First of all, the OXAS Inc team would like to thank Mike Michalowicz and Ron Saharyan for having our BD managers Laurence Whittam and Joe Minniti on their hit podcast “Grow My Accounting Practice”. The interview was a fantastic platform for us to explain how our project-based accounting support can help small practices scale profitably.
We are delighted to announce the podcast interview is officially live across the web. We know the audience is going to learn a lot from it and we can’t wait for everyone to listen to it and gain more insight into QXAS Inc and the work we do for accounting firms such as accounting and bookkeeping, ledger review, payroll, etc.
You can listen to the podcast here.
Here are some excerpts from the interview:
Mike Michalowicz: How do accountants and bookkeepers start with a company like yours?
Laurence Whittam: Every company needs to through a consulting phase to grow and that’s what we try to explain to them. The idea behind outsourcing companies is they become an extension of your business – a back office for you. Even if you don’t have the physical room to grow, you can still continue to scale. Outsourcing can make sure you do it profitably.
MM: What kind of functions are businesses outsourcing to QXAS Inc?
LW: We do everything right now – from bookkeeping and accounting to tax preparation. We also do some advisory services for our accounting firms.
MM: How do you think you are ready for an outsourcing partner?
LW: You need to be able to have a model that can scale. So what a lot of outsourcing firms do is they actually create standard operating procedures for the types of work that are delivered to them. This helps the outsourcing firms to effectively complete the work of the clients. Every accounting firm differs, their needs are different.
MM: I assume there are going to be some ripples and bumps when you start working with a new client. Does that happen often and how do you navigate that?
LW: Definitely! So one of the things you can is to work with an outsourcing firm for a trial period. This is just to make sure you gain the quality of work that is the same as yours. But you have to set realistic expectations. It’s just like taking on a new employee. For example, they are not going to be perfect immediately. In this case, if the outsourcing firm has got it right and is ready, you can scale and there should be no training needed from your side to continue.
MM: What size business do I need to own it make this even a possibility?
LW: A lot of people think you need a big business to outsource. It’s not at all! We are dealing with clients with literally just one accounting CPA – doing it all by himself and it is not profitable to him to take on more bookkeeping clients. But now we give him the option to do that, so he can do a bit of everything on a full-service model.
MM: What’s your charge per hour? Is that a set rate or a range?
LW: The pricing depends a lot on the work. Let’s just say it is data entry and bookkeeping, then it could be as low as $8 per hour; and could be $15 and above for more sophisticated work such as accounts payable, account receivable, reconciliation and general ledger.
MM: What if I outsource my clients’ work to your company or a company similar to yours, and then my client finds out that it is not my company directly doing it. It is some third-party. I am paying just $15 an hour; and I am charging $75 an hour to my clients, and they get agitated. How do you navigate that?
LW: To be honest, it doesn’t happen. It hasn’t happened. It is one of those things – you can be upfront to your clients and say “hey, listen up – I use this outsourcing firm.” But a lot of times it is not restricted to end-to-end work. You are reading their financial report and making sure you learn a bit more about their business so you can give them real advice.
Joe Minniti: Communication is key in this situation. The way you communicate with the people who work around you – whether or not you are using an outsourcing firm – your clients. This is the key to your whole scenario to making it successful.
The idea for anyone who owns a business is to grow, to make more money and to become more profitable. And it gets very difficult when you are doing all the work, you’re doing all the hiring, making all the decisions, preparing your own books. You know that's when an outsourcing partner can come in and choosing the right outsourcing partner is very important.
MM: We are here in New Jersey, India is on the other side of the world. I am never going to talk to these guys. That’s my fear. How do you address the two different time zones?
LW: One of the first questions I usually get is “can I even talk to these guys?” I mean it depends on the firm and how you work – but that’s another thing you need to make sure. We personally work on EST hours, so you can pick up the phone right now and speak to the India team. You can video chat with them, send them messages.
MM: Am I able to interview these people and check for quality?
LW: That’s one of the things you can do. You can be completely involved. We have our standard protocols for recruitment. But you guys can have the final say if you are looking to get a full-time person onboard from our team.
MM: What are the mistakes that owners of small accounting firms make when it comes to outsourcing?
LW: Lack of communication! If you hire someone who sits next to you, you need to provide them direction. You need to convey your expectations. Similarly, when you use an outsourcing partner, you want to make sure you set your expectations.
Right from the beginning, we introduce the accountant who will be doing your job at QX. You can get in touch with them at any given point in time – you can send them an email, do a video message, and get them by phone. Some of our clients also reach accountants directly. This also varies from business-to-business and process-to-process.
MM: I am outsourcing bookkeeping and I have 20-30 clients. Is there a team that I can work with?
LW: There is a team you can work with. We are looking to adopt your processes and your goals. If you want to limit who you want to work with, we can totally do that for you. But it is not necessarily a default protocol. Clients use their outsourcing partners in different ways and when you are looking for an outsourcing partner – whoever it may be – you would want to make sure they are going to adapt to what you are doing. You want to grow your business. We make sure you are doing what you need to do to grow that business.
MM: One of the things that I experienced when I was in the outsourcing business is that there is a high employee turnover. How do I know the person I am interviewing is going to do the work?
LW: You need to understand that here it is the brand, not just one person you should be looking at. Yes – you may have a point of contact and somebody who you know is there and you have put in a little bit time in training them. But if there is a turnover, you should not see a dip in quality of that work. So that’s the main thing. Internally, we could have a couple of people working on a job to make sure that we are training somebody in replacement just in case a turnover happens.
MM: Are you actually interviewing the business owner? For instance, I am the firm owner – what would you want to know from me?
LW: Sure I would like to know what your expectations from us are. What are you looking to get out of this partnership? What type of work you want to do? I need to know the software that you are utilizing. I need to know a couple of procedures you have in the office. Do you have a view check? We have our own internal quality controls but I need to know about yours and what you’re expecting out of it.
MM: What’s the next step?
LW: The next step is to give it a try. I understand the outsourcing model has its fair share of controversies. You really need to test it out to see what it’s really all about. Is it going to be perfect on the first trial itself? Probably not. Since it is the first time that an outsourcing firm is working with that accounting firm, there is a bit of learning curve and there should be proper communication.
MM: How long should a trial go?
LW: It depends on the clients. We just assess what their need, what their requirement is. It could be a week-long trial, it could be a day’s trial.
MM: Do you start mid-year? Do you start after the tax season is over?
LW: You can get started anytime. We have taken clients during tax season when they were swamped and needed immediate help.
MM: Is there any minimum amount of time to work with you?
LW: We have a 3-month engagement model when they need a full-time person on-board. This is a more dedicated model. Then, there is the ad-hoc model where you pay by return or pay by the hour.
MM: Do you have an ideal client?
LW: We usually work with small accounting and bookkeeping firms – that’s our niche and that’s where we can help them to scale. I want them to grow – that’s where we both are going to benefit from.
MM: Can bookkeepers use you with the mentality to grow?
LW: Definitely! We are working with a bunch of bookkeepers right now. Their pricing model is more hourly-based and not value-based because it is not going to work for them. Some client work is going to take longer and some is going to take no time.
Please note this is an abridged version of the podcast interview. Please listen to the complete interview here.