Who's Really the BOSS?

There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Rachel Dillon: Hi, I'm Rachel Dillon, and together with my husband, Marcus Dillon, we lead Who's Really the Boss podcast, where we highlight the joys and challenges of running a business with your spouse or family. Our mission is to strengthen families and businesses by helping listeners avoid the mistakes we have made so they can lead.And live happily ever after.

Rachel Dillon: Welcome back [00:00:30] to Who's Really the Boss podcast.

Marcus Dillon: Hey, thanks for having me back.

Rachel Dillon: We have to give an update on the girls, because I know it's been an episode or two since we've given an update, and we're giving an update at the end of August, and this recording may not come out until October. So anyway, the update as of the end of August 2024, you want to share what's going on with the girls?

Marcus Dillon: Move one one back into college at Baylor. She called last night and had us [00:01:00] supervise her, changing out her own shower head.

Rachel Dillon: I think it was just affirm and encourage, right? Like she changed her own shower head. Um, and any time you tried to offer her advice, she said, I know, I already know, so I'm not really sure. I think we were just there to witness her greatness. I think that's why she FaceTimed us.

Marcus Dillon: I would have never guessed a college student would try to change out their own shower head for, [00:01:30] you know, salt water, but you get sold all kind of thing. I guess it's on TikTok or Instagram. Yeah. And so apparently this shower head will produce water that makes her hair better, you know, so she found a dupe on Amazon, ordered it. Which if you have kids in college that are still on payroll, um, Amazon is a very dangerous thing. Um, because once they get in Amazon, chick fil A, Starbucks apps, all that stuff that's got your credit card on it. [00:02:00] It's a blank check. And so maybe you're better than us and put some controls in place. But yeah, so she was kind of proud of her. You know she had she's not the most, um, tool savvy person. But she made it. She figured it out.

Rachel Dillon: But she's very resourceful. She taught herself how to use a sewing machine in less than 24 hours and made a shirt like, not a pillowcase, not a square. She made a shirt that she still wears to this day. So, um, she's [00:02:30] pretty incredible. I think she gets a lot of that from you. I won't say that too often, but, um.

Marcus Dillon: But she's also so stubborn, you know? And it's like one of those things as a 19 year old, uh, you know, so that was her second day of classes at Baylor. And, you know, it's like we had helped her move in last week, um, put together some furniture, you know, did all the parent stuff, right. For a new apartment. You know, I'm, like, checking in on her. And, you know, we're having this conversation, like, have you [00:03:00] heard from Kenley? And I'm like, well, I texted her, but she never texted me back. And I'm like, I pay for the phone. Like, I could turn things off and, you know, make it difficult on her. But then you, you ask, you know, like, what did you send her? And so we can, you know, share that conversation too. Yeah.

Rachel Dillon: Pro tip for anyone who has a teenager or college student, do not send questions in your text messages. If you send questions, they are 99.9% [00:03:30] for certain not going to respond. Now, if you send a question of which color of these do you want me to buy for you? And it's something that they really like. So if you're buying something for them, doing something for them, maybe you can slide a question in that. Um, but better to find out where they hang out on whatever social platform or wherever you can contact them. Just, you know, like their [00:04:00] like their post or give them an affirmation about something and then you're likely to get some sort of interaction or engagement. If you start asking 19 questions and interrogating and how is your day is the most overwhelming question, I think, for a teenager or college student. So do not ask that one for sure. Maybe share something funny with them or, you know, like something that they've sent [00:04:30] you previously and maybe they'll respond pretty much anytime you say you're going to buy something for them, for our daughters anyway, they'll pretty much respond almost immediately if it's something they're actually interested in. And like.

Marcus Dillon: It wasn't it wasn't. How was your day? I know better than that. But it wasn't. It wasn't much better. It was which which classes were today, and that was on Monday, and I don't think I got a response until Tuesday. Um.

Rachel Dillon: Which I think is frustrating to her because probably [00:05:00] we can see what her class schedule is, and likely she's already told us 13 times what her class schedule is. And so just asking a question that you should already know the answer to, that's definitely not going to get you a response.

Marcus Dillon: Yeah, I, I probably could view her class what she signed up for. I just see the bill, you know, the tuition bill that comes to my email and I'm good with that, you know. So.

Rachel Dillon: All right. Avery update. Yeah.

Marcus Dillon: So, uh, high school has started at senior year. Um, [00:05:30] so we're about to be a little bit empty nesters next year this time, so it'll be interesting. Um, I think Avery's got senioritis. Uh, did, like, she doesn't go to high school a full day. She'll leave and then go to her club. Swim. Um, but I think even for for me, I don't know about you, but I feel like I have senioritis. Like, I'm just kind of done with high school and that whole season of life and some of the stupid little drama that comes with, like applying for swim team captain and all the girl junk, you [00:06:00] know? I'm like, how old are we? So, you know, I think we've been there, done that. I'm ready to move on.

Rachel Dillon: Yeah. So that'll be an update coming in the future. Did she make swim captain for her high school swim team? Um, the other thing that she has gotten into a habit of doing before her club swim practices start is that she. So our apps that the girls share with us Amazon, chick fil A, Starbucks, and Sonic. Meaning they share the account and have access to charge [00:06:30] our card and not use their own money. For those.

Marcus Dillon: Go straight to the Amex.

