What the survey revealed was 23% of public accounting firms provided general advisory and/or consulting services to clients, the highest-percentage response to a question that allowed for multiple responses. This was followed by assistance with calculations/support material for loan forgiveness (21%), assistance with calculations/support material for loan applications (20%), and loan application documentation review (16%).
While the initial rollout of PPP loans last year was kind of a clusterfuck—for small businesses, their banks, and their accountants—it was a money-maker. According to the IPA survey, respondents reported an average of $547,841 in added revenue from PPP-related services in 2020, ranging from an average of more than $2.2 million for the largest public accounting firms to an average of $120,000 for the smallest.
This morning we kicked off our certification series that may or may not get you motivated to find some additional letters for your business card. However, if you’re more interested in your getting your name (with letters behind it, natch) getting on the sign/in the window sooner rather than later, there’s good news as well. Forbes 20 Most Profitable Small Businesses list came out last week (on April 15th no less) and accounting related services took three of the top five spots.
Offices of CPAs #1 – Average pre-tax margin of 17.1% and; the trifecta of “pricing power…low overhead and marketing scale,” gave CPA firms the top spot in Forbes list.
Other Accounting Services #3 – Average pre-tax margin of 15.5%; The list states that this includes, “accounting, bookkeeping, billing and tax preparation services in any form, handled not necessarily by a Certified Public Accountant.” Of course many CPA shops do offer these services so it’s not something you should dismiss outright.
Yeah, being the boss is tough but for accountants its a path that many take, as FINS reported last week, citing the AICPA “Roughly three-quarters of the country’s 44,000 tax businesses are one-person shops, according to the American Institute of Certified Public Accountants (AICPA).” And it’s not like everyone is going at it alone. If you’ve got one or more colleagues that you trust (and can stand to be around for hours and weeks on end) a partnership is always a solution.
And while this is great news for you entrepreneurial types, you can’t forget what you’re getting yourself into – you will be responsible for the outcome of the business, succeed or fail. As much as you hate the bureaucracy, politics and all around song and dance of the larger accounting firms, the failure of those firms are completely out of your control. But then again, maybe that’s why you took the risk in the first place – so you can be in control.
We all know about getting a credit rating. Whether it’s for a personal credit card, a supply chain vendor authorization, or the much maligned oligarchy who rate public companies and entire nations. Based on al ion, a score is developed that (attempts) to capture the inherent risk of a credit failure.
How much could firms benefit from getting a Technology Productivity Rating?
What is the risk of a technology failure?
If an objective ratings agency existed that scored a company’s use of technology, how well would other people score your company? Who is the ‘Greece’ of technology?
To rate technology productivity, the rating has to encompass the entire organization and the way in which technology extends to external stakeholders (customers, suppliers, staff, etc). Optimal productivity from technology doesn’t simply mean newest technology. It’s not just about what technology a company uses that matters. It’s about how the technology is used. I met with a colleague in the technology industry recently who went so far as to say there’s still times when a FAX is the optimal technology for a task. It depends on the potential outcomes and workflows.
To date, I think the focus of technology productivity has been too inwardly focused in companies. Companies say, ‘How can this technology benefit us?’ instead of looking at the workflow effects for external stakeholders too. Granted, most organizations are completely overwhelmed simply by this one-sided approach. But if you look closely at some productivity software, part of the “technology” benefit is actually a workflow transfer to external parties. If I had to rate the technology, the score would decline in the event of workflow transfer being masqueraded as technology.
Supply Chain Management
As a means to increase productivity, big companies implement supply chain management systems that effectively transfer the burden for account administration to the vendor companies (sometimes they even charge a fee!). For the implementing company, it is great. All the vendor information is keypunched and filed away into the database for free.
The system integrates with the ERP for invoice approvals all the way to point of payment. The internal technology productivity score is high. For the vendor, every new customer could conceivably mean a similar routine resulting is a productivity loss and therefore would rate the technology lower. A vendor with a lot of customers practically needs a Mechanical Turk just for the data entry!
Seeing these scores could be really beneficial when vendors are choosing what customers to prioritize.
Recruitment
Recruitment technology can be burdensome to external stakeholders while being helpful to internal stakeholders in a similar way. The key to recruitment technology is capturing candidate data to enable filtering and search. Some technology in this field is simply transferring the data entry task to the candidate. Each candidate types out their life story field by field, row by row. From the company standpoint, they see the output of the technology. It is good. From the candidate standpoint, they see a time sink.
Taken in isolation, this candidate time commitment is not a big deal. One candidate typing their qualifications one time in response to one job posting is fine. But what happens when the candidate is applying at a dozen jobs? Two dozen? At what point does the opportunity cost of doing a whole bunch of data entry deter the brightest candidates from these particular employers?
The brightest candidates will apply to the companies that DON’T require a massive typing drill first, selecting away from this less productive technology until it’s unavoidable. The overall technology productivity score would take this into account.
For a company purchasing new technology, understanding the opportunity costs both from your perspective and that of external stakeholders and developing a Technology Productivity Rating may not become a formal process. There is no Technology Productivity Bureau, or least, there isn’t anymore. There was… for a short time… an idea before its time… may it rest in peace.
Perhaps it’s enough to look at it from a more macro-level. Ask yourself, is my business technology liberating for stakeholders or, or are they being repressed? Then, act accordingly.
Geoff Devereux as been active in Vancouver’s technology start-up community for the past 5 years. Prior to getting lured into tech start-ups, Geoff worked in various fields including a 5 year stint in a tax accounting firm. You can see more of his posts for GC here.
One thought on “Number of the Day: $547,841”
There clearly are large firms that made PPP loans a business. The average small firm made no where near that. To be honest, I was cutting clients a break to ask forgiveness of $15,000 of PPP loans with a very small fee being charged.
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There clearly are large firms that made PPP loans a business. The average small firm made no where near that. To be honest, I was cutting clients a break to ask forgiveness of $15,000 of PPP loans with a very small fee being charged.