Deloitte Private Connect

Accountants Face an Inevitable Shift to Fixed-Fee Advisory Services: Deloitte

Deloitte poured years of research and millions of dollars of its consultants’ time into its recently launched accounting and advisory online service, Deloitte Private Connect. BoxFreeIT asked Ben Shields, lead consultant for Deloitte Private and a passionate supporter of the project, why the firm was so keen to release a fixed-fee advisory service and how it would impact the future of the accounting profession.

Watch Ben Shields demonstrate Deloitte Private Connect at Future Series: Virtual CFO next week. Book your ticket now.

BoxFreeIT: What motivated Deloitte two years ago to expend so much effort creating a packaged advisory service?

Ben Shields: When I joined Deloitte Private we looked at our own services and we were already being disrupted. Xero had caused huge disruption and was starting to create an expectation that advisors could look at an SME more frequently and therefore give more robust and timely advice.

BoxFreeIT: Isn’t that what accountants are supposed to do?

Shields: It’s long been the promise of accountants that we would act as the custodian and the strategist to allow the business owner to get on with running their business. But it’s somewhere between hard to impossible to do that in a traditional way (with desktop accounting software). You just can’t be across the numbers.

Even the best of accountants, unless they’re actually doing your books on a monthly basis, aren’t able to do that.

BoxFreeIT: But big companies can afford to have an accountant do their books each month, right? And that created a price barrier that prevented smaller companies from affording advice?

Shields: Yes – in a larger organisation your finance department is looking after your books on a monthly basis and there is a CFO taking care of finances.

If you are an SME using desktop accounting software and a bookkeeper. the accountant only has access when the business owner sends them the file. And then we have to work out whether the bookkeeper was right, were there any missed codings or journals to be added. Which is why only the most senior people in an organisation could do it because they had the years of experience to determine the margin of error and then give good advice.

So all we’ve done really is deliver on the promise that’s long been in this space of a virtual CFO.

BoxFreeIT: Deloitte Private Connect is effectively compressing the time taken for the bookkeeping, right? So you can focus more on advisory.

Shields: Yes but doing it in a highly efficient way that we know is reliable. Our accountants don’t have to interpret whether the information is correct and holistic before they start to give advice on the information.

If I had to sum this up, I’d say that for a long time the balance of the SME accounting process has been out. The weight of effort and cost has been getting information into the system and not getting insights out of the system, let alone working out the action to take based on that insight. About 90 percent of the effort has been getting the data into the system. We want to flip that around so that 90 percent of the time is spent drawing insights.

BoxFreeIT: Would you call Deloitte Private Connect a virtual CFO service? Is that the right term?

Shields: The term “virtual CFO” has a really broad application. You have to be very specific about what you mean when you use it. Our partners are able to act in that role where they have the four faces of the CFO – the catalyst, strategist, custodian and operator. A CFO has to have a breadth of experience to act in all those four ways.

Outside of that is what we would call “actionable insights”. That’s a much broader term. There are still people in our organisation who are great compliance people but we’ve long required people to be both and you get this averaging of performance.

BoxFreeIT: Is there a better term than “virtual CFO” when talking to SMEs about fixed-fee advisory packages? It seems like a very effective way of explaining to business owners that this is about strategy and not compliance.

Shields: From a marketing perspective I don’t have a better term. I think some people are indeed looking for a CFO-style adviser, but some are just looking for what do I do next to make my business better. And that’s why we love the term, actionable insights.

I want to know what steps I can take to improve my business – better revenue, lower costs, higher quality product, a new market. I just want to know what to do next and I want someone who cares about my business and can think that through.

I don’t necessarily want a high-falutin plan, I just want to know the next steps. Here’s what the numbers tell us, here’s my interpretation.

BoxFreeIT: Yes, but while accountants have always offered advisory services, the SME just sees an open-ended time sheet and feels nervous. Dont you think SMEs want a fixed-fee advisory package to measure the value more easily?

Shields: That’s precisely why we put it into the subscription price. You get X hours a period, you can dial it up or down within a package, and the accountant will meet with you face to face, on Skype or over the phone. It’s not an open-ended time sheet.

But it is both time bound and periodic in that it’s X times a month, quarter or year, and the accountants are going to look at your business and talk to you about it. It’s not reactionary.