Rachel Dillon: So she's. Yes. And so she's going straight from school to Sonic and then to home. So she goes and gets her drink and then comes home where I'm like, okay, I'm old now because all in my mind I'm like, well, you're coming home and we have that same drink at the house, like we have food at home. You don't need to go. You don't need to go out for that. But she's enjoying her freedom for a couple more days. And then [00:07:00] September 1st, she will lose all of her freedom because she'll have three hours of swim practice every night, so that'll be fun. But in addition to talking about the girls, we are also talking about beyond the billable hour today. And so what? I think this is quite the funny topic for us. A little ironic is that we're saying beyond the billable hour. However, in our firm Dylan, Business Advisors, [00:07:30] or DBA as we call it, we still track time even though we don't bill clients hourly for work that we do for them. Um, for the most part, we don't bill hourly. We still have our team members track time. So just want to talk through this and kind of what the optics could be for a firm who's still tracking time or firms who don't track time, and just kind of what the opinions are, [00:08:00] why we do it, how we do it. And you know, what we hope to do in the future.

Marcus Dillon: Yeah. So a little bit of background on DBA if you haven't followed with us, you know, our firm makeup is right at 3 million. About 80% of our monthly income is cash related. All MRR subscription based, you know, made up of 120 or so family groups that we serve with our team of three model. So the other 20%, it'll probably be a little bit more on an annual revenue side is made up from some [00:08:30] some families that we do tax services for, and we serve them throughout the year. Um, but, you know, it's one of those things where we don't bill it until once a year just because of the nature of those projects. So we do that with the team as well, just so we know, um, how to serve those clients the best way. And so I think beyond the billable hour. That's catchy. Right? You know, and growing up in different firms, obviously EA and then all the way down to where we're at today and DBA, [00:09:00] I've seen, you know, different iterations of, you know, capturing time, data and um, even when I worked like college jobs, you still have to clock in and clock out. You know, I think those are the pieces that you don't want to just discount. Oh, you track time.

Marcus Dillon: Well, it's like majority of all businesses track time for payroll purposes. Right. Um, now once you move to full time, like, what are what are people working on, especially in a virtual environment. Like, I would [00:09:30] have such a hard time wrapping my mind around like, you know, just what what's going on? And not that I care, like how much time is being spent, but I think it does weave into just a little bit of our project management that we have, especially when things start to go out of scope in a virtual environment. It just kind of, um, brings, you know, shines a light on an abnormal month, and then we can have a conversation about what went on that month, you know, because it may [00:10:00] have been scope creep. So yes, we do still track time. Um, I don't think it's that big of an issue. Um, you know, we we'll talk a little bit about the technologies we use. So, um, when we started, uh, DBA and when it was just me, 14, 13 years ago, capacity planning didn't really matter. Like how much? Like I have to go some. I have to go home sometime. Right? You know, so I think that was the main thing. Like, how much more work could we do?

Rachel Dillon: Did you though, did you ever [00:10:30] come home? I don't know, four hours, 3 or 4 hours a night? Um, during February through April, for sure.

Marcus Dillon: So I remember you'll have to help me remember. But I remember when I was at the previous firm before I bought the original book of business that started DBA. I remember working a tax season, leaving the office at like 2 or 3 in the morning, driving home about an hour and then going back the next day like 8 or 9:00. I think I [00:11:00] was even asked why I was late. You know, it was one of those things like, yeah, late morning. I'm like late night. Gosh. You know. So, um, but I remember driving home like I could kill somebody. Like, this is, you know, tire driving is just as bad as drunk driving kind of thing. And I think that was like the, hey, if I'm going to do this, like, I'll do it on my own terms and kind of part of the part of the initiative to search out other options as far as what that firm was. So but I don't know that I ever slept at [00:11:30] the office, have I?

Rachel Dillon: No. And I you had to mature a little bit. We had to get the business in different processes before I even allowed you to have a couch at the office to make sure that that did not happen. So it wasn't it wasn't the very first office, and it wasn't even the second office did not have like physical offices, did not have couches. It wasn't until our building that we're in now that [00:12:00] I allowed a couch in the office, because I didn't want you using that as an excuse of being able to get more work done if you just take a nap there.

Marcus Dillon: Yeah. Um, so I think I have fallen asleep at the office, but I don't know that I've intentionally, like, stayed overnight, like, packed a bag or slept through something. I know plenty of other friends and CPAs that have done that sometime in their career. Um, but yeah, thankful. And I guess [00:12:30] now that we office out of the home, you know, you could say that we have, uh, slept at the office every night, but, um, but. Yeah. So part of it, you know, is just this, you know, evolution of different technologies that we've used. And we'll talk a little bit about that. But the billable hour for us, why we still capture time data that way is really just capacity planning. And so I think a lot of professional service firms, CPAs included, [00:13:00] it all just comes down to what inputs are available for the output that you can have. And so that's defined as capacity capacity planning. And while capacity planning is talked about a lot and buzzword, very few people have their handle on it. As far as like a good calculator, a good way to even see what their firm can do as far as an output. And you could bash me and say like it doesn't matter the [00:13:30] time inputs that shouldn't be tied to output at all. Like, yeah, like once you perfect it, but you've, you've kind of got to start somewhere. So for for those of us that have captured time, data and maybe even done billable hour projects where a lot of our career. I just want to talk through today how somebody could help, you know, move forward a little bit with capacity planning in their firm.

