to log into Xero Workpapers or Spotlight Workpapers and didn’t know which one was which and we kind of got stuck in a little bit of that. So look unfortunately we use Gmail for our business. We have a lot of canned responses so that we have a lot of our information request emails saved as templates. Gmail just calls them canned responses but basically they’re just templates and so we do that. In Practice Manager we use the email myjob system where you can, even though you’re working predominantly in email if you copy in yourname@emailmyjob and put the Xero or practice manager job number and it will go into the job as a history. It’s a really good…that feature is probably a very big catalyst for us not needing a second system immediately or upfront. There is another and I’m going to forget the name, but there’s a form builder, maybe I’ll have to-

Heather: -yes, yes somebody’s mentioned that before. The form builder-

Paul: -form basic but its specifically…you can create any sort of data collection form and it will pre-populate the data from Xero Practice Manager, send out a link to the clients and get them to fill in missing data. So it’s something I’m looking to do when I get some time, but looking to do that to make sure our clients addresses are up to date but also asking them some key questions like do they have a will and those kind of things that are important that we don’t get that full visibility on. But there is a plugin form builder that uses the XPM-

Heather: Yes and they were at Xerocon because a few people have mentioned them to me. Is that right?

Paul: Oh I don’t think I saw them. I wish I had of. I must have been-

Heather: -well there was some form…a company based in Sydney that does forms etc. Maybe I’m thinking of the wrong thing. Sounds like you need to engage a uni student over the Christmas holidays to come in and do that for you.

Paul: Yes I know, I know! My wife keeps offering to come and do it for us. Like anything when you run a practice I guess the knowledge of the clients and the knowledge of the history and the information between different areas is often in our head as the Director. As much as you can give. Turning the systems on the easy bit but making sure that the data’s right and is working. That’s the hard part. Turning them on nowadays, these add-ons you can turn on and turn off at the drop off a hat.

Heather: So leading on from that what solutions are you currently using in your business?

Paul: Gmail for email, Xero-

Heather: -so you’re not using Google Apps, you’re using just basic Gmail?

Paul: We are using Google Apps but we don’t…I still love Excel and Word, I don’t know why, I’m an accountant and I just love Excel. The Google spreadsheets or whatever they call it, I like it and it’s good when you need to collaborate but if you don’t need to collaborate I work on Excel. I have Google drive, I have documents in Google drive, I haven’t organised it into a firm-wide structure. We have box.com for most of our document management and also a mini-client portal. We’ve got the functionality to effectively use that as a client portal although I think client portals are useless because clients don’t want to login anyway. So it’s there but we never use it.

Heather: What software gives you the features of a client portal?

Paul: I don’t think accountants need a client portal. I mean I think a good client portal is no client portal. I don’t think…I think some clients you can train them to go there but other clients no matter how easy you make it to get…I mean most clients can’t even look through their email for the last copy of their tax return. They just ring you and say I’m going to the bank can I have a copy of the tax return. Didn’t I email that to you yesterday? Oh I didn’t even look. So if you can’t get them to look at their email which they look at arguably 100 times a day how are you going to get them to login to a portal. It’s my theory and it might be a bit harsh on the people selling client portals.

Heather: Very good. So with respect to the 5ways journey what have been some of the biggest challenges and obstacles you’ve faced?

Paul: Hiring staff I think is…we’ve got wonderful staff but you have to…growing to the point where you need to put on a staff member is, for any business, is the biggest challenge. It’s that you’re revenue is going up in a line and the effort, struggle, difficulty, distraction of recruiting, interviewing, hoping it works out, training, that kind of stuff sort of becomes not worth the journey in some respects and definitely something that during times where we were grow, grow, grow of that mentality made it really hard and probably helped the decision to say, hang on let’s put our number 1 goal as being ridiculously efficient and profitable rather than growing at a million miles an hour. That definitely was I think…I mean cloud has been around 15 – 16 yeas I think with internet banking. Some people still think that grabbing a laptop a going to work at a café is not a real job and that might not be from clients, a prospective clients position, but I think that society as a whole they don’t understand that it’s still quite a legitimate, quite a challenging environment to work in. It just looks like you’re spending your days at a café and I think I had a wonderful comment from someone in my own family, how’s your casual work going? You know because I take a day off and arguably being connected online you can’t, you never take a day off, but working from wherever I am, wherever I want to, travelling and having a day at home with my son is considered casual work. So I think society has those challenges.

