564 Great Accounting Firm “Workflow”, Defined

In the last three months, I've pulled over a thousand accounting firms on what is the biggest thing you're struggling with headed into 2026. Is it tech? Is it hiring? Is it finding clients? The biggest answer, probably 70% of responses came back workflow. Workflow. But what does that even mean? Does that just mean being more efficient? Does that mean applying better tech? Or do we all just have, like, this workflow dysmorphia where something about the human condition makes it feel like we should always be getting more done than we actually are? This is such a sticky thing to define and even put your finger on, like, what even is good workflow. But today, today, my friends, we are doing the impossible. I'm going to walk you through two things. One, the two ways that you make whatever you're doing today as efficient as possible. We're not talking about pulling up the carpet, making big change. We're talking about with what you run right now, what you do for clients. What are the two ways that we ship that work at a high level as efficiently as possible. But then after that, we're going to talk about the three sort of bigger movers, the drivers of complexity and workflow issues, where if we can build meaningful solution for these three bigger things, the whole workflow conversation gets way, way simpler. Okay, it's time. Pull up a chair, let's do. I'll tell you what workflow is not. Workflow is not Sally. Same as last year, just following whatever was done in the past. So the more modern meta for running an accounting firm, it is not following the work from last year and then charging hourly for whatever you did. It is more fixed or value pricing outcomes and then selling that outcome to a whole bunch of clients. Does it take hours to get that work done? For sure. But if you understand what the client needs and where they're trying to get to, then what you're selling them is the ability to do that. Not tax services, not bookkeeping. And I know this sounds very heady and more abstract, but that's ultimately how you get away from hourly billing to finally unchain ourselves from effort being tied to money. And wouldn't that be nice? And this is just this unthinkable for a generation of accountants who came up through firms where that was how we were measured. That was what success looked like, was getting work done, charging a higher and higher hourly rate. But let me. I'll let you in on a secret before you sink decades into that. If I told you right now you were going to live out the Rest of your days trading time for money. And that was the only way you ever got paid. I think we could all agree that's a bummer. And it's not to say, I mean, I sat on a flight the other day next to an attorney who very proudly shared that he charges $2,500 an hour. But I think we can all agree that it would be really nice if what we ultimately sold our clients was disassociated from the amount of effort that went into it. You know, the old, like, everybody loves the quote of, well, you're not paying a thousand dollars for the one hour took me to solve that problem. You're paying for the 30 years of experience that led to me being able to solve that problem in one hour. There's the one of, like, the mechanic where he, like, you know, hits something with a hammer in just one spot and instantly fixes it and then gives you a $10,000 bill. We've all heard those stories before and we all love those stories. We're like, yeah, that's me. You should want to pay me more. But. But then we often don't run our business in a way that would even allow for that or give ourselves permission because we feel guilty. So workflow, to me, it is not going back, doing the Indiana Jones archeology thing into last year's file and then just doing the same thing this year as quickly as you possibly can. That, to me, is not great workflow. A huge factor, and how good your workflow can be is, are the people you're serving, like the breadth of the people that you're serving and the breadth of the. Of the services you're giving those people even, like, work flowable, right? Like, are you. The Cheesecake Factory of accounting firms famously has like a hundred page menu. There's seemingly anything under the sun that you can pick off the menu, this humongous, vast menu, and they'll bring it to you within 15 minutes. Are you the Cheesecake Factory of accounting firms? Or are you that, oh, what is it? I can't remember what it's called. It's like a real hipster sort of format where you just show up and the chef puts food in front of you. You don't even get to pick. You're just happy to get to be there. Which of those two accounting firms do you want to be? I think we all want to be the latter firm, don't we? And so there's a question, a bigger question of have we set up our business in a way to where Our workflow can even really be very efficient. And we're going to cover what the three big drivers of, of that are at the end. But first, how do we take the state that things are in right now and just be as efficient as possible with the work we've already committed to doing? Two ways that we can get more efficient with what we're already doing. Number one is by standardizing how you track and how you talk about the work you already do internally. So a couple basic examples, bookkeeping and a tax example. If we do 10 month end closes, the natural state of a, of a month end close engagement is every single one of these engagements takes on a life of their own over time, right? The longer you have them and the more that it's up to the client to kind of take the lead in that engagement, these over time become more and more bespoke processes. And so when people start talking about workflow, they're like, oh yeah, sops, we got to build systems and all that. And then when it comes down to like actually doing that in practice, you realize I have 10 very different bookkeeping engagements here. And so the work of building an SOP for every single one, it's a lot of freaking work, man. So you have these, these 10 end to end SOPs for all 10 of your month end