177 Selling Banking & Capital Services in an Accounting Firm

Nothing's worse than that stanky old bank that your client just turned up with. Oh my gosh, bank feeds broken. You got to like piggyback their access to get in into anything. More and more firms these days are actually starting to get into like selling banking services. Like banking services, being part of the services that they offer. Capital services, going out and getting working capital, helping them to get loans. Let's talk about that. Is that a good idea or not? And how to at least help have some influence in the banking decisions that your clients make because good golly, does it impact you. So let's talk about that. Come on in. Let's upgrade your clients banking and credit card stack. Okay. How is the wrong banking or capital solution getting in the way or holding you up, holding your clients up? Right now, the capital side, I feel like that's obvious financing needs and all that. But stuff that gets in the way makes you less efficient on the banking side. Broken bank feeds in the US still a massive problem because we have over 5,000 banks in my firm, over two thirds of our clients we could not get a working bank feed for. It's because we worked with a lot of regional banks. So broken bank feeds, man, should be a solved problem. Still aren't yet. Having to ask clients for docs. This is usually due to some sort of access issue. Having to get check images or statements or you know, going to, going to ask the client is like the worst case scenario, right? Having to do that every single month. Having to do that at the end of the year to like whip together some bookkeeping for a tax return. That is the worst case scenario. Not being able to just get your own access to the bank. I mean it's shocking how few banks have, have this these days. Like the ability to act like manage members and give granular access. Most banks straight up just don't have that. Still not being able to control exactly what those permissions are. I remember having all sorts of issues with clients where the only way that I could get access to say the credit card login is to be issued a credit card. Like that was literally a thing that we had to do where we would get cards sent to us because that was the only way that we could get access. Like that's awful. Like you don't ultimately want the ability to transact for the client. In a perfect world you want, you want read only like that's the starting point. But there's actually a whole ton of different levels of access that in a perfect world you would set up. So that people within the company can get to the information that they need and not all the additional information, but because they're banks. We, we just like assume that this is a really hard thing to do and we just don't have that Being able to force enforce two factor authentication. Unfortunately, I think what a lot of accountants do is because they have to use their clients login oftentimes because they don't have any other option, two factor becomes a massive headache. And so they go and disable it. Like the, the notion that a code has to go to your client every single time and then you got to track down your client and then before the code times out in five minutes, you got to put that code in. Creates a bunch of friction obviously. But then oftentimes it will like make the client or potentially even the accountant neuter the security settings so that this isn't an issue when these days you absolutely should have two factor authentication on everything. I get that it's a pain, but this is how most data breaches happen is access from someone who shouldn't have access. Especially if we're talking about a system that'll let you move money, right? Having staff members use your bank login. So like the client goes out and creates a login for you. And sometimes they'll make you put in a social. They'll make you do all sorts of different things. And then you're never actually the one that uses that access. Your staff uses it, that does that. That feels like an issue on the business side. Man, if I had a dollar for every SMB I talked to where they had an, an office car admin card that was like bumping around in the office and a whole bunch of different people would use it. And anytime somebody needed something, they would grab that card and go out and buy something with it. And it has the business owner's name on it. Usually the same client who would be like, yeah, you know, every six months or so this card gets stolen and we have to switch it all over to a new card. Not being able to create virtual cards. Virtual cards, I feel like are still a fairly newish thing. And by new I mean in the last decade because it's banking where time moves slower. But the reality is most transactions we do these days ought to be set up on virtual cards. But most of our clients don't know this yet. Maybe they're not practicing good hygiene yet because most banks just, they don't give you virtual cards. Like that's not a thing. Cutting paper checks in the US still big problem. Most SMBs still using paper checks. Not exclusively, but still mailing out a lot of paper checks. But then some of these people are the same ones who are like, I'm not going to move my stuff to the cloud. And then they'll sign a little document that has all of your bank account numbers on it and mail them to God knows where all over the country. Paper checks just not a good idea. But it's. In fact, it's kind of amazing that paper checks even work to begin with. That just seems like ripe for abuse. Getting check images on the bookkeeping side, that's like the biggest gap in information. If you just look at a bank statement and the merchant descriptions, usually you can figure out what it is, but the check will be check number 1, 2, 3. And for some reason, every bank has a different policy on check images and many of them will charge you extra in order to include the check images on the bank