Harshman Phillips & Co.

Transcription

1 CUSTOMER CASE STUDY: Harshman Phillips & Co. A tech-driven CPA firm based in Atlanta.

2 BRUCE PHILLIPS, HARSHMAN PHILLIPS & COMPANY Bruce Phillips is a managing member and co-founder of Harshman Phillips & Company (HPC) a tech-driven CPA firm based in Atlanta. HPC was founded in 1992 as a traditional audit and tax practice that predominantly served construction and real estate clients in the Atlanta metro area. The firm has since evolved into a modern cloud accounting practice that specializes in CFO business consulting, U.S. tax planning and compliance, Xero setup and conversion and SaaS back-office solutions. HPC is a platinum Xero partner. Bruce brings a unique background to HPC. He has been a CPA for 30 years, served as a small business tax preparer for 20+ years and ran the audit practice at HPC for 15+ years. Prior to founding HPC, he was an audit manager for a Big Four firm. He was first introduced to cloud technology while serving as a CFO and COO of a digital media technology company. When he returned to HPC in 2008, he implemented much of the technology he was exposed to while working in the digital media industry. PROOF POINTS Annual top-line net revenue increase of 100% since adopting cloud solutions Monthly recurring revenue increase of 275% since 2011 Consistent revenue growth while increasing FTEs by only 8.5% Clients in 28 states and 6 continents Happier clients and improved quality of life

3 A B C D PRIOR TO XERO HPC used Peachtree exclusively for client engagements until moving to a hosted QuickBooks desktop solution in While the new product was a step in the right direction, the accessibility and ability to collaborate that is now synonymous with cloud products hadn t yet been fully recognized. The hybrid desktop-cloud solution did not eliminate the long-standing file compatibility issues created by different versions of the software. In fact, getting their hands on the working file proved difficult for HPC. was the most efficient way to send and receive files but was not secure. A file transfer protocol (FTP) was much safer than but was a complicated tool. Visiting the client onsite to physically obtain the file was the only remaining option, which is counterintuitive to moving away from a desktop application. Additionally, the hosted desktop solution was not as cost effective as the SaaS accounting applications of today. HPC s clients had to pay for licenses for each user, as opposed to the monthly, per company subscription fee they pay for a cloud platform. The desktop solution environment actually created other issues independent of a true desktop application. Printing documents and exporting and saving files on local hard drives was a lengthy and cumbersome process. It also required users to first login to the server and then into the accounting platform itself. Many of HPC s techchallenged clients felt overwhelmed by the complexity of working in the hosted environment and would call their account manager with general inquiries, such as password recovery. It quickly became apparent to Bruce and his team that their cornerstone accounting solution was causing them to spend too much time on minor one-off tasks and not enough time advising clients. PROBLEMS WITH HOSTED DESKTOP SOLUTION Compatibility. Different parties working on different versions of the desktop solution created file compatibility issues. Logistics. Because it was difficult to transfer files electronically, HPC had to often visit clients to receive their accounting files. Printing. Even after receiving the files, it was still complicated to print and save locally from the hosted environment. Accessibility. The desktop solution required multiple logins. High cost. The desktop solution required individual licenses for each user. Complexity. Working in the desktop solution proved very challenging for non-tech-savvy clients.

4 THE MOVE TO XERO The move from Peachtree to the hosted solution was part of Bruce s effort to rid HPC of its servers, which had become too expensive and required excessive maintenance. He had become familiar with the emerging technology while working as CFO and COO of a digital media company and realized that the cloud was the way of the future. While attending an accounting conference in late 2011, Bruce met Xero CEO and Founder Rod Drury. Rod shared his vision with Bruce the idea that Xero could be used as a tool that improves the way accountants and SMBs work together. The conversation left such an impression on Bruce that he signed up for a Xero account when he returned to Atlanta the next day. Bruce was instantly pleased with Xero. The interface was a drastic improvement over the hosted desktop solution. However, it was the automatic bank feeds and concept of zero data entry that really resonated with Bruce. By being hosted on remote servers, as opposed to an individual desktop computer, cloud-based solutions like Xero are able to capitalize on the connectivity of the web. Transactions from online bank and credit card accounts which are also located in the cloud are fed directly into the user s Xero ledger. Additionally, third-party cloud software providers are able to sync with Xero through an API, allowing users to work smarter by accessing and acting on data that flows between the connected, open platforms. At the time, I don t know if I would have even been able to think of something like Xero. I was thrilled with the idea of not having to go to the client s office and swap discs. That s where we were at that point.