close engagements and then you got to keep those things up to date and it's like everything is done sort of from scratch. This is how most firms operate and it's why the whole notion of building and maintaining SOPs feels impossible, because every single thing is bespoke. But standardizing how we track and talk about these projects looks like identifying the pick a number, the 30% of these 10 month end close engagements that are the same across every single one. We think about what makes these engagements unique. But sometimes we forget what all of these engagements have in common. How about the pre accounting process? How do we gather information for all these different clients? The, the items that we're gathering for each client are different. But shouldn't the system by which we gather that stuff and organize it and name the files and all these things, shouldn't that be the same across every single engagement? How do we reconcile the bank account in the accounting ledger? Shouldn't that be the same across every engagement? For firms where all those projects look vastly different, maybe 40% of those engagements are the same or 40% of the tasks that make up each month and close are the same. For firms that are running a more standardized practice, upwards of 80% of those month End closes, the tasks will look the same from close to close. Recognize that we are, we are pushing back against the natural way that these engagements want to take on lives of their own. And the only way to reel that back in is with intentionality. My vernacular for this, it is what I call building a service library internally. And this is how I took a 80 year old firm of 1800 clients where we're doing all sorts of different things for all sorts of people and developed an internal language for exactly what we were doing for all these different folks. So to come back to the month end close example before we get to a tax example, and Mark and my firm, we boiled it down ultimately to services that were bookkeeping one, bookkeeping two and bookkeeping three. Everybody in my firm understood exactly what the expectations were that were rolled up into a bookkeeping 1 engagement or a bookkeeping 3 engagement. That label, everyone knew what it meant. And if I say that's a bookkeeping three client, they then knew how to go run and do 70% of the work. But for the other 30%, this is the stuff that we have to document and track. And this is where the SOP comes in. So if you're going to build a system, a set of documentation to show your team how to do any type of work in the firm, rather than building SOPs for 10 entirely unique month end close engagements, what we're doing instead is we're building SOPs for what does a bookkeeping one engagement look like? What's a bookkeeping two engagement look like? A bookkeeping three engagement, we have an SOP for each one of those and then the client specific SOP, all it is is the 30% that is unique about that engagement. Now this may sound like moving papers around and, and just like a whole bunch of sort of mental gymnastics to get the same work out the door. I promise you it isn't. Because what happens once you have this language for how we do this work is those projects begin trending to be more similar over time. That Bookkeeping 3 project, where there's 30% of tasks that fall outside of what we would normally do for bookkeeping three, the next time the client raises their hand and they're like, hey, can we do this or that or this or that different, what your staff will now say is, yeah, here's our preferred way of doing that, that actually brings the engagement closer in alignment with how we want to do that type of work. And that's because we have an established understanding of what Bookkeeping 3 is, which is a little Bit opinionated how we think this work should be done. Now, if bookkeeping 3 does not exist in your accounting firm, then you have a whole bunch of different people running around telling clients different things, leading them down different paths, and this is where your work becomes a mess. So tip number one here for how you better get your arms around what you already have and what you've already committed to is in how well you've standardized how you track all the different work that you're doing. If you want to do a deep dive on this, I got about a 15 minute video. I'll link that in the show Notes around how to build your service library from scratch. We built a 16 tab monster Excel workbook you can swipe for pretty much every service accounting firms offer. We even did a whole week of podcasts going even deeper on it if you want. It is kind of the, the fundamentals of how you systematize work in an accounting firm. Whether you do just one thing a thousand times or you do a thousand things one time, it is kind of a flexible system that can incorporate both of those things. So nailing that absolutely makes your workflow better. The second way you can improve your workflow without changing what you're doing, without changing the nature of the work you're doing is, is by making sure you've got adequate tech to track what you are already doing. And if you start as a solo firm owner, this one is hard because what makes sense for you. There's kind of different milestones here. The big one is the first time you hire somebody, you used to have everything in your brain and you realize, like, I can't get help if everything's just in my brain. So you got to kind of have a different system for tracking stuff that that pain continues as you add more folks. And you realize, okay, I kind of can't hold anything in my brain. It all has to be in this system. But then you reach this additional milestone where you get past like six to eight people and you need an entirely different level of documentation because you've now outgrown the size where everybody kind of just knows what everybody else is doing. There's this sort of like tribal adjacency to just, you know, all your other colleagues very well and you know what's always going on with them. And so there's certain things that just don't need to be said. But you grow beyond