Rachel Dillon: Yeah, for sure. If someone's tracking time already kind of how we use it. And you know, for our [00:14:00] team having the data of how much time is actually being spent on a client. And obviously this is entered by humans, we do have timers that people can start and stop. But again, you have to remember to start them and stop them or you have to enter your time on these clients. So not saying that it's perfection, but what it does, it gives us black and white data. It takes the emotion, it takes the opinion out of what's actually happening. So [00:14:30] we have at DBA, we have a few different check ins, um, between like one on ones with leadership team and team members between weekly check in surveys that people complete. And so as people are starting to feel stressed about a client or feeling like maybe it's it's too much or not enough, or what does it actually look like, that's when we can take not the opinion of what it feels like, because what happens [00:15:00] more often than not, and from personal experience, I can say this when there are outside stressors and things pulling on you, as well as client requests pulling on you, you may give more weight to one as being your biggest problem over the other, and there may not be data to support that.

Rachel Dillon: So when we're looking at, you know, you have kid things and life things going on that are needing your attention. And the client has one [00:15:30] additional request. You may put it all on the client and I have too much work. And this is. This is too hard. We need to look at, you know, what's going on. So that's where that documentation and the the tracking time really saves us and gives us a clear picture of what's actually happening. That also saves us because we do bundled services at a flat monthly recurring fee. It helps us look at okay, when we [00:16:00] two months ago, it was taking our team eight hours to complete the engaged amount of work. Now it's taking our team 14 hours to complete the work for this client. Is it still the same engaged work or are there things out of scope? Has the business increased in volume or complexity? What's different. And so that time and then notes that the team puts in with their time really gives [00:16:30] us a clear picture of what's actually happening on each client without us having to sit down and, you know, dig with take the team member's time, our time to figure out what's actually going on.

Marcus Dillon: Yeah. Um, and I will say, um, you know, even when we were all in office, right, when every team member sat in Katy, Texas, in one office, it would have been a little bit easier to say, hey, we don't need this time, data. I can kind of make my rounds, so to speak. Having this in a virtual environment [00:17:00] is so like, I'm so thankful we still have it and we're still progressing. Like we always say, um, you know, we're not measuring different things. Like we're not measuring performance or anything on time. Like we're not holding that, you know, against somebody or celebrating it based on like effective utilization and all that. Um, it's just data. It's black and white, and the team members really don't even know, like, we don't share that with them because we don't want them to focus on some of the metrics that could be focused on in other firms like [00:17:30] your effective utilization needs to be X numbers. You need to hit so many hours per week of production. Like that's crap. Like if that's why you're tracking time, you need to be better than that. And so I think, you know, we do look at work going out. Why. You know, why it's not timely going out if there is something that's holding it up.

Marcus Dillon: So I would say if anybody wants I think part of it is like where do you start as far as like knowing available capacity in our firm today. Like you have to start somewhere and so open [00:18:00] up Excel or Google Sheets, if you're really that cutting edge accountant and your MacBook Pro, um, but open up Excel, open up your spreadsheet, put every one of your team members and then put their role. So for us, we have csms, we have client controllers, we have client CFOs. We also have some admin team. So, you know, if you're tracking along and I'm sure that we could probably create this resource because we have something similar. And we could share that with you if you really want it. So open up that Excel file. List [00:18:30] each team member out on row. Put their name. Put their position. Put in the next column how much they work right. So if they're a full time person, 2080. Um, don't commit somebody to overtime, you know. And I think that's the piece where if they're full time, 2080, if, um, if they're not, if they've committed to six hours, three days a week, then you put that, you know, on the year. So, um, your, your accountants, y'all can figure that out.

Marcus Dillon: And then in the next column, [00:19:00] put the, uh, put the goal as far as like realization that you want for that position. Um, I would avoid putting it per person. I would put it per role. And so we know that our client service managers are 85%, you know, production. And so that's on the whole year. The other 15% is time off, education, admin, all that other stuff. But we know that for the most part csms their goal is 85%, client controller 70%, [00:19:30] and then client CFO 55% is what we have determined as like the mix of admin versus production. And then if you're all great accountants, you know where this is going. So then you do the formula and then you see okay, here is my available capacity by team member by team. And we could break that down by pods. We could break it down by legs of pods to see. And then I think then you have a picture of like okay, this firm has 10,000 available hours. The [00:20:00] next question is like, what do we do with those 10,000. And some of the different metrics that you could really start tracking is if our firm does $3 million a year in production and we have 10,000 production hours, then 3 million divided by 10,000 gives you your, you know, production rate as a firm and it's mixed.

Marcus Dillon: And that is a very real number that is looked at in valuations of CPA firms, just to kind of see how effective the [00:20:30] pricing across the team. And, you know, if you have a very low, um, number there, then you would start to question, okay, this is more of like a, a bookkeeping or payroll firm like this. You know, maybe it's not a lot of highly technical stuff. If you've got too high of a technical, then you still have some questions there about like, you know, if this was to change, owners like, could could that technical work continue if there was a change in in team members. So I think those are some of the pieces that [00:21:00] you can start to look at. Metrics and time data is used in that. So some of our listeners who maybe have gone through recent valuations or M&A, you know, conversations that that may have been talked about as far as like what's your number as far as per hour in the firm? And if you don't track time and you've got some other way to, uh, you know, show your value, then. Great. But this is something that people do look at.