5 THE MOVE TO XERO Xero s ability to pull and organize data from a variety of sources gives small business owners and their advisors the ability to work more efficiently. Reconciling bank transactions, processing payroll, sending invoices, creating purchase orders, submitting and approving expense claim and paying bills can all be accomplished through the Xero platform. Most importantly, Xero can be accessed through any web browser on any internet-connected computer or through the Xero app on mobile devices. This makes it possible for accountants, small business owners and other stakeholders to work in concert from remote locations. After initially signing-up for Xero, Bruce introduced it to a selective few clients. As him and his staff grew more comfortable with Xero, HPC began to gradually roll it to out to all of their clients. WEATHERING THE STORM In the winter of 2014, historic storms literally closed Atlanta. Drivers spent hours ensnared in traffic, businesses shut down and the Governor of Georgia declared a state of emergency. HPC, however, did not miss a beat. Bruce and his team continued to assist clients from the comfort of their homes, simply by accessing Xero and their cloud solutions through the internet and their mobile devices. The entire city was shut down for two days. Nobody was doing any business. There weren t even places open to eat. But we were able to work. I had my computer, phone and access to the internet. I was actually more productive during the storm than I normally am because there were so few distractions.

6 HPC: TWO YEARS IN THE CLOUD Since adopting Xero and other cloud solutions in late 2011, HPC has achieved an annual top-line net revenue increase of 100% while increasing FTEs by only 8.5%. HPC s success stems from the changes to its business model that were made possibly by cloud technology. Prior to its transformation, about 50% of HPC s revenue was attributed to tax preparation; 30% to accounting, bookkeeping and advisory services; and the remaining 20% to audit. In the two years since, HPC has sold its audit practice and now drives 70% of its revenue through accounting, bookkeeping and advisory services and 30% through tax preparation. Xero lends itself to the ongoing accounting, bookkeeping and advisory services that HPC now specializes in. It has eliminated much of the dayto-day work such as bank reconciliation and data entry that bogged Bruce and his team down during the pre-cloud era. HPC is now able to provide continuous business advising to their clients, at a fraction of what an in-house CFO would cost. HPC successfully generates recurring revenue on a monthly basis through the higher-valued services they are able to provide by using cloud technology. Instead of billing by the hour, the firm now packages its service offerings into bundles, which are offered at varying monthly fees depending on the needs of the client. Since moving to a monthly billing business model, HPC has increased its monthly recurring revenue 275% and annual top-line net revenue 100%. Advancements in technology and the anywhere, anytime accessibility of Xero has allowed HPC to begin working with businesses from around the globe. The staff is able to train and communicate with clients through the web and no longer has to make onsite visits to setup the accounting platform and physically exchange files. We were mostly an audit and tax firm for many years. These clients came back every year but we wanted to take these annual services and provide them monthly in order to generate recurring revenue and consistent cash flow. Secondly, we wanted to be closer to our clients by providing more value and advising, versus just doing their tax return.

7 WHAT DOES A MODERN ACCOUNTING FIRM LOOK LIKE? THE FIRM IS ORGANIZED INTO THE FOLLOWING DEPARTMENTS: Client Services & Support Onboarding & Implementation Controllership & Virtual CFO Tax Services Sales, Marketing & Business Development Administrative Support HPC CURRENTLY WORKS WITH CLIENTS IN 28 STATES AND 6 CONTINENTS North America, South America, Europe, Asia, Australia and Africa. The firm is part of growing network of global Xero partners that share clients with international operations. When the client of a Xero partner in another country expands to the U.S., they are referred to HPC, who is able to assist with compliance and other U.S. regulations.