Heather: Yes. I heard a lady speak recently and she was growing her accounting firm and she said her most successful recruiting method was she would post on Facebook that she wanted staff and the requirements and you had to post your response to her in a video.

Paul: Oh right.

Heather: And she said it massively reduced the number of applicants she got plus she kind of understood whether they were technically savvy also if they could actually manage to pull a video together.

Paul: There was a recruitment system that did that and asked the questions, flashed up on the screen and had to record a video. Yes another firm I speak to often kind of used that and said they got some of the funniest…you could see that the persons eyes darting and googling all these kind of things and looking quite worried. But yes it did have that effect. It did self-filter some tyre-kickers.

Heather: So can you elaborate, maybe you’ve already done this, can you elaborate on the journey that led you to say “goodbye to timesheets and hello to a client focused value based model.” What led you to actually kill the timesheet?

Paul: Because I hated them. Plain and simple. I was bad at it. I didn’t enjoy it. I thought it was…I don’t think I’ve ever met a timesheet that was 100% correct. They’re fictional. Nobody completes them properly and they’re just a bad measure of everything. So I think that was quite easy to get rid of them. I said that but when I talk about our journey to get rid of timesheets I do mention and I do fully appreciate that we started from no clients and we started from scratch so we could. And we’ve never been particularly staff number heavy and I know that in medium-larger practices where you need something that has that transparency on what your staff are doing, so I appreciate that when you can’t look up and glance around the whole all of your staff in an instant and you work with them most days then it does get harder to manage. So look we just did it. I figured that in my previous roles I had 4-5 people working under me, I was a manager in a small-mid firm in Melbourne and it took me 3 months of the year, averaged out over a year, if you condensed it all into full time hours it was 3 months just to measure it, to compile the time, to monitor it, to analyse it, to bill it, to collect it, just do everything with it. Look at percentages and all those kind of things and for 3 months of my year for data that I wasn’t sure was correct, or I knew wasn’t correct, or not 100% correct and gives you an idea. Look I figured by getting rid of them I would get 3 months of my time back, I could be less efficient for a month, I could lose some time for a month, I could over service my clients that I didn’t charge them for a month and I could go on a month’s holiday and I arguably wouldn’t be worse off. And that was sort of how I justified the decision and then what I found though after I did it was that people consumed far more services when it was an upfront fee-

Heather: -oh that’s interesting.

Paul: Accountants know what they’re going to charge. If you got to the end of the year and you billed someone for their tax return and set of accounts and BAS and whatever they’re going to have invoice shock even though they kind of know 12 months ago they got the same bill or often the bill that you’ve added 5%. But if you tried to bill everyone $1000 all of your clients at the end of the year you said look we’ve given you great ad-hoc tax advice this year I need $1000 to compensate me for the time I’ve spent with you over the last year they would laugh you out of the office. It would create so many problems yet if you said it upfront, you said look I’m going to be available for you to call, email, tweet, Skype, whatever and that’s going to cost $1000 but I think it’s worth it because during the year you’re going to have, you’re going to be able to get rich and ask me any question about your business life, family, whatever and none of them have a problem with it. And you extrapolate that over all your client base and the dollars are amazing and with little or no fights over the bill. It’s just crazy. The other thing that was really powerful is, and I love it. I get new clients and the first time they call me even though it’s in their package, they say oh I know you’re busy and I won’t chat for long and I say you’re paying for it chat for as long as you want and they just love it. Some take the piss and you’re always going to get that but every time they call with timesheets and this whole don’t take up our time because we’re going to bill you, you just lose that connection. You lose that willingness for a client to go I want to call my accountant and you can only get paid enough for it…you can only be compensated reasonably for it where you tell them upfront and they will be happy with it. The worst they will say is no. I’ve had some that have said oh look that’s a bit higher. Right then let’s make it 75% of that cost for that advice and you just try not to call me as much. Which they never do, like they were probably never going to call you anyway. But you can do that. That was really powerful.

Heather: Excellent, that was really good. Thank you for sharing that. So Paul what do you perceive the accountants relationship should be with the clients bookkeeper.