Rachel Dillon: Yeah. And I think just to [00:21:30] reiterate what you just said, in case somebody zoned out and missed it, that not planning around somebody being 100% effective utilized whatever the correct word is there, but not planning on theoretically, they should be able to do this amount of work in a perfect world, especially if you're not using that scenario as, let's say, tax [00:22:00] season for our industry. If you're not basing it on that, if you're basing it on a normal month, a summer month, then you're automatically guaranteeing that person is going to work over time. And I think when you're in planning stages, that that's not if that's not the direction you want to take your firm, then that's not the direction to do capacity planning with. And so keeping that in mind, that 85% that our team is [00:22:30] very efficient, they get a lot of work out in that 85% of their time, while also still enjoying their job and enjoying their family. So they're able to do a lot. We don't feel like we're missing out or we are, um, not running the firm well, by not filling each team member, each role over capacity. Um, I think having that balance and not having a revolving [00:23:00] door of turnover because people are burnt out, I think that's real important to keep that in mind. Yeah.

Marcus Dillon: So I would say that this capacity number is, is just as good as like what your revenue number is. Right. So if you know the total numbers, you know the total kind of capacity for your firm that can be shared with others. Um, how do you increase capacity? I think that's the next step. If you do feel burnout or you say, hey, we don't have enough capacity in the in the firm. Um, really, [00:23:30] there's two ways to increase capacity. And it's either higher and that can be internally. Once you add another full time person, you've increased capacity. Right. And so if it's 2080 times 85%, let's say for a CSM, then that remaining additional time adds to your your total capacity for projects at that CSM level. Um, you could also do external. So whether you outsource or you're kind of outsourcing functions of the firm like operational that maybe [00:24:00] some other team member that was previously listed. It's impacting how much production they could do or you know other things. So so hiring is one. The other is is becoming more efficient or effective. And you know, that's where all your software vendors want to sell you that magic, you know, bottled up in a monthly subscription.

Marcus Dillon: And so that does not need to be just technology. And so the way that other ways that you can become more efficient and effective are just through structure, structure of your team, [00:24:30] kind of defining roles, um, setting standard operating procedures and kind of different things in addition to technology where it makes sense. Um, so I know that within within DBA, when we, um, did the team of three model and kind of introduced like these, these roles that had specific responsibilities, and then we were able to kind of build a little bit out that way. We saw huge strides in effectiveness as far as teams. And, you know, we were able to [00:25:00] address some some people that were no longer, um, you know, needed for where we were going and kind of make some adjustments there, which that improved profitability. So I think those are the pieces that whenever you kind of peel the onion back on why this is needed. It's it's to help you make decisions in your firm. And if you don't know where you're at, like, this is a great place to start.

Rachel Dillon: Yeah. And I think it's common. I think a lot of people do track time. So if you have the data and you're not using it, here's [00:25:30] a good way to start using it. If you don't have the data, likely you have some other type of metric. And we are always open to learning new things. And again, we don't use tracking time as like a punitive measure. And we actually base success on something that's more important to us as far as the client experience and delivering work by a certain date. And so that's actually looked at and not actually billable or tracked time. As [00:26:00] far as celebrating with our team and celebrating our individual team members. Um, yeah. So that's that's definitely really good. I think one other thought that I had, as you were talking and talking about the structure of our team. At the most basic level, it's like the mentality or the thought process behind the assembly line. If we can make the work so similar per each role, that's how they build up that efficiency. So in an industry where, my goodness, every single thing [00:26:30] feels like it depends. Every business looks different. Even if they're in the same industry, every business still has its own nuances and its own unique characteristics. But if we can make that as similar as possible, and we've been able to do that not only through the client service manager, the controller and the client CFO roles, but also through taking those teams of three and aligning them per industry. So a dental practice is likely going to be more similar to [00:27:00] another dental practice than a construction company. And if we have team members who are really good working with attorneys, which we do, then why would we give it to someone who's never worked with an attorney, so just being able to build up those expertise and then also seeing the challenges of that industry and having that controller and that client CFO be able to speak into that and see, um, different ways that the owners in that industry [00:27:30] have overcome those challenges, for sure, and being able to share them across all of our clients.

Marcus Dillon: Yeah. So, you know, the evolution that we've seen within DBA over, you know, more than a decade, right. And team members and now the team that we have going on almost 20 team members, you know, 17 to 20, depending on who you ask and who's considered a team member. Um, I think all that time data that we've kind of worked through and always had, [00:28:00] um, the software, the softwares that we use have changed. So let's talk a little bit about the software evolution, because, um, I think that does provide a little bit of insight. Um, it also shows that we actually run a firm. Right. So we're dealing with the same stuff that everybody else is, much like when, you know, when I started DBA and took over the first block of clients, they were on lizard, and then we transitioned to Ultra Techs in about 2016, 2015 and have been on ultra tax ever since. So, you know, the old [00:28:30] school, hey, we're going to we're going to exist within a CCH or a Thompson Stack. Um, that's no longer a thing in my mind. So it can become really overwhelming on technology. And you need to define the process. Um, and the, the way that you use these, these technologies. And that's what we would call systems, right? You know, when we expand it beyond software. And um, so when I started, you know, tracking time within the firm [00:29:00] and, um, really I was just looking at effective utilization because that's all I've done. Even when I was the only person that was production, I think I used Intuit Practice Management some somewhere, and then that was killed by Intuit.