a certain size there and that stuff breaks down and, and now you're, you're getting into independent pods now, needing to do their own work and be productive, but in the same way that the other pod is productive. And so you got kind of these little fiefdoms within your accounting firm for the first time and they all need to operate the same way while also operating independently. And the solution to like keep this stuff on the rails, it is the exact two things that we've talked about is having a clear system to standardize how you track what you do. And, and then second, having adequate tech to be able to track all of those things. So without changing anything about your client engagements, what you've committed to, those two things can make your workflow better. And to be clear, it's a huge spectrum. There is no such thing as good workflow, bad workflow. There is, there's several dimensions to this. There's what is the breadth of all the different things we've committed ourselves to. But then given that breadth, how good of a job are we at organizing this stuff efficiently? Those are two very different things. You can take a firm that's doing a million different things and try to workflow it as good as possible, or you can just throw your hands up and be like, oh, it's impossible to workflow this stuff. Those are two different things. How we're making the most of what we're already doing. But then the bigger long term driver of great workflow is the other consideration. Are we just doing too much stuff? Are we Cheesecake Factory or are we like the hipster place where the person just comes in and the chef says, no, this is what you get to eat tonight. Hey, real quick, are you tired of having to like duct tape a whole bunch of apps together to run your accounting firm? Of course you are. Wouldn't it be nice if you had you had what you needed all in one place? Gang, listen up. This is where today's sponsor Financial Sense can make your life a whole lot easier. It's everything you need to run your firm all in one place. But they recently started shipping some really cool workflow stuff. It has a deep integration into the accounting ledger. It will actually pull all the transactions in so you can do more of your month end review from Inside a Financial Sense. And it'll even auto flag a bunch of stuff like big transactions, inconsistent transactions. It's got kind of a whole month end review flow that you now go through from inside a Financial Sense. Then you make those changes to the transactions, they all get pushed back to the ledger like magic, bro. So one of the headaches right now in picking accounting tech is you have practice management Systems that oversee the work. Then you have workflow tools that do the work. Financial Sense doing a bit of both. Now they've been a practice management system historically. Now they're getting more into the bookkeeping workflow, which is great news if you're the type of person that doesn't like juggling a whole bunch of tools. Now Financial Sense, they'll actually give you a 14 day trial if you use the link down in the show notes. That is the most generous free trial I've actually seen in our space. Absolutely worth kicking the tires on. To learn more, check out that link. Hey, real quick attention. If you have clients that do project work, do ugly stuff like manufacturing, like inventory, construction stuff, anything where you got hairy itemized bills that have to go to specific destinations. When it comes to bill pay, there is a new sheriff in town. It is this episode's sponsor, Makers Up. Even if you don't do bill pay, this is something that is worth showing your clients. Actually we've done a number of videos on my channel can start sharing my videos with your clients. What fun Gang we are light years beyond what the old guard like bill ever did with automated bill extraction and get like getting these things through the approvals process which is oftentimes much more complex than just is this bill over $10,000 or under $10,000 man. We I worked with a church that had this like multi level like just this crazy hairy combination of approval approvals that was dependent on like a mountain department all these different things and they had this physical thing that had to get passed around for every single total nightmare. You probably got a bunch of clients with situations like this and you can absolutely be the hero with Makers Hub. It is seriously good worth checking out. Learn more about Makers up at the link down in the show notes. Now before we get into that those sort of longer term considerations, a big thing here to keep in mind is what causes people to say workflow is kind of our biggest concern right now. Oftentimes what causes people to say this is simply that they're at or above capacity and business owners. When you're the one that let all the stuff in the door that got you over capacity and when you're the one that underestimated how much work your team would get done, it's much easier to point the finger at everybody else in the room. And when we look at the firm point the finger at workflow and say these are the things that need to be improved than it is to say oops, I let too much stuff in the Door or oops, I didn't have enough uncomfortable conversations. Letting some of these legacy clients go. This is maybe a majority of the firms who raise their hand and say, workflow is our problem. And here's the test, here's the test to know if this is you or not. If you chopped your client list in half right now, not just getting rid of the sneakers, but if you did half as much work as you did right now, would you still say that workflow's a problem? If we were doing half as much volume, would your top priority still be, we gotta improve our workflows? For some people, the answer will be yes. For many people, the answer will be no. And that is because saying improving workflow is like a band aid for the fact that you just can't hire that senior tax manager or that one person left the team and now we're, we're over capacity. So recognize the whole compa. Capacity consideration here. Capacity