What does it take to be an Intuit Firm of the Future, the champions of QuickBooks Online? We analyze the technology stack and business models of this year’s finalists to find out.
This is the second year that Intuit has run the competition, which picks four accountants and bookkeepers who specialise in QuickBooks Online. The terms of the competition are rather vague – there are no clear rules that say how finalists are chosen.
So I interviewed the four finalists in depth about their businesses to find the common strands. Not only will this show you what to achieve to win the competition in 2017, it also reveals the characteristics Intuit considers important for next-generation accounting firms.
Table 1: Business model
|Name||Hemingway Bailey||New Wave Accounting & Tax||24hr Bookkeeper||Moore Details Bookkeeping|
|Location||Hull, UK||Gold Coast, Australia||Minnesota, USA||Ontario, Canada|
|Pricing||Fixed fee||Fixed fee/value pricing||Fixed fee||Fixed fee/value pricing|
|% clients on QBO||100%||99%||95%||100%|
|Age of company||6 years||2.5 years||7 years (3 years full time)||10 years|
|Age of principal (est.)||51||26||35||38|
|Year transitioned to cloud/fixed fee||2015||2013||2014||2013|
|No. of staff||5||4||5||5|
|No. of clients||70||300||80||50|
|Staff to client ratio||1:14||1:50||1:16||1:10|
|% of clients buying management reporting||15%||40%||~5%||40%|
Firm of the Future – Young, Small and Light
A quick glance at the table above reveals the Firm of the Future to be young, small and unsurprisingly heavily focused on the cloud. The average age of the business is six years; several finalists were only part-time for some of those years so a more relevant number is under five.
The Firm of the Future employs about five staff servicing on average 70 clients. That’s when you omit the Australian firm New Wave, an outlier in terms of number of clients and ratio of staff to clients.
This may be due to a number of factors. The other finalists may service larger clients; Jennie Moore from Moore Details Bookkeeping says she only targets “dragon” clients. New Wave also services 100 individuals, and the 250 businesses are likely to be smaller.
Australian firms can automate more of the bank reconciliation process and tax submission due to a simpler tax code than, for example, the US, which allegedly has more than 10,000 types of sales tax.
New Wave is also the furthest in evolving towards a more broader business than accounting. Not only does it offer integration services for the various cloud apps that connect to QuickBooks Online, it plans to launch another department building websites for customers and offering SEO services. This is not just reporting on the numbers, it is actively finding new customers for its clients.
Not all firms will head down this path. But it does indicate the breadth of possibility for accountants and also that accounting as a service no longer needs to be the headline act.
The Firm of the Future charges fixed fees (either one set for all clients or by value pricing) and is exclusively a QuickBooks Online shop. No other vendors, and no desktop users. These finalists don’t just advocate cloud software for accounting, they use it almost exclusively to run their business.
Table 2. The App Stack
|Internal||Name||Hemingway Bailey||New Wave||24hr Bookkeeper||Moore Details Bookkeeping|
|Office Productivity||Google Apps||Zoho Mail||Google Apps||Microsoft Office 365|
|Workflow||Google Sheets||Asana||Google Docs||Evernote|
|Tax + Statutory Accts||TaxFiler||Tax Assistant||–||–|
|Electronic Signatures||PandaDoc||Adobe eSign||Adobe eSign||–|
|Document Storage||Google Drive||Microsoft One Drive||Google Drive, Dropbox||Google Drive, Dropbox|
|Time tracking||TSheets||–||Work etc.||–|
|Expense tracking||Entryless||Entryless||Bill.com, Entryless,
|Credit control||Invoice Sherpa||–||–||Invoice Sherpa|
From CRM to workflow to electronic signatures and quoting, the Firm of the Future runs on a large number of cloud apps.
Surprisingly, Microsoft is not the mainstay of the Firm of the Future as it is at conventional firms. Only one firm uses a Microsoft suite for emails and documents; the firms have found different uses for Google Apps in multiple cases.
There is a lot of variety in apps and no clear standards. Clearly there is a lot of choice out there, and future-thinking firms should find the product that suits them the best.
It’s also instructive to see the type of firm omitted from the finalists’ podium. There are no firms here with decades of experience, scores of staff, legacy systems and clients on a range of accounting programs.