Marcus Dillon: It was supposed to bridge between QuickBooks and Lessert. And, you know, the promises that software and technology companies make, they're no different than they were 15 years ago. Right. So, uh, you know, Intuit came out with Intuit Practice Management and then it got killed, like [00:29:30] overnight. And, um, you know, we like the guys at Intuit. Obviously we're close to them. But that product came and went. Obviously Lessert is still there. Quickbooks is still there. We've always done all of our from the very beginning. We've always done all of our accounting and sending invoices out of Qbi. It used to be Qbi desktop. Now it's Qbo. Um, we are probably transitioning that ten years ago to Qbo, but we've always existed within Qbo. That makes us better advisors [00:30:00] to our clients who are using Qbo. Our clients could care less about how to send an invoice out of practice or canopy. So I think that's the other piece where we're getting we're getting practice every day, every time we send an invoice that helps us better educate our clients on qbo. So, um, but because we've always had a disconnect, so it went from Intuit Practice management to then Thompson practice, which I know a lot of firms still use and practice is definitely one of those legacy applications. [00:30:30] Um, we actually had to have quite a bit of help to set that up, both at the Thompson level and consulting level. Fun fact that consultant, uh, Amy McCarty is now on the team at DBA and, uh, collective. So, uh, she was, you know, part of the original setup team, uh, for Thompson.

Rachel Dillon: Yeah. So we tried Thompson and practice implementation with the Thompson, and we even purchased, like a [00:31:00] training module or something from Thompson in that first year and it felt like such a mess. We felt like we couldn't see what we needed to see that we were doing work in there, but it just wasn't organized quite the right way. So in 2015, um, we thankfully met Amy McCarty and were able to get that all sorted out. So Amy's been helping me build and pull reports since 2015, um, through multiple [00:31:30] different, uh, practice management softwares. And so I'm excited that still within collective and within DBA, we're still able to one benefit from all of her expertise, but then also share that with other firms as far as her expertise in helping with advisory with other accounting firms.

Marcus Dillon: Yeah. And Amy can tell you like even practice very robust, meant to scale to very larger. I mean, I [00:32:00] would say very large, larger firms. Um, if you're a very large firm, I would think you're in CCH, but, um. But, yeah, Thompson could handle, you know, firms with dozens upon dozens of employees. I don't know about hundreds, but. Yeah. So, um, so we were on Thompson for a while. Um, what we did is we entered time. We never invoiced out of Thompson. So do you want to explain a little bit about that process that continues to carry over from [00:32:30] today? Because we would always send the invoices from QuickBooks and not wait to send to enter those into Thompson and then send them through Thompson. We never entered payment information into Thompson. And part of that is me. Just as a business owner, I want that client. I want that invoice in front of them as soon as it can be. And so a lot of times they're actually seeing that invoice. If it's a tax engagement as a PDF inside of ultra tax, we put their fee there, they see an invoice and then [00:33:00] we send that to them through qbo to pay whenever the project is wrapped up. And that's still the process for some of our clients that are tax only. I know we'll have naysayers that say you should get paid in advance. This just kind of works for us right now. I mean, 80% of our revenue is coming in. Mr.. Yeah. So, you know, I think that's the piece where it still works. It's still good. We have zero bad debt. We have very little. Ah, um, so the client would see it as soon as they accepted, we'd [00:33:30] send them an email through QuickBooks with a link to pay. Um, I know there's other options now, but. Thompson, what did it look like to clear out those invoices that happened all throughout the month against the time that may have been booked against that job?

Rachel Dillon: Yeah. So we would take and this I mean, you guys listening can judge us all you want. It's okay. Also, I am not billable and willing to do it. And the information the data that we get [00:34:00] from it is important enough to us that we've continued to do it. Um, but we would take the information from QuickBooks so the total amount invoiced and we, I would go into practice and clear out time very manually as a process. So just taking that total invoice amount, applying it to the client. So we kind of filter and sort by client. So the projects or the whip by client. And then we'd go in and clear out that [00:34:30] time manually. So definitely double entry if you're tracking along with us. Definitely not a seamless process. But also that's done once a month. And again, having that data and being able to pull different reports and see how profitable we are on engagements versus time people are spending on it to see if work is in scope or out of scope. Those types of things were are very important that we've kept [00:35:00] that process even through a few different practice management softwares.

Marcus Dillon: Yeah, and I know a lot of people, whenever they transition away from practice, the biggest pain point is like some of that reporting that they may lose. So I think you really do have to, um, determine what reporting you really need and what reporting you really look at. If you haven't looked at any of those practice reports in 12 months and you're making excuse on, you can't move to a better software because [00:35:30] the reporting, that's just an excuse. So I think what was important for us was being able to look at per client, per service, like making sure that we were pricing things appropriately because most much like the title, right beyond the billable hour, we're not pricing really based on billable hour. Billable hour is or hours are, um, what's driving capacity for work? It's not influencing price necessarily. So we [00:36:00] were looking at that data to make sure that, okay, this was out of scope. This is just there's some inefficiencies here. We need to get process improvement. Why is this client the way they are. You know. And so, uh, what happened is after a few years, I don't even know how many, uh, in practice, probably 6 or 7. We actually moved over to Onvo, which is a Thomson Reuters product. It is their solution, um, to practice management still to this day, we [00:36:30] were very hopeful that Onvo tax was going to follow or also come out about that time. That's why we made the leap to Onvo practice management first on Visor Tax. I have no idea if that's ever coming out or um, you know what the roadmap is for that. So Onvo, we were on for two years, is that correct?

