Well, hello, hello. Hello ladies and gentlemen, I'm delighted to be here for the premiere episode episode number one of our new podcast called strategy and the virtual controller. My name is Damien greathead. And I am sitting in a wet saturated Sydney, Australia at the moment. But my co host Penny Breslin, I hope the weather is better in in San Diego, Penny, how are you? I'm doing fine. It's about 70 degrees and the sun is shining. And it's a beautiful day in San Diego as usual. Fantastic. So ladies and gentlemen, strategy and the virtual controller, Penny and I have been working together for 10 1215 years now on off and on on a variety of projects. And in recent weeks and months, we've been talking more and more about challenges facing the the accounting industry, the bookkeeping industry, and how we can help with our combined experiences, how we can help practitioners and business owners build better business, the title strategy and the virtual controller that comes from a book called strategy in the fat smoker by a guy called David maister. And it's a really interesting read because it was a self reflection. He was overweight, obese, he was a smoker. And he knew that to live, to live beyond 50. All of that needed to change. But despite his best efforts, he was never able to until he made quite significant changes in his daily routine. He knew what he had to do. And he knew the importance of doing it. But making those changes, making those habits on a daily basis was incredibly difficult, incredibly challenging. And that's where the idea for strategy and the virtual controller has come from, we know changes difficult. We know moving from hourly billing models to fixed pricing, we know people management is difficult. And so the idea of strategy in the virtual controller is to talk through with our listeners, different strategies to help practitioners make practical changes in their business so that they can have better work life balance, so they can better service their clients. So their team members have more fulfilling lives. And so that really is the idea of strategy in the virtual controller is for Penny and I to share our experiences of working with accountants and bookkeepers around the world, helping them set up their businesses that are more process driven, that are more technology enabled, and give listeners the confidence that they're not alone in this whole process. And so Penny, why don't I hand over to you and and you give us a little bit of your background, some of your experiences and and what you're doing with money, Penny Hi. Okay. Let's see. I started off getting into working with accountants by accident. I think it was kicking a filing cabinet that caused it. When I tried to do bookkeeping, realize that immediately that I didn't know anything about what I was doing. And at that time, I was a high school history teacher. So had chained moved out of state that I was certified in and hadn't certified a new state. So took over the bookkeeping for our family business and totally messed it up. Had a little program called QuickBooks desktop, didn't know what I was doing. got frustrated, couldn't find a manual on it, took a six week bookkeeping class at the local community college, came back sat down fixed all my mistakes by figuring out the rules of the database of that program with the rules of accounting, and bookkeeping, and then wrote all the steps I did. And we sold it to accountants to teach them how to teach their clients how to use QuickBooks. And but, oh, probably four or five years after that I was invited to India to teach Indian accountants how to use QuickBooks. I spent about 10 days training about 50 Indian accountants. This was like 2002. And, and realize that there was an opportunity because most of the clients, the accounting firms we were working with at the time, were like overwhelmed with the amount of work that they had to do. And we had already been pushing the idea of hosted solutions because we had started hosting QuickBooks in 1999. So Long story short, I ended up opening up an outsourcing company in Bangalore, I left that eventually and went to work for two years for a firm that specialized in restaurant accounting, management and out of Mumbai. And then after two years in Mumbai, went and worked for a year and pony, and then kind of decided I was going to get out of this business and go back to something I enjoyed doing, which at the time was making topical cannabis products, and selling them to dispensary medical dispensaries. And then I ran into Damien, when I was introducing a young man who was building an app, I took him to an accounting conference and ran into Damien, he said, before you leave Penny, right down everything you do to manage the insourcing of a client's work. So an outsourced accountant can do it. So I did. And the other story really took off. And, and one of the reasons for that, because when when you're doing the bookkeeping, for your business, or for your clients, and you're perhaps sitting in the room with the actual account with the client, and you can go through all of the source documents and sit there side by side and ask questions. I mean, it's a terribly inefficient process, obviously. But there's no real need for process, because you're sat there by by the client, and you're able to ask the questions that you need, and then enter the information appropriately. But But when you do outsource to, whether it's to to an accounting firm, or whether you outsource the accounting to a firm in India, it requires an enormous amount of process, doesn't it? Yes. And in the same process, and this is something, I try to tell accounts like the same thing, I'm giving you the same steps I need for you to perform my job for my team to perform their job for you efficiently and timely. And in a costly fashion. That's the same thing you need to do with your client to bring the work in. So when I'm telling you or I'm teaching you are I'm encouraging you to use certain products. It's because they're efficient. And I know they're going to speed this up and not speed it up to the point of mistakes, but speed it up to the point of clarity. You need to do the same thing you can't you, you get garbage in, you're eventually going to shove garbage out to us. And that doesn't benefit me. It doesn't benefit the people that work for me, and it doesn't benefit you. Well, it's the same thing with your clients there is there's a decision you have to make who's going to run your company, you, your clients, your employees, are the technology and or is it going to be a mutually agreed upon solution by all of you. But in any case, there always has to be one person driving this. And you know, that person is the Process Manager. And it can be you it could be somebody else. But if you don't have an organized coming