Paul: I think that’s changed immensely. I think Xero and online software together has really diffused almost all of the historical problems that bookkeepers and accountants have said and I had an analogy that I made up many years ago, but I said that the accountants and bookkeepers were like squabbling children fighting over a toy and the toy was a desktop data file and by mum or dad being Xero or MYOB, taking the file and putting it into the cloud was giving the two kids anytime access from anywhere has really just meant that they can play nicely together. My discussions with bookkeepers now is oh can you do it. You’ve got a login, I’m on the road. Oh can you do it. Rather than that protectionist theory or that protectionist way we used to be about the data file and who used it last and who had the live files. You open it up, you diffuse it, everybody’s there helping it. Everyone’s in there. Everyone has transparency. Everyone can go and get their own layout. They can get their own report layout. They can get their own information when they want, how they want it as long as you just…the only thing that I think that the bookkeepers and accountants still need to work on is, I just have a really honest and open relationship with the bookkeepers I work with and I say, look whatever we do we do it together, we’re working together to help the client. If you’ve got a question ask. Whatever we do we’re both doing it together for the good of the client. I think that’s the power.

Heather: Sounds like you’ve got a good working relationship with your bookkeepers as you’re probably aware there’s constant complaints on both sides and I kind of look at it and read them and it all just seems to come down to communication, but sometimes I guess there’s a little bit of “I want to do everything” type of comment coming from one of them.

Paul: Yes and I’ve just been made a Director of AAT.

Heather: Oh really? Congratulations!

Paul: Yes. Thank you. Because of my role on some of the advisory councils for CAANZ Chartered Accountants, I’ve become a Director of AAT so I think that changing nature of bookkeeping and definitely that relationship. I still think a lot of the problems…the main issue for accountants and bookkeepers is not embracing…and I hate this sort of change. I hate people calling it disruption because I think technology’s been anything but disruptive to my business. It’s been empowering and efficient and everything else. I think that if you still try to work the old way, if you still try to take the information offline so you can hoard it and hold it and control it I think is where you’ll still have your problems.

Heather: Yes definitely. So that small little piece of newsworthy information that you’re now a Director at AAT, what does that mean for you and what does it mean for sort of what are you hoping to do with that role?

Paul: I think I want to expand the information and really help the industry both accounting and bookkeeping, obviously AATs far more in the bookkeeping space. It just understand the positive impact that technology can play on the industry. I mean I think it’s the best and the worst time for the accounting and bookkeeping industries. It’s the best time because we’ve never had these tools that are just blowing our minds and giving us amazing efficiency and giving us the ability to take away pure grunt work that we never wanted to do and have really amazing relationships with our clients. There’s never been a better time to be an accountant or bookkeeper in that sense. But it’s also never been a worst time to be an accountant or bookkeeper because currently we’ve got these, I call them predators, but basically it’s these management consultants and people just pushing this agenda of digital disruption, oh if you still do compliance you’re dead and if you’re a bookkeeper doing a bank req then you’re dead and oh you’re going to die and the world … oh my god…and I just really feel that I have a real passion for the industry standing up to that for members and for bookkeepers and accountants not to have to put up with that. I almost feel obliged that somebody that has embraced the technology but we certainly didn’t lead, but we were in the back of the front group I guess, you know you kind of have that obligation to pass the message down that this is just a such great, wonderful, empowering era and not to listen to these people just absolutely pushing fear for no other reason than to sell you software, seminars, consulting fees or other stuff and it just… my blood boils at the way accountants and bookkeepers are treated in this sense and the way we’re told what we have to do. So really that was why I wanted to take this seat on the AAT board and also do as much pro-bono work with Chartered Accountants Australia New Zealand that I do.

Heather: Fantastic. Yes I was going to ask you what network do you turn to for support but it’s obviously probably going to be lying in the AAT and Chartered Accountants network, and in what you were saying before regarding these marketing and accounting experts, it’s kind of a shame and this is one of the things I’ve always fought with the ATO. It’s kind of a shame that our details are so public and that these marketing or people who like to call themselves accounting thought leaders etc. are able to buy our email addresses and scan them. I think Xero does a bad job of enabling our email address to be publicly available. If you’re a BAS agent or a Tax agent again it’s publicly available which kind of causes the problem almost somewhat.

Paul: Look I guess I don’t have a problem with it being public. You’re probably getting the same here do you want to buy a Xero user email. I personally put all my email addresses and I’ve got two business websites and two personal websites and LinkedIn and I guess I can’t question people getting me through a channel because even though those channels make it easier to get my email address I publish it so nothing, in a sense, is private anymore. But I just think that I have no problem with these people contacting people or talking about the outsourcing or recruiting or the latest who …these gurus who frankly have never worked in a practice in their life, you know a grand stint at one of the Big 4 firms when they were, before they could shave, hardly qualifies. But they think it does.