Perhaps most importantly, the Firm of the Future doesn’t have a traditional partner structure. These look a lot more like any other business with a principal in charge (two in the case of New Wave) who can make decisions quickly.
This should be a warning for the majority of the accounting profession who do own or work in a conventional accounting firm. If you are not in a Firm of the Future, are you in a Firm of the Past? And what does that mean for the business’ prospects and your own in the face of the new guard?
Now for a quick, personal introduction to the people behind the finalist Firms of the Future.
Finalist #1. Hemingway Bailey
Alan Hemingway had never worked in public practice when he set up shop in 2010. He had recently been made redundant after working as a commercial accountant for 23 years.
Hemingway started out with no clients, a small network and no idea of what was required to run a practice.
In 2013 he went to a presentation about QuickBooks Online and decided to go all in with cloud. In less than three years he has built up a highly efficient practice that is a heavy user of Google Apps for operational systems and Crunchboards for management accounting.
“Accountants are at risk of losing their jobs because of technology. The view we have taken is that you can’t fight it, so let’s embrace it,” Hemingway says.
A tech-savvy attitude has positioned the young firm to take on larger competition.
“There are lots of mid-tier practices who say ‘We working in the cloud’ but it’s a very small proportion of their time. We can now take on the bigger practices because we know we’re efficient, we understand the technology and our team are mainly millennials,” Hemingway says.
Finalist #2. New Wave Business Solutions
Gold Coast, Australia
New Wave is different to the other candidates for several reasons. Its two founders both worked in an accounting firm before setting up New Wave as a part-time bookkeeping business in 2013. They quit to work full time only eight months ago and are rebranding to a two-pronged business, New Wave Tax and Advisory, and New Wave Small Business Solutions.
Reuben Bergola and Peri Cummins are 26 and 25 respectively; despite their young age their previous firm offered to make them partners. Instead they wanted to move beyond a tax return service to a more engaged model where they show clients how they’re performing on a weekly, fortnightly or monthly basis.
“We really want to show that you don’t have to be in your mid-40s to start your own accounting firm or bookkeeping practice,” Bergola says. “There were times when the old directors told me we would have to put in servers, a massive fit-out, employees – it was a costly affair. But in this day and age if you’re good at what you do we want to encourage a new generation of accountants to come through.”
Also worth noting; New Wave employs two full-time staff in the Philippines who work on QuickBooks Online files.
Finalist #3. 24hr Bookkeeping
24hour Bookkeeping also started out as a part-time affair seven years ago. Karine Woodman, the principal, has worked full time for the past three years.
Unlike a typical bookkeeping practice Woodman provides consulting around the third-party apps in the QuickBooks Online ecosystem. This involves setup and workflow design as well as app selection.
24hr Bookkeeping is a heavy user of Work etc., a CRM and project management tool which contains repeatable projects for each type of service offered. The app handles sales leads, budgets and billing, and tracks all emails to and from customers.
When a customer calls, a 24hr Bookkeeping employee can see their complete activity in Work etc.
“We have completely systemised our business. That helps with pricing for our clients and we know what’s involved in the work,” Woodman says.
24hr Bookkeeping effectively sells the lessons learned from its internal organisation to its clients. They can help a business find a better way of working.
“We’re not afraid to say your system is broken, but we’re not going to judge you. Then they trust you and ask can you help me find ways to improve the way my business is running or grow it?” says Woodman.
Finalist #4. Moore Details Bookkeeping
Jennie Moore cut her teeth in corporate accounting, then left to start her bookkeeping business and raise a family. The constraints of working in Canada with three kids – long distances, snow storms, sleeping kids in tow – meant she could only take on five clients at a time.
She now works from home 26 hours a week and runs a virtual team that focuses on business services rather than bookkeeping.
Moore Details Bookkeeping only works with larger clients, or “dragons” as Moore calls them.
The company recommends apps from the Intuit ecosystem and also advises on workflow. The slow pace of change in the accounting profession has benefited Moore’s operation enormously.
“I have obtained an awful lot of business from accountants and bookkeepers who are refusing to make this change. There will still be desktop users but they are going to be fewer and fewer, and what’s the quality of these individuals?” Moore says.
“I see that apps are really the way to go. QuickBooks Online has been paramount in scaling my business. It has really propelled me out of my comfort zone, to gain more clientele, have more freedom and ultimately wake up every morning happy.”