should never be ambitional. Ambitional, ambitious, aspirational. Capacity should be founded in what can we already do today? Not do we hope to be. Not like how much do we hope to be able to do 12 months from now? This is probably the mistake that we make is like we assume everything will go great. We sort of chronically underestimate how much stuff will. Will how much time stuff will take. And before you know it, we end up over capacity because all that stuff, we, we didn't, we didn't find that next hire that we needed. In fact, somebody went on maternity leave, we weren't expecting that. Capacity has to be built around what are our capabilities today? Not what do we hope they will be 12 months from now. Real quick because I said I'd give a tax example. Just realized I never did. We gave a, an example of 10 month end closes. Let's just take 10, 10 40s. Similar to month end closes, we had basically five levels of 10 40s in my firm. We just called them 10 41, 2, 3, 4 and 5. And the driver of what put them into what bucket was their complexity. Talked about this before on the podcast, how we use this sort of difficulty scaling for who is allow to prepare what returns and who was allowed to review what returns. Level one returns, 1040s were basically just like returns based on government forms, pretty much administrative data entry, not complex stuff like TurboTax returns. But I went clear up to level five, which is kind of the catch all for all the big ugly stuff. And internally we could say like this is a 1043, this is a 1042. And when we would bring in new clients, that gave us kind of a helpful bucket to sort of let staff generalize where they thought that client would land from a complexity standpoint. And then we built SOPs for. Here's the guide for how to prep a 1040 Level 1. How to review a 1040 Level 1. Being able to build an SOP for a Level 5, a very complicated thing, we never did that because that's like the astronomically complex version. Right. And so you start at level one, and when you learn how to build the SOP for level one, then it starts becoming realistic. Okay, I can see now how we could build an SOP for level two. That firm where you have a system for how anyone in the firm can prep or review level one, that's a much more productive firm than the firm that just has a whole bunch of people that rely on experience. And looking at last year's file, right. In a situation where you have an absence of systems, you will have an over reliance upon expertise. This is not a binary thing. Again, it is a spectrum. The better our systems are, the less reliant we have to be on expertise. Doesn't mean there's not still a place for expertise. But absent systems, you have to deploy more expensive, more scarce expertise to get the same work out the door. Okay, last, the three sort of big meta driving issues for accounting firms that dictate like am I the Cheesecake Factory or am I the Bougie restaurant? Workflow is complicated by three kind of systemic issues that honestly plague most firms. One is just serving different types of clients. If you could clone one client a thousand times and only work with that person, that would be the perfect version of that. Right? But that's not possible. And so all of us, we have seen some level of complexity and some level of breadth than the type of people that we would solve. So a, a micro niche example would be I work with taxidermists making between a half million and a million dollars a year that mainly sell online. They don't have a retail location. That's an example of a very specific type of client. And they're in the US or in New Jersey or something like that. Right. The more common thing you see is we work with business owners under 2 million a year, maybe above a half million a year. That is a very wide collection of people. And if you're a tax shop that's still doing 1040 work with non business clients like you're doing all sorts of different types of work for different types of people. So that's the first driver. And obviously, the more specific and the more selective you are in the types of people that you will serve, the easier it is to build great workflow around it. Second driver, here is the breadth in service offerings you offer to these clients. Am I just selling them one thing or am I selling them everything under the kitchen sink? A lot of firms will try to win business based on the breadth of their services, doing anything and everything for the client. You can do that, but it's a hard business to run. It's a hard way to make money. I brought this up on the podcast a number of times, but Blair Enz has a great book, the Four Conversations. He talks about trying to win work with an armor piercing approach rather than by just doing more work than anybody else. So rather than saying, oh, we do tax, we do bookkeeping, we do wealth management, we do all these things, so you should come and work with us instead, do the one thing that their current provider doesn't do because it's so specific. So if we go back to taxidermists, maybe they've got some hairy compliance thing they have to do for the state of New Jersey around, I don't know, some sort of wildlife stuff. Be the one creating a bunch of content about that hairy compliance thing. Because the generalist firm that they work with, they probably don't specialize in that. They may help with it and they may be like, oh, yeah, we could probably figure it out, be the expert in that one thing. The opportunity here is that person can actually then engage you while they still have engaged their other help. Like they don't have to divorce their current accountant to come and have you do that one specific service for them. And then when they have a great experience, they bring the rest of their work to you. This is why, quote, unquote, tax strategy is such a good way to win clients, is if a client doesn't feel like they're getting proactive tax strategy or, you know, CFO help or whatever, whatever that looks like from you. Even if you feel like, no, we're already doing that, we just don't call it that. If clients don't feel like