Heather: Yes, yes.

Paul: The problem that I have and I personally think that the accounting bodies do a shocking job in calling this out. You know, if you think you can improve my business by offering marketing management, business advisory coaching then tell me. But don’t lie that compliance is dead. Don’t lie around the changes to limited licencing. Don’t lie about technology killing bookkeepers. Do what you want, you sell, but when it’s just fear and just scare mongering and especially when it’s telling half the story just to promote that fear then that’s the bit where we need to stop. Someone needs to stop. Someone needs to put up their hand and say get over yourself.

Heather: And I think you’re right. The accounting professions have dropped the ball. I think they’re kind of picking up now but definitely for like a decade it was like the accountants should be the guys in there giving business advice. Why aren’t you pushing this, promoting this. Why aren’t you telling people that they’re beyond what they are?

Paul: And it was from this void that was…the void was created by the technology moving as quickly as it did. The professional bodies not moving at all. And I love them, I’m on their board, so I’m not…it’s just because public practitioners are only 30% of the CA membership so it’s not…I think that the IPA and CPA who had far more percentage of their members in public practice probably shoulder far more of the burden but missing this. Nobody was telling accountants, helping accountants, with the way they run and bookkeepers, with the way they run their practices and empowering nature of technology and left this void for the darkest sewer dwellers. I’ll probably get in trouble for saying that. But these just pure predators that are…never worked in practice in their life and just sell, they just sell and that’s the bit that unfortunately was created from a void and fear sells.

Heather: Yes absolutely it does and they’re relentless etc. I’m with the Chartered Certified Accounting body which is a little bit off topic but, that’s the ACCA, I just find that they’re completely pitched to me becoming the CFO of an organisation the size of Telstra and they don’t understand any of the lower level small business type of level and they kind of say they do and for 1996 I passed my qualification, since then for every magazine that comes out is like none of this resonates with me. None of this relates to me and it’s been like that all the time. I’m kind of hearing that similar vein coming from you as well.

Paul: Yes-

Heather: -sorry you go on.

Paul: It’s a real struggle but somebody’s got to say no and that’s what I’m trying. I post LinkedIn posts that probably get me a little bit more attention from these people that I deserve. A lot of them reach out, we’re not just pushing fear. I hate to tell you you are. But we’ve got to get better at saying no.

Heather: Absolutely. So thank you Paul so much for speaking with me today and I’m sure the listeners are going to really appreciate and learn a lot from this conversation. Can I leave you with one final question Paul? What gets you really excited about your daily work life?

Paul: Helping small-medium business. Just helping them do anything. Its genuinely tax, I’m a tax geek, you know finding, saving tax, minimising tax, those kind of things are still great opportunities but I think as accountants, whether or not you charge for it, I mean we are business advisors. There are people out there saying you have to go and charge for it. We are business advisors. We can talk to our clients on any matter of topics, through any amount of days, we can be a marriage…just this week I’ve almost sort of put the hat on as marriage counsellor and someone just a supportive friend in bad times, but also some wonderful times through businesses and I think that that is the role that really gets me excited about where the industry is and I don’t think you can fully do that role properly if you’re stuck doing manual data transposition. It’s the bit that technology gives us the opportunity to not waste the time we wasted on work that wasn’t worth anything, which was the data transposition and left us with the high value work and compliance is still high value but it’s the last bit of the compliance that has all the value and decisions and it’s that role because as much as being in business is one of the most difficult things I think you can do. It’s difficult, lonely and I think ironically a lot of the bookkeepers and accountants in our own businesses are very similar to this. We are running our own businesses and we have the same struggle with government and compliance and staff and all of that and I think the power is in…what gets me out of bed is just knowing that I can be there for the clients and really help them take their business wherever it wants to go. It doesn’t have to be in a certain direction. Not all businesses want to grow. There’s the concept of just being busy. We should always be adding how many clients did you add, how many hours did your work last week. I want to help clients go well, let’s make more money in less time. Let’s focus on that profitability rather than just being busy because anyone can be busy. It doesn’t take too much skill or too much innovation to be busy.

Heather: Yes definitely. Thank you very much for leaving us on that note. I’m sure our listeners will really appreciate this information and I’ll leave Paul’s contact details in the show notes. So thank you very much Paul.

Paul: Thank you very much. Have a great day guys and thank you very much for listening.