8 CLOUD TECHNOLOGY SUPPORTS HPC IN ITS ENTIRETY: AffinityLive Project management and CRM (Xero Add-on Partner) SmartVault Internal document storage and secure document sharing with clients Bill.com Client bill payments (Xero Add-on Partner) ADP, ZenPayroll & SurePayroll Client payroll (Xero Add-on Partners) Expensify & Receipt Bank Expense tracking and receipt management (Xero Add-on Partners) Microsoft Office 365 Internal communication GoToMeeting Screensharing and online training EchoSign Electronic signatures Xero, ACH & PayPal Billing and payment collection Xero Client accounting system

9 NO MORE FEAR It s not easy to reinvent your firm, especially if you have operated a certain way for years or even decades. It makes sense if you are at ease with your processes and not eager to invest time and energy learning and applying a new way to work. That being said, the cloud offers a tremendous opportunity for accountants to work faster and smarter. As in the case of HPC, modeling your practice around this new technology can even translate into an increase in the bottom line. For most accountants, realizing these benefits and making a commitment to overcome the fear of change are the first steps in adopting the cloud. As you were reading this case study, you likely realized that HPC s journey to success wasn t recognized overnight. This is to be expected with early adopters and the good news is that others can replicate their successes while avoiding their mistakes. The resources outlined on the next page can provide additional guidance on a seamless transition to the cloud.

10 THE RIGHT PROCESS HPC spent much of the past two years adjusting their bundled services and pricing in order to find an offering that is profitable yet desirable to clients. After much trial and error, the firm has found a recipe for success and is continuing to grow. One of the lessons Bruce learned early on was that HPC couldn t do it all. When they first began adopting cloud technology, they attempted to provide a complete back-office service offering. They soon discovered that these tasks could often be too time consuming and generated minimal revenue for the effort. As the service offering became refined, Bruce developed a client profile that made sense for HPC. After experiencing how challenging the hosted QuickBooks desktop solution was for non-tech-savvy clients, he learned that familiarity with the cloud is a must for all HPC clients. HPC also encourages their clients to have an in-house employee who is responsible for the day-to-day administration of the business. This person does not have to be an accountant but rather someone who can handle the routine business tasks while leaning on HPC for higher-level advising. By asking their clients to have this resource internally, HPC is able to avoid general housekeeping tasks that prevent more beneficial guidance from taking place. Once a new client signs on with HPC, they follow a very specific onboarding process that has been honed over the past few years. Bruce and his team remotely train their new clients on Xero and the other applicable cloud platforms using the GoToMeeting screen share feature. In addition to training the client on the relevant tools, these sessions are an opportunity for HPC to clearly explain the terms of the working relationship. The staff is able to assign roles and set expectations from the start in so doing, the client is made aware that day-to-day tasks are best handled by them. Bruce has learned that clearly defining the terms of the engagement upfront and investing the time to teach the client how to properly use their software is essential to forming a healthy working relationship and making clients feel comfortable and happy. We have never had a consultant or service provider do exactly as they say and actually deliver on all fronts including the platform, process and people. We are really pleased with our back office solution. Wendy Wixon, 210 Brands, Inc./dba Canterbury North America.

11 Get in touch: Xero Team Become a Xero Partner: Free Partner sign-up xero.com/partners/signup Online resources: Harshman Phillips & Company hpccpa.com Xero for Accountants & Bookkeepers xero.com/partners Live & on-demand Education xero.com/training/accountants-bookkeepers Harshman Phillips & Company recommend Xero Accounting Software xero.com/us/tv/video/?id=5107-harshman-phillips-%2526-companyrecommend-xero-accounting-software

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