they're already getting that from you, they'll go out and engage another firm and pay them for it, be impressed by it, be impressed by the results, and then after they're impressed, let you go and bring the rest of the work to that person. That is an armor piercing approach to attracting clients rather than just trying to win business by doing anything and everything. And so this Is the second thing that makes workflow really hard is are we delivering different services, a whole bunch of them to clients? And then the last one, number three, that makes the work that you do just really hard to standardize. And workflow is delivering the same service differently to each client. Because even if you only sold them one service, if you do that service a wildly different way for every single client, then are you really making your life any easier? So the three things here to help. So the three things here to think about. How different are all the clients that I'm serving? How many services am I selling to those clients? And for each service, how consistently is that service delivered? Is there a whole bunch of variability even within a single service? Now, most firms, they suffer, suffer from the unholy trinity. All three, you're like, yeah, no, that's me through and through. All three of these can independently or together be improved with better positioning, getting more selective about who you serve, like letting some of those legacy folks go who don't nicely fit in the pocket of who you're trying to serve. Going forward, any one of these three can be improved, but also the previous two things we talked about can be improved as well. How do we standardize and track what we do already? And then how do we find tech that adequately helps us track all those things we're doing now? I would say 80% of the attention goes to the two things that help you better track what you're already doing. Because it is very uncomfortable to change what we're doing. Right. So we put 80% of our effort into. We just got to find some better tech for this. That's the problem when, if you put your, your assume you don't run an accounting firm. We're talking about somebody else's business now because it's, it's, it's easier to look at what they do than what we do ourselves. So if you put your, your coaching hat on and you look into somebody else's firm, you would probably tell them that 80% of the time and effort should go into more. The systemic issues. The three things we talked about. Are we serving too many different types of people? We offering too many services? And are we not delivering specific services consistently? That's the driver that is making the whole issue worse. Those are the holes in your boat. And does it help to have a better bucket? For sure. Does it help to have more people in the boat, each with their own bucket? Absolutely. But for Most of us, 80% of the focus is on getting people to shovel water faster. Shovel Bucket getting, getting people to bail faster, bail water out of the boat. Hang on. No, this is a really good analogy focused on those people rather than the holes in the freaking boat, man. Because plugging that hole, that looks like calling Jim and being like, oh, I'm sorry, not a great fit for what we're doing anymore. Or the whole fear of just like, serving a more specific type of person. Right. Which is totally justified. I mean, if you want to make this easy, honestly, surround yourself with other people who are doing this. Surround yourself with people who are serving very specific clients. I think it's really funny. The pulse out there of folks in accounting firms who are like, yeah, niching down isn't for me who have never done it. And then you've got the other people who have done it and they're like, yeah, no, I'm, I'm never going to run my business any other way. Those two opinions aren't, should not be equally weighted. The opinion that, that really needs to be paid close attention to is from the people who have done it. And in my experience, the people who have done it, they don't go back to not doing it. With very, very limited exception. The folks I want to hear from are the folks who have niche down. And so they have the perspective to say, is this better than when I was general? Because I virtually never see people go from niche back to General. But 80% of the people talking about this conversation are ones that have never gone niche at all. And I don't like, actually don't like the phrase niche. I like specialization better. Niche implies it's kind of this binary. You're either niche or you're not specialization. To me, it feels more like a spectrum. How specialized are we? And this is the reality of how it is. You don't snap your finger and overnight have 100 taxidermy clients instead of 100 general clients. You, you, you specialize over time. And every single day it is a decision, do I want to get more specialized, stay where I am, or get less specialized. And this happens one client at a time. And you only continue to go more specialized when it's very obvious that doing so is better for the business and more profitable. We're not burning the ships and, and being like, okay, we're only going to do this now. Like, you only get to that point when you have a, a preponderance of evidence to suggest that, like, no, this is the only thing you should be doing now. And that's a big driver in. Is it realistic that I can quote unquote, workflow. All this work that I've committed myself to. So there you have it. Some band aids. But then also, like, kind of the core things that we need to be thinking about to ensure that we don't end up with. Remember? Remember at National Lampoon's Christmas vacation, they pulled the Christmas lights out, and it's just like this solid ball of tangled cord. A lot of our accounting firms feel like that right now, don't they? I'm sorry. That was too personal. Gang, you got any big brain tips on this stuff? Pop that stuff down in the comments. Got any questions on how to do xyz, this app versus that app? Put that in the comments as well. Thanks for being here. I'll catch you in the next one.