Rachel Dillon: I believe we started in 2021. Yeah. With on Vo.

Marcus Dillon: And whenever we move to on Vo. So another big thing is when you do transitions [00:37:00] like this. So we started that at the end of the year maybe November 1st December 1st. And we did not bring over any, uh, we didn't do like a transfer of data over because we did not want to see former clients. We did not want to see former team members come over into an Vo. And that's one of the pains with practice, is you can never truly like, delete or archive a former team member or former former client. They always kind of continue to pop back up. So with on Vo, we started fresh [00:37:30] and obviously entered in the work in progress for any projects that that had time in them, uh, as of 11 one. And the reason why is because, you know, some of those tax return projects that you may build once a year, they finally do send an invoice in October. And so at that time, we still had a lot of more tax projects. But, you know, that's that was the transition that was made. So our process, when we would still enter time into Envio kind of do that monthly closeout. All the while, QuickBooks [00:38:00] is continuing to do its thing right. We didn't adjust how we got paid or had to roll anything out to clients. It was all the same. So none of that changed. The the clients had no idea and it didn't impact our cash flow or any way that we did that. Right. And so that was important to me as a business owner. And I could play with practice management softwares all day long. So within the transition from practice to envio, did you see anything different in that or an improvement on how we were doing things?

Rachel Dillon: I would say our team felt a [00:38:30] bit of improvement because they no longer had. A lot of our team members were only logging into an actual server to enter their time. And that felt crazy. That felt like, okay, if we are just doing that and we we don't use time for their individual performance. Like, not only are we causing them a headache, but it really doesn't even benefit them. It benefits us as the owners, but not the team member necessarily. And so moving [00:39:00] to that browser based solution was a great solution for our team being all remote. That was a great solution. What we found was we lost a lot of functionality of like custom reporting and pulling data in ways that we used to, but thankfully still, Amy by our side, holding our hand and helping us. I think she's a wizard in the background and can get the data and build reports and ask people, you know, in like support and development [00:39:30] at the software companies to get things done the way we want to see them. And so very thankful for that, that even though it wasn't perfect, even though it did have some issues as far as timing, timing out or, you know, not being able to enter time. It was still better than our remote team having to log into a server for that one function.

Marcus Dillon: Yeah, so so on. So we use primarily [00:40:00] as practice management really just time data. We did not use any of the portals that came along with because we were on another solution at that time called Liscio. And Liscio. Was the secure messaging kind of secure delivery, um, for tax returns and financials and things like that. Um, so that was a good call. We didn't store any data. Um, in, in on veo. Um, we did an invoice. We didn't live invoice, I guess, um, out of Envio we didn't post payment. So whenever we were ready [00:40:30] to make the move to the next best software solution, it was a little bit easier to leave. So I would say that, you know, if you're building out, you know, practice management as part of your, your main tech stack, like just keep those considerations in mind. We've always believed that Microsoft will always win. So office 365 and OneDrive, all those fun stuff, those continue to be the home for documents, right? Um, SharePoint, all that good stuff. So so we were on on [00:41:00] view for about three years. It was producing the same data, the same capacity data that was helping us to evaluate capacity in our firm. And then we moved over to Canopy and Canopy. We kind of used in the same function. Um, you know, it does track our projects. It tracks our time. We do not invoice out of canopy.

Marcus Dillon: We don't accept payments out of canopy. I know that it can do that. But like I said, QuickBooks is the home for that. And I don't [00:41:30] know that we even have like any integrations turned on. We turn those on at one point, but we've turned them off because they weren't coming over as clean as we would like. Uh, we also don't store data long term. Um, in canopy, it all goes to Microsoft SharePoint, OneDrive for storage. We will use it as like our secure messaging platform through email. We have phased out Lcio, but um, but yeah, that's kind of limited in the scope that we do use it because [00:42:00] at this point, I'm not going to trust any practice management software to solve all of my problems, and I'm not throwing any vendor or solution under the bus. It's just overpromise and underdeliver and as, um, you know, enhancements are rolled out or roadmap. Things do get cloudy. So I would say if you're trying to plan out like this perfect solution for your firm, just realize it. It doesn't exist. Or based on my experience, it doesn't exist. And you're probably going to have to put together [00:42:30] a process or a system to actually, you know, marry some of these things that you need in the data that you do need for your firm to make decisions.

