On April 15th of this year, our firm joined the BDO Seidman Alliance, a nationwide association of independently owned local and regional accounting, consulting and service firms with similar client service goals. The Alliance gives us an opportunity to expand the services we provide our clients – without jeopardizing our existing client relationships or our autonomy. We asked Nate Miller, one of our newer shareholders, to tell us what membership in the alliance means to him.
What does the BDO Seidman Alliance mean to you personally?
Being a member of the BDO Seidman Alliance means our firm can quickly reach experts on almost any subject. Knowing that I have access to Alliance resources gives me greater confidence with current and prospective clients.
We just met with several BDO partners from the San Jose and San Francisco offices. The partners made it clear that whatever experience or expertise they have, we now have as well. The Alliance really means something to member firms.
How will it benefit your clients?
Even in this sluggish economy, clients are continuing to grow and improve their businesses. They are looking for ways to gain a competitive advantage and expand their customer base. Their search for an edge has caused some companies to expand beyond state and country boundaries. Thanks to our membership in the BDO Alliance, we can now provide services well beyond our local market – and can better address multi-state and foreign issues. We can also serve larger, publicly-traded companies who require more complex services.
BDO also offers tax specializations including R&D Credit services and Cost Segregation studies. We’ve already invited members of these teams to meet with several of our clients who might benefit significantly from a specialized study. These are just a few of the additional services we’ve explored so far, but there are many more areas that we plan to explore in the future.
Clients expect us to provide basic services in a timely and accurate manner. Our goal is to exceed their expectations by providing solutions they might not have even considered. These specialized tax areas can be of great value to our clients and I’m excited about bringing BDO in to help us continue delivering exceptional client service.
What did you learn from others at the Alliance conference you just attended?
The most important thing I gained at the BDO Seidman Alliance conference was access to the BDO staff. I’ve already contacted them after the conference for guidance on several key issues. With the size of the BDO firm, they are able to have staff and partners specialize in specific areas so they can become experts. This has been a huge resource for us – now we are able to go to a specific person with a specific issue and they know the answer.
What can you contribute to other members of the Alliance?
For starters, we plan to share our expertise in agriculture in the Central Valley with other members of the BDO alliance. We expect to be a key resource for member firms who work with agricultural clients.
Why this alliance and not others?
BDO seemed to us to be the premier alliance for CPA firms. As part of our research, we spoke with partners from several firms who have been BDO Seidman Alliance members for many years. We left the meetings with a sense that these firms shared our views on practice management and client service. They were drawn to the BDO Alliance for similar reasons.
Since the BDO Seidman Alliance is a client of the firm BDO USA, the staff and partners of BDO USA treat the Alliance members as one of their top clients. We take pride in providing excellent service to our clients and they do as well.
We polled everyone on our team for some ideas that would help our current and future clients begin 2011 on the right track. Here are the resulting suggestions.
The number one suggestion, according to our unscientific, non-secret vote, was for businesses to update their 2011 Strategic Plan and decide where they want to be financially in 2011. We also suggest every individual prepare his or her personal financial budget. (If you don’t have a Strategic Plan or a personal financial budget, now would be the time to sit down and create one. Ask us for a $COPE grid that you can use to start the process.)
Here are some other resolutions you might want to add to your list.
Retirement and Estate Planning
- Review your estate plan. Recent tax law changes and asset revaluations may have substantially impacted your planning.
- Consider meeting with an estate attorney if you don’t have an estate plan.
- Review your retirement portfolio. Is it time to change your investment allocation?
- Review your retirement contributions. Is it time to increase the amount or frequency of your contributions?
Pension Plan Fiduciaries
- Review pension plans to ensure that all fees are reasonable. (To comply with new rules that take effect in July 2011.)
Employees and Employers
QuickBooks users
- Use the QuickBooks budget feature.
- Use the Accountant’s Copy to securely share files with your accountant – it will save you time and money.
- Review your chart of accounts. Is it too detailed or not detailed enough?
Closely held businesses
- Avoid paying personal expenses with company credit cards.
- Review related party loans between owners/partners and the business.
- Establish or review your business succession plan. Who is next in line? Are your processes documented?
Businesses
Planning and budgeting
- Establish or update your 5 year plan.
- Create both an Income Statement and a Cash Flow budget. (Ask us how our $COPE It! Software can help.)
- Focus on building more business now.
- Review and communicate your company’s break-even point.
- Create a capital expenditures budget to capture any planned projects or expected investments in furniture, fixtures, buildings, equipment or other similar items.
- Prepare a monthly budget to actual analysis (check your software for reports that provide this view.)
Accounts Payable
- Start capturing 1099 vendor information early. Formalize the process each time you add a new vendor.
- Contact your top vendors and suppliers to see if you can negotiate a better deal based on volume purchases.
- Look for ways to improve your accounting system.
Banking/Collections
- Review your lending relationships to see if you can lower your interest rates on debt.
- Look for business expansion opportunities – is it time to add a new product or to acquire a new business?
- Review your Accounts Receivable. Now is the time to take action on any amounts that are older than 60 days.
Expense Management
- Review your advertising and marketing expenses. Investigate new marketing ideas and evaluate the success of your past efforts.
- Review and improve your internal controls.
- Look for ways to reduce your expenses. Make sure your expenses are broken out in enough detail to provide clear insight.
- Improve profitability. Review all components of your Cost of Goods Sold for opportunities to lower costs.
Analysis and Systems
- Learn and apply significant financial ratios.
- Determine if you can pay down some extra debt.
- Take time to research your clients’ needs and measure their satisfaction with your products or services.
- Review your software for opportunities to update, enhance, or expand its use in your business.
As accountants, one of the hardest concepts we have to explain is the difference between cash and profit. (There’s also that whole Debit versus Credit thing but don’t get me started. ) I can’t tell you how many discussions have centered around the subject of cash. The discussion with a client can go in one of two directions: 1. “If I made this much money, why don’t I have any cash in the bank? ” or 2. ” I have cash in the bank, so why don’t those financial statements of yours show a profit?”
In the past, I have resorted to drawing on the financial statements, creating elaborate flow charts, building multi-tabbed excel spreadsheets, and one time I tried hand-puppets to make my point. But it’s just not a subject that makes sense to most people. The missing cash can usually be found hiding in the balance sheet as an investment in customer receivables, increased inventory, or additions to fixed assets. The ins and outs of the missing cash can be tracked on the statement of cash flows, but no one ever reads it. (Except fellow accountants and sometimes bankers who are looking for evidence that their loans will be repaid.)
Part of the problem in explaining this concept and many others is the language barrier between us as accountants and the language of normal people like our clients. We tend to think and speak in a linear, numerical fashion while most business owners think visually and speak conceptually. After many years spent wrestling with this issue. we have found a tool that lets us bridge the communication gap. It’s called $COPE It!. It’s a new iteration of similar products we have been using for a couple of years. The beauty of this tool is that you can bring in financial statements, convert them into pictures, and then make changes to your results. So now, rather than telling you that selling more products and services at the same margin (with other factors unchanged) will generate NOT more but LESS cash, I can change one number on the screen and show you the impact on your cash. I can also enter your targeted cash balance, and show you where to focus to achieve it.
After making one simple onscreen change to a set of numbers, I have had even marketing people proclaim that the blanket of confusion has been lifted from their eyes. Suddenly they understand why cash and profit are not the same thing. It really changes the dialogue when you’re doing business planning, negotiating loans, or evaluating new sales strategies.
But you really have to see it to believe it – just ask a member of our team to show you how it works.
Now let’s talk about Debits versus Credits…
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