BoxFreeIT: How did you work out your prices for fixed price billing?

Shields: We designed it from the client experience backwards. Our clients were telling us they wanted these insights but they didn’t want the old process. Our clients would call us with 24 hours notice of a major business decision asking for advice and we’d have to get up to speed and then give them the advice. That was all time-sheet based and we told them what it cost afterwards.

Now they can call whenever they want and we will make time with them to sit down and review what’s going on. We know that the data is reliable and it just takes the friction out of it.

I saw there was some consternation on your blog about the pricing of our packages. They are comparable to what else is out there and what our clients are paying for now when you add in bookkeeping and advisory.

Most of the others don’t package in this actionable insights piece so it’s not an apples to apples comparison. We have a vastly superior product.

BoxFreeIT: How will this shift towards advisory services affect the profession?

Shields: I think it’s a critical shift. It’s delivering on what the clients and the advisers want. That’s why I think it’s a permanent shift, it’s not just a ‘cool cloud’ moment.

We presented at the Zuora subscription conference in the US six weeks ago and they described us as having reinvented our industry. That’s a bit much but we have shifted the emphasis from getting data into the system to getting insights out of it. I just think that’s going to have a fundamental impact on the industry.

It doesn’t mean bookkeeping won’t exist. We have bookkeepers in our business but there is almost no data entry, we use optical character recognition to do most of that. But there are still queries and where there is an application of skill or intellect we still need highly trained bookkeepers. So now we are looking for the best of the best (to hire). Bookkeepers won’t cease to exist, they will just have different roles.

BoxFreeIT: This should lead to higher job satisfaction then?

Shields: That’s absolutely what we expect to see as this take holds. We have highly trained, very intelligent people throughout our organisation who have a desire to help businesses be better. That’s what they went to uni for, not to do compliance.

For us it’s a massive change for our clients and a massive step forward for our people. They can get out and be advisors which is what they wanted to do.

Watch Ben Shields demonstrate Deloitte Private Connect at Future Series: Virtual CFO next week. Book your ticket now.


  1. says

    Thanks @Sholto, we’ve been enjoying how deep you’ve been able to go with your coverage of Deloitte Private Connect. @Ben, great to hear more from the horse’s mouth.

    Overall fixed-fee billing makes sense for much accounting work including subscription billing, where the work is on-going like advisory typically is. This is a strong trend in other service based industries too – law, consulting, project management – and it’s a good thing for the customer. Automation of aspects of the compliance process and more focus and time spent advising by accountants is also positive for small and almost all businesses.

    It’s great for the small business owner to have business advisors and virtual CFOs from big professional firms like Deloitte to advise them. Particularly as they can draw on insights from other small businesses in the same and other sectors. The advisor or virtual CFO becomes an expert across different industries.

    However, it’s not all good news and there is risk. Only having their head in a business month to month (rather than all the time), an advisor does not get the same deep insights that a business owner or in-house CFO does. Because of this they can’t give that deep, high value advice that small businesses need.

    I see that the shift will improve the accountant’s quality of work, and there is value for the small business owner too. That said, it remains to be seen whether accountants can be truly effective business advisors for small business owners.

    Deloitte Private Connect will help test the promise of accountants to act as the custodian and the strategist.

  2. says

    I’m really interested in how this is going to turn out for Deloitte in the long run. I’ve done so many online accounting software clean ups now, I can safely say that it’s a huge step forward. However, much of the work was done for non-automated processes. Loan payments, equity payments, and the starbucks run that the owner put on the company bankcard.

    I’ll be interested in seeing how they standardize the process to clean up the data before providing analysis. The cleanup or the bookkeeping is the thing that’s mostly likely to be wrong on a small business books. I’d say that 80 to 75% of company files have some sort of issue before an accountant starts looking at them.

    • says

      Thanks for the comment, Laura. Deloitte does employ bookkeepers – in fact they’re hiring a whole bunch now that they have this Deloitte Private Connect service operating. DPC automates as many transactions as possible and the remainder are flagged for a bookkeeper to verify/categorise. I think the workflow is handled by, or at least it’s built on the platform.
      I understand that the bookkeepers are automatically notified about non-automated transactions, so they can address them and keep the accounts reconciled in as close to real-time as possible. At least, that’s the design plan. I haven’t seen that part of it in action myself, only the dashboard and widgets.

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