statements. But then how does a check image come through a bank feed? Pain in the neck, right? I only have two more and then I promise I'm done. These are all reasons why you need to be more opinionated about what banks your clients choose having to manage vendor information for making payments to vendors. So if you're pushing ACHS to vendors, that sort of thing, having to be the one to hang on to that banking information, generally not a good idea. And then getting vendors to provide W9s is a US thing. W9s before taking payment. And that is a wound that is still bleeding because it's the end of January. Is it? Are we into February yet? Who can say for sure? These are all things that are solved by good banking platforms. So there's a growing number of them. I think the main ones that you see in the accounting space most on the banking side these days are Relay and Mercury. On the card side, you see ramp a lot. You see Divvy a lot. Divvy acquired by Bill a couple of years ago. There's a ton more. As I'm always hesitant to start lists because inevitably you leave somebody off of that list. Those are some of the names you see commonly in the accounting space because increasingly accountants are sticking their nose right in there and saying, nope, client, I actually want you to use this bank because obviously there are a lot of painful aspects of managing that if done wrong when it comes to doing the accounting. But I can tell you my initial reaction to that. And I think it was when Relay kind of first came on the scene as kind of banking solution for advisors, or at least with advisors heavily in mind. My first reaction was like, well, who am I to tell a client who to bank with? Like, that's not something I've ever been opinionated about before. What are they even going to say to that? And what I realized, I realized a couple things. One, when you think about the notion of convincing somebody to do something like that, human nature is for your mind to go to the hardest possible scenario for first, right? And that has that. Maybe you already did that, where you're like, well, Jim, he loves, he loves Pam down at the bank. They've got a great relationship and they've got all this. They've done all this financing with them, and I'm never going to be able to talk them out of that. Or maybe I have a relationship with this bank and to send them to some other solution like, that just doesn't seem right. Our mind, our mind goes to those client situations that will be the most difficult to move. But in my case, it was a very small percentage of my client base that actually had a good reason to be with a specific bank. But then the other big thing I learned was most small business owners, like, are not opinionated in this regard and will just kind of do the default. And it's one of those situations where when there's a void of expectation or a void of guidance, they're going to do something because they have to do something. And oftentimes you're going to be annoyed at the result because they didn't want you to do, because they didn't do what you wanted them to do. And if that's the case, why not stick your nose out there and have an opinion about that, right? Doesn't mean there can't be exceptions to the rule where it may not be for everybody, but it's something that most clients won't have a take on. So don't be afraid to share your take because on the other side of it, you know a whole lot more about the right way to manage cards and bill payments and, and some of the things that are really important features of your banking platform. You're going to be more educated on those things than your clients generally will be. Foreign this episode is sponsored in part by Cloud Cloud Accountant staffing. Y' all know I'm a big advocate of hiring offshore. One of the biggest changes I made in my firm, we transitioned a Legacy firm from 100% onshore local hiring to 100% distributed US and then 100% distributed globally. Hiring and honestly is the best thing I, we did at Virtually alleviated all of our hiring pains. Completely changed how we thought about staffing projects and the type of work that we wanted to bring on. Because you know what, the folks we hired offshore, really freaking good. A lot of misconceptions around the type of people that you hire offshore because your enterprises will oftentimes use offshore folks for like menial work. Absolutely not the case. There are tens of thousands of people working for big four accounting firms, you know, offshore outside the U.S. you can get folks that can do anything from tax to junior level stuff to super senior level stuff. But try to do that yourself, figure it all out yourself. That's going to be hard. It's going to be scary. Really good place to start. Cloud accountant staffing. They will hold your hand through that process. Their story is super simple. At accounting firm in the US hired a bunch of people in the Philippines, fell in love with them, but didn't fall in love with the fees they were having to pay to the staffing companies that were managing these employees. So they built their own solution and now they're starting to pull other accountants in. I'd encourage you. A big tipping point for me was when I was like, I'm gonna stop being opinionated on this and just try to learn. And so I talked with other practitioners, I talked with some of the vendors that would like help you get into offshoring. That really opened things up for me. So if you've been on the fence, I'd encourage you to at least learn about it and you start heading down that path. Consider cloud accountant staffing. Now in some of the more extreme situations now, not, not like bad extreme, but like the firms that are super packaging what they do. Take a, you know, take an accounting firm that's going to work with real estate, you know, property managers, something like that, as part of their package of services, they will have a tier where maybe the entry tier is like a business