Rachel Dillon: Yeah. I will say one thing, and this isn't this isn't definitely a recommendation. Um, but because we do have to kind of duplicate and do that invoicing within our, um, within our practice management after the fact, I do [00:43:00] not only do you see it as your invoicing, but I also see it as I'm clearing out time as far as write ups and write downs. And so it it gives us a little bit of extra accountability to address issues sooner than later. If it was just you and you're busy and you're thinking about things, and that client's a good guy and that team member is doing a good job, and you might not address issues that are likely out of scope [00:43:30] or potentially burning out your team member as soon as if that. That's just been our experience as even though yes, it's not perfect, and probably not even a recommendation that we would tell other people to do it this way. But having that second set of eyes and someone who's literally just looking at black and white data, like I'm not looking at anything else and just manually entering something, um, I can I can pick those out. [00:44:00] And if I see it more than one month in a row, obviously I will remember that from the previous. And we address it immediately of, do we need to have a conversation with the client and is it a price increase conversation? Is it an additional engagement conversation? Is it a special project? Is it a team member process or efficiency problem? Um, what's what's happening here. And address it right away. Because whenever you have monthly recurring [00:44:30] service projects, it's real easy to set it and forget it and just hope that it all shakes out right. And, you know, you might get six months or a year down the road and not be real happy with how that engagement has been going from a profitability standpoint.

Marcus Dillon: Yeah. Um, before we describe kind of the process of exporting the time data, which is really just whip, and then you enter that in and mark it up and all that stuff. We've gotten pretty, um, pretty quick at that process, but I'm going [00:45:00] to take it all the way back, because the first six months I owned the firm and the the last half of 2011, the process looked pretty different. And we bought, um, the, the first book of clients. It was from, I don't know, how old would you say Bob was? 60s, maybe 70s. Yeah. And then with that, I inherited an office manager. Who? 60s or 70s, right? Yes. Um, and she was my only employee until we asked her to leave. Um, but [00:45:30] all the fun stuff she would print out. Whip. I have no idea what program we were using or he was using. And then I inherited, uh, before moving to Intuit Practice Management. But I just remembered this, and it's funny. Um, she would print at the end of the month these whip reports where it was unbilled whip by client, very similar to to some of the same data that, you know, we and other CPAs pull. But she would print it for me, uh, set it on my office, and then I sent it on my desk in my office. And I remember having [00:46:00] three stamps that were custom made.

Marcus Dillon: And they were stamps, like, old school, like, dip it into ink, pop it onto the like. That was the world that we lived in 13 years ago. And, um, one of them was keep like just the word keep. So boom, boom, you know, and and we're not we're keeping that whip. We're not billing it yet. One was right off and the other one was this like custom stamp that they had made. And they were so proud of it. I think it was I think [00:46:30] I had to pay money for it as part of the acquisition. It was that special. So it, uh, you push it in and then there were blanks on this stamp where it said like invoice and then the dollar amount invoice and then the, the date of the invoice. Right. And so that was the closeout process, if you will, for about 6 or 7 months, maybe even a little bit longer, uh, until after Sue was gone. Um, so but yeah, it was I was I don't know what happened [00:47:00] to those stamps. I probably threw them away in one of the moves, but man, that was old school. So, uh, thankfully, you don't have to do that and get, like, ink all over the side of your hand and, uh, work through that mess.

Rachel Dillon: Yeah, I don't know. I think you kept some of their some of their ways, some of their process in there. Because at the end of the month, I see keep write off and then an amount it just doesn't come in stamp it comes in an Excel file. Yeah. Very nicely. [00:47:30]

Marcus Dillon: Let's talk about that. Yeah. Because we the team does they enter their time into canopy And then obviously we match that up against mostly monthly recurring process that are flat invoice. Right. So we're just trying to see like which ones have good margin so we don't have to go adjust price. Which ones we need to go adjust kind of look at efficiency and effectiveness given process improvement. So at the end of the month after everyone's had a time, you know, a couple days after to make sure all the time data because we're also tracking like PTO and [00:48:00] admin time in there as well. Um, we export that to Excel. It has all the previous whip that was unbilled, similar to the report that I used to get on my desk 13 years ago. And then I create a pivot table, which is, you know, something newer, something fancy that Amy taught me. You know, it's like, hey, you should do it this way. And it's sped up the process quite a bit. So, um, I actually just show only the data that I need for that pivot table and quickly kind of go through it. That takes me about an hour, maybe an hour [00:48:30] and a half if it's a busier month. But then that goes over to you, and then you enter in kind of these invoices into canopy to write up or write down people's time. And then that gives us the data that we need to make some of those decisions about, um, capacity or pricing in the firm.

Rachel Dillon: Yeah, absolutely. And so it is a bit of a manual process. We do invoicing. We have to choose the client. We choose [00:49:00] the time that we want to clear out and then are able to put the amount that we invoiced. So um, we're able to save if it's ongoing whip we don't have that very often. Um, but we do have that with some projects that we keep and bill separately. So yeah, that's what that looks like. And it's depending on the month, depending on the volume of what we've invoiced and done that month, it could be anywhere from [00:49:30] an hour and a half to two hours. Usually not. I don't know if it's ever been more than two hours. Uh, now that we kind of have the process down.

Marcus Dillon: Yeah. And what those reports ultimately tell us, at the end of the day, you know, when we pull that data and review it, um, for the most part, we should have write ups, you know, across the board if there's an ongoing like, maybe there's a timing difference of when we've accepted an onboarding payment and then there's still a little bit of onboarding, um, moving throughout the system. So there would be a [00:50:00] little bit of a write down. But it's just it's all the same team that's doing that. So like it's not holding it against anybody. And then um, the other thing that that does is you know, it obviously we also have now where we're actually accepting payments from clients, and there's no time in that given month because like, it just doesn't like it doesn't fall within that month. Maybe they're on a monthly, um, payment schedule, but it's more of an annual project or, you know, less frequent. [00:50:30] So I would say that the data has changed. It has helped us make different decisions in the business. I did have, uh, a mentor or friend tell me one time, like that process you're doing, like, how long does it take you? And I was like, well, now it takes me about an hour and a half, two hours, and then it takes you probably 2 to 3 hours maybe. Um, we've kind of gotten it down pretty quick. And then they were just like, oh, this solution, this software, like, you know, it's like now I just kind of shake my head and I'm like, I should have never listen [00:51:00] to some of those, uh, recommendations because that software cost thousands of dollars a month, and it saves me four hours, like I need to be looking at this data.