that's first getting set up and they will literally include in that like banking setup, maybe like the setup of the tax savings account and how money gets pulled into there automatically, stuff like that. This is something that increasingly folks are like building into service lines. And it particularly makes sense, I think in situations where the clients aren't generally going to be opinionated about that. Now there's certain types of businesses that are capital intensive from day one and those are the ones that are going to be a little more tricky to get onto a banking platform of your choice. But even there, there's a growing number of solutions. And so again, there's a long list. And so as soon as I start listing people, I exclude others. But in the US the highest profile one has probably been Biz to Credit. So that's Biz the number two credit. They are an online lender. I think they're online only that has a big like accountant facing channel where they say accountants, you can come and use our platform and help your clients apply for loans. And they do everything from SBA like 7A loans to term loans to working capital. And it is all in like a modern online interface where you can provide some of the information, you can pull the client into perform to gather some of the information. If you remember, Biz to Credit was who was involved in the PPP loan stuff. Early days they had set up a platform. CPA.com said like, hey, this is our preferred platform for firms to come and do a whole bunch of PPP loans. There's some good things about it, some not good things about it. But it's like this whole opening the door to credit options for your clients. I think it's probably something that most of us are like, I don't know about that. Like I've never identified as the type of person that would help people to do these things. But what is the alternative? Is your client going to go out and just start like ringing up banks for solutions? If there's something that you have access to or something that you've done with 50 other clients, something that like you have trust in working well, like this being a good solution, isn't that better than your client just starting to like cold call lenders? Right. I was pretty skittish on anything that wasn't like firmly in the pocket of this is what all accounting firms do. And then over time like really my mind opened up to accounting is what gets you in the door. And. And then it's just about build a business that solves all the problems that this type of entrepreneur has. And if you work with the type of client where when beekeepers hit $1 million a year in revenue and they need to make this capex investment or something like that, where they hit these tipping points where the business changes to have a credit solution where you're like, this is something that works for a lot of our clients and we can help you through the process like clients, most of your clients will by default be like great, let's just do it. Save me the work of having to go out and like shake down a bunch of lenders to try to figure something out myself. Because if they already have A trusted relationship with you. They would rather do more with you than have to go find a new advisor or some other solution to do this thing right. Ultimately, how much money do you make on this stuff? I don't really know and I'm not too worried about that. Honestly, when it comes to the banking and the credit and all that stuff, I'm more interested in can we build a compelling solution for this type of business that leans into what makes this type of business unique? Like, are we showing that we understand the nuance, nuanced problems of dentists or beekeepers or attorneys or whatever it is? And does this solution plug in? Well, I do think there's an element of stickiness that comes with getting clients onto your preferred platforms. Something about, uh, getting them into that kind of portfolio of apps, I think makes that relationship a little bit more sticky. And yeah, at the end of the day they could, they still bounce and they would still have ownership over all of those accounts. But a lot of the things we get frustrated with when clients come to us and then, and then later we're like, why didn't you ask me about how to do this first? It's like, well, did you ever like even make lead them to believe you would be opinionated about that thing? And you know, for tax people, that's usually like, oh, I created a business or did this or that. For accounting firms, oftentimes that's, oh, I, I just hired a payroll company to do my payroll. And you're like, that's the worst. That is the worst payroll platform there is. See you later. Working with you never. I wish you would have asked, but I think oftentimes clients just don't know that we are opinionated on these things or, or they think that all of the solutions are fine when you know all too well just how bad bad it can go when somebody has the wrong solution. And so how do we get this stuff out in front of people more? Honestly, building it into your packages isn't a bad idea. Even if it's not something that you're going to do for everybody. It's not to say it's a mandatory part of your package, but just think of, think of it in terms of visibility. How can I make clear to people that when they get to this point, you know, choosing a payroll platform or starting a business or something like that, I want them to talk to me or I want them to use the platforms that we recommend because we've worked with a hundred other beekeepers and we see what works best. We have Visibility into things that they do not have visibility into. And this is part of the expertise and the value that I can extend to you. And it probably doesn't cost anything extra. It could if you want to. But being more, more vocal and more opinionated about that, I honestly think in 95% of situations clients are going to be like, yep, for sure, I'll defer to you on this. And maybe in the