Marcus Dillon: So when I'm closing it out, I'm looking at it. You know, it kind of serves two purposes. And I'm okay being a little bit old school. I've moved on beyond the stamp at least. So um, but that's where we're at. And I think the beyond, you know, the hours is, you know, it's the hours are contributing to the overall [00:51:30] data, and the overall data helps us make decisions on capacity, helps us make decisions on pricing. Um, something else that we're kind of fine tuning and going to roll out is we do have a lot of, uh, part time folks on our team. Um, and right now, if a part time person just doesn't have billable work to work on, they'll actually just log off for the day, and it's kind of hard to know. Um, where are you willing to give DBA more time, or were you really done? Like, do we need to have that [00:52:00] conversation? Um, so we're going back through and kind of perfecting that to where if you're a part time team member and you've committed to 24 hours a week, uh, we're committed to paying you 24 hours a week, regardless of your production time. Because what we've seen is, um, you know, if you're trying to make your 24 hours, then maybe budgets on clients aren't the most accurate, and maybe you're just putting time to projects that don't have time on projects.

Marcus Dillon: Um, we need to know what your [00:52:30] availability is so we can, you know, fill up that availability and do more great work for other clients. So I think those are some of the pieces where, um, you know, time sheets and, um, people kind of fluffing time is a real issue. I know that, um, that's talked a lot, a lot about about a lot in our different circles and things that we listen to when it comes to time sheets. But, you know, hey, we're committed to these hours. This is an agreement between us and your family. Like, if it's 24, it's 24. Like, that's [00:53:00] the commitment. What we do with that 24 hours is on us to go out and fill up as far as capacity of the right mix of work. And so we know that, um, it's just getting a little bit, uh, beyond, you know, that, um, that process of what we did have in place to where, hey, CSM, 85%, 24 hours a week, you're going to be 20 hours or whatever that equates to as far as production work. And if you don't, if we don't have enough work for you, we're not going to hold that against you. So I think those are [00:53:30] the next steps that we're looking at. Yeah.

Rachel Dillon: Well, I think this has been a great conversation. I know that the data for me has been very helpful. So when we were looking at about how many hours, um, of tax season work like of annual tax returns, they're included with our monthly projects that we serve clients with. However, they do happen only once a year. So once a year we do have a higher volume and other requirements [00:54:00] that we need to complete. And so we've even looked at, okay, how much time are we spending on tax returns? How many people does that take? What are the available hours. And that has helped us assign um, works to work to team members in the past. That has also helped us when we've had to move around, if people are going to be out for an extended time or going to be out, they've moved on to another role. Having to move clients around to new teams of [00:54:30] three. Having that data and knowing about how many hours each month that client takes. Um, that's all been super helpful. So even though we may be old school, even though we may do some processes manually when there's technology that could do it for us, I have been thankful and we have utilized that data. So I guess that's probably it. If you're not, if you're doing it and not using it, then yes, you probably need to reevaluate your processes. Um, but if you're doing it and [00:55:00] it's working, then definitely keep your ears open of how you can continue to do it better and still have the same data to go off of.

Marcus Dillon: Yeah, that's that's great. I think once the way that we've also used that data is, you know, once we know that we have excess capacity, um, as a business owner, then you can make decisions, right, with what you do with that excess capacity. So maybe you need to go turn on a little bit more marketing, or get out and really try to evaluate price to get engagements in the door and different things like that. [00:55:30] Um, the other thing that it does is, um, I've actually I follow a few different thought leaders when it comes to M&A and succession in our space. And, you know, Alan Colton will say, you know, the most valuable firm is the one with team members and no clients. And I think that is a very real thing because I was looking at another, um, succession plan, M&A, um, kind of event, uh, within our space. And the firm had done an exit of clients right before they started [00:56:00] kind of their succession plan and M&A search. And because they had excess capacity, they were actually more valuable to the buyer because, like, nobody wants to buy a bunch of overworked and burned out employees. They want that that existing available capacity within this team. And so even those two things alone, whether you can go, whether you know, to go turn on the marketing engine and go get some new clients and not have to hire anybody because your team has now gotten that much more efficient and effective, [00:56:30] or if you're looking at kind of a succession event, M&A like that's a sales feature, your multiple could go up if you have if you have additional excess capacity, because more than likely that's going to be a benefit to the buyer.

Rachel Dillon: Yeah. Well those are awesome points. This has been a great conversation and I look forward to our next.

Marcus Dillon: All right. Thanks so much.

Rachel Dillon: Thanks for hanging with us to the end of another episode. Leave us a review with your thoughts, comments, and [00:57:00] feedback on Apple Podcasts or Spotify. Be sure to subscribe to our podcast so you don't miss any future episodes. Join us again next week for another great conversation.