other 5% they're, you know, their brother in law is into beekeeper lending or something like that, but that's not going to be most people. So from a practical standpoint, how do you roll this out? You're like, great. I honestly, I would love it if every single one of my clients were on a banking platform that made my life easier. But I don't know how to get from A to B. And that's, that is the, the trap in so many situations, right, where you're like, yeah, no, cool, that's a good idea. I get the value of it and I'm happy to sign off on that. Here's the problem. I, as all my clients are over here, how do I migrate the crowd over to here? And so to get folks onto better banking platforms, you'll notice that the pattern here is similar to a lot of different change management we talked about. First, start with the newbies, new clients or new businesses that are being created, get them on the right platform from day one. That's the easiest thing. It's kind of like setting expectations with a brand new client versus resetting expectations with existing clients. When those new clients come in the door, they are like little babies being born into a new reality. And you can be like, what do. No, we always deliver financials 25 days after month end. That's totally normal. No, we always extend all of our tax filings, we don't take phone calls. You can expect a three week response time. Don't do all that, but you know what I mean, like the whole what is the norm? It doesn't take any convincing because they're like, they're still coming into a new reality and they don't know anything different. So you can set things up in a way that are maybe beneficial, more flexible to you. Something that overcomes a bunch of the pain points you have with the status quo. And so when you're taking a new client in, when you are helping a client to set up a business, get them on the right platform from day one. This episode is brought to you in part by Team up, helping you recruit top Filipino accountants without Any ongoing monthly fees. The difference between teamup and all the other offshoring options. The Team up helps you hire staff directly. No middleman. You work directly with your new hire in the Philippines. Hire the person, not the company. Guys, gals, gang. Here's just a few reasons to hire directly. You have access to higher level talent. Makes sense. You have complete control over team culture and training. They keep 100% of what you pay them and it's a lot more affordable for you. So you can retain your team for the long term. Team up could source accountants with experience working at US or Australian firms familiar with tools like Zero, QBO and DeX. Also recruit specialist roles, team leaders, tax specialists, administrative assistants. Thought experiment what if you had an executive assistant for the first time this tax season just just throwing it out there. What would they do? Start at that email video I did on the main channel recently. Get help with that stanky old inbox. I digress. Team up recruits these talented folks for a flat one time fee of 4,000 US American dollars. That's it. 4K one time. Somebody at Robert Half just did a spit take. Robert Half reference. We ever going to get Robert Half to sponsor this pod? Not anymore. And they can connect you with an affordable employer of record if you need help with payroll and compliance once you hire that person. Big fan of hiring in the Philippines. You know I did a bunch of that. Check out the link in the description to learn more about Teamwork Up. So just because it might be hard today to imagine getting all of your clients to a better banking platform doesn't mean that the next time a client sets up a bank account or the next time a client creates a new business doesn't mean that they shouldn't be on the best platform. And this is a a big time change management trap with clients where you're like, oh, Jim's never going to use a client portal and so you don't roll out the client portal. Meanwhile, you got new clients coming in every week and you got a whole bunch of other people on your client list who would probably happily switch if you just communicated to them about it. So first, start with the newbies. That's the easiest place to start. Second, tranche is a group that is acutely feeling a pain that the platform can solve. So is somebody PO'd at their bank? Is somebody inconvenienced from a workflow standpoint by the fact that maybe you have to ask them for stuff every single month and you're like listen Tina, you wouldn't have to send me These check images or do this or that, or, you know, send me two FA codes. These stupid hoops we have to jump through. You wouldn't have to do any of this stuff for me if we got you on a proper bank. So if they're actually feeling some pain from this, it's going to be much easier for them to be open to the switch. And people also get stuck on the pain of switching too. And they're like, oh my gosh, I have so many things going through this account. That's going to be a big pain. Platforms now are making this as easy as possible. Like you can actually, in some cases is you can actually connect their old account to it and it will go out and find all the recurring transactions and like give you a checklist of the things that have to get moved. It is like a band aid that just has to get ripped off. But some of these platforms now are making that a little easier. So first, group new businesses and new clients. Second, a group acutely feeling a pain that the platform can solve. And then third, think of it in terms of groups that can benefit from a specific feature a modern platform offers. So a few examples. Card management. Most small businesses have never touched virtual cards and are just going out and spinning up a American Express account or some sort of Visa or whatever they think will get them the best rewards when there are much better decisions or much like bigger variables you should be using for selecting a card. So what could that look like? Like putting stuff out that would show them how they could benefit from a specific feature. Educating clients on, on virtual cards. You know, we talked the other day about the problem of all these SaaS subscriptions and forgetting what you have and the idea of using a virtual card that dies after 30 days every time you sign up for a new subscription. So you have to like basically opt in, then after 30 days, put stuff like that in front of your clients or show them the right way to do it. How to not have a quote unquote office card that anybody can grab and go run out and use or, or why it's a bad idea to let a staff member use a card with your name on it or the value of, you know, setting budget or spend limits on specific cards. So you can actually enable members of your team to do stuff with some guardrails on it. A bit of education around that and your people are probably gonna be like, your clients are gonna be like that, wow, that's actually way better than what we're doing right now. Help us get switched over another Feature that can be helpful here. Payments. A lot of banking and credit card platforms now have built in digital payments. In the US most SMBs are still writing paper checks in some form or another, while some of the legacy banks will have like some very, very light bill pay features that are really bad and they may have had negative experiences within the past. And that oftentimes is why people are still using paper checks. And you can show them like no, this stuff is way better. You can do ACHs even same day ACH oftentimes wires like it's just gotten way easier. Third feature here, budgeting. So managing, managing like monthly spend limits across users or by department or having several users cards pull from like shared budget pools. So if you're going to go through the work of setting up a budget, why not align your cards with that budget that you just set up, creating more accountability within your team. So they have to for example, ask permission if they're going to go beyond that budget threshold. Fourth, security. Just the misuse of cards, cards getting stolen. I mean I've had clients, yeah, tell me like every six months this card gets stolen and we have to replace it. And it's like, is nobody stopping to consider why that is a like why, why that's a thing. That's weird. And then last I've got here W9s. And so maybe if you just went through a brutal 1099 cycle with clients, maybe this is something you could really stress is like I can put you on a payment system where we can set a payment to go out to a new vendor, but they don't get the money until they provide a W9 so that we don't have to track them down for a 1099 later. You know what you're supposed to do, but people just go out and make that payment before getting a W9. That's something that a banking platform can absolutely solve for you or bill payment platform for that matter. So if you're thinking about how to get your clients from A to B, easiest group, the first group, stop the bleeding, don't let you know if somebody's creating a new business, you're taking a new client client and get them on the great, the better banking platform from the beginning. Second, identify users who are feeling a pain that it can immediately solve. Third, educate your clients on the cool new stuff platforms will enable virtual cards, that sort of thing that they may not even have on their radar. And the cool thing always to me about enabling tech adoption in your client base is the value of that over time like when they get that sweet new tool that saves a bunch of time for them or makes their job easier, they attribute that value long term with you, but it doesn't require any like ongoing heavy lifting from you, right? So if you get somebody from, you know, signing a hundred paper checks to using a digital payment platform and that makes their life way easier and they can approve stuff on the fly and they have better transparency and to bill pays, stuff like that, that is value ultimately that they attribute to you that could have came on the back of just a single recommendation. And so I love like tech enabled value delivery to clients because it, I think it helps that stickiness and boosts the perceived value of the relationship as a whole. Without you like doing that, you know, one more tax turn or one more monthly close or something like that. This is one where the first time I heard it, when like these banking solutions that were helpful for advisors, this is one where the first time I heard it I was like, yeah, no, I have, like that's not my place. It's not my place to make that recommendation to a client. And then over time I realized like, what in the world does your client know that is going to lead to them making a better banking decision? Like, this is definitely a situation where we probably have better information than they do. Seeing the backside of this for a whole bunch of clients, so why wouldn't we make a recommendation? Right? That's my story and I'm sticking to it. Guiding banks, payment platforms, card management platforms that you really like. Drop them in the comments. Been thinking about doing some content around this just to help people see into like, what do these things look like? Because if you haven't experienced one before, that's probably kind of tough to visualize if you're just used to the legacy banking platforms and also stuff like, you know, quote unquote, expense management. These platforms are picking up steam and becoming more powerful. And you like, if you're doing their accounting, even if you're just doing their tax work, you ought to have a say in ultimately like what expense management platforms your clients are using, good or bad experience you've had. I would love to see it in the comments. What do we got next? I think we got Q and A coming up next. Got any questions? Drop those in the comments as well and I'll see you there.