in, what you're going to get coming out of that is going to be a mess. Whether you keep it in house, or you outsource it to somebody and in your country or you outsource or offshore, whatever if you don't have an organized coming in. It's always going to be a nightmare. And I think penny that that where we met was the first QuickBooks Connect, wasn't it always ran into each other again, no. Well, we met up again with where you would bought that app developer down. It was QuickBooks Connect, wasn't it? No, it wasn't QuickBooks Connect. It was actually the LA accounting and the flagship Oh my goodness. QuickBooks connect to this was like 2014. Okay, so I think QuickBooks Connect was probably maybe later that year. But I remember now is the flag show at the LA x Hilton. Free hotdogs on the on the ground floor. So hopefully a few listeners will remember the good old days of that. But it was a really interesting time happening in the accounting space in that QuickBooks was QuickBooks Online was gathering momentum zero had obviously been in the marketplace for a couple of years. But also there was this explosion of these applications, like the receipt banks, like the Zen payrolls way back then bill.com that we're looking at different Part of the bookkeeping function and and technology was it was starting to do more of the heavy lifting of these particular steps in the bookkeeping process. And that sort of that that came in around the same time that accounting firms recognize that with the right technology, the right people in the right process, they could insource the bookkeeping work from their clients, and make it a significant revenue stream and a significant profit center for the accounting firm. Well, yeah, and at the same time, these same apps were telling them, you know, we're going to take a lot of the heavy lifting out, which means you're not going to spend a lot of time doing data entry, which means really can't justify the billable hours. So you have to change the pricing model. And the pricing model was flat rate and the favorite one, and I zero with with the best ones, it's starting, this is the three package deal, the bronze, the silver, they this startup that that Well, that makes it easy to read makes it easy on the website, makes it easy to deliver the sell through, you know, every firm had to become a marketing firm. Now, every accounting firm marketing this thing. And that's all well and good. And you can you can do that all day long. But the real sweet spot on the profit comes from you having the time to have the relationship with the client, that you just sold bookkeeping for $300 a month. But you're not going to make him money by doing that, because you're going to run out of capacity before you can make profit. Right. And we're going to scalability is the word I guess I would like to use is scalability, you can't scale it. Unless you have a big outsourcing firm behind you. Okay. This is I have a client law firm in Austin. And, and we were talking about this probably two or three months ago. And he's I said, he said something and I said, Can I quote you on that? He said, You can quote me on it. Because you're the one who told me to do this four years ago, and it was one of those conferences you had set up after we wrote the book, right? And he said, apps are not the answer. The relationship and talking to the client is and that from a CPA, who, when I met him in 2016, barely knew what QuickBooks Online was had never had a QuickBooks Online client had one zero clients, and had no clue what to do with it. And he doesn't do taxes anymore. He does CFO services for a select group of clients. And I think that's a really interesting thing. Penny is the role of accountant bookkeeper CPA has has fundamentally changed in the last 10 years. And it's it's changed from the technician doing the actual work plugging the information into QuickBooks, or into the tax software, and spitting out the reports and then technically telling the client what the report says. So it's gone from that technician to very much the relationship side of things. And rather than keying data, it's all about controlling the flow of data now, isn't it and making sure the data is flowing from the right source? into the right into the wrong destination? Yes, yeah, yeah. traffic cops. Yeah, that's what that's what my team calls themselves they squid trap with a traffic police. And we're sitting there going the app that that's good. That's good that goes there that goes there. And And And is there a duplication of effort here? Or is there a duplication of data being fed in because we've got expenses, and we've got payroll, and we've got time, and we've got bank feeds and credit card feeds, and e commerce feeds and merchant accounts? And where is there any kind of crossover duplication? Or sometimes the robot didn't understand it? You know, and there's, you know, but I do believe that not only has there been a huge shift in zero lead the charge, but QuickBooks Connect really changed the attitude of bookkeepers. I mean, the first time I went there, it was like, you know, I ran into people that I'd known for years and they, they're scratching their head, they're gone. I don't get it. And the next time I went there, it was like Like, like Donald the model head model heads very much on the East Coast, outside of Boston. And you always say when somebody you know, light bulb went off, like Donna will model that sorry, little bit geographic humor there. But um, it was like an opening up of, wow, I get it, I think I can make this work. Now, that was for surprisingly small to medium sized bookkeeping firms, I saw some accounting firms, obviously, were there some CPAs were there, but they'll The bigger the firm, the less buy into this. And one of the things I do with firms that I worked with that were a little bit larger, it would be like, have you thought about just not sending you have you thought about sending your team. So like the third year of QuickBooks connecting, and the fourth year zero con, I was telling my clients, you need to send your whole team here, the people from the outside of the firm that need to go to this training, because they got to buy the Kool Aid. Because you can buy the Kool Aid all you want, you can take it back to your office. But if you don't get them involved, if you don't get them tied into this, if they don't see the dream, if they don't read, if they're not dialed into the radio station listening to what's in it for me FM, then you're not going to get this to work. And, and that's absolutely true. And I think also moving from these traditional business models, but also traditional roles. And that was one of the things that we were discussing, when we were thinking about the title of this podcast, we we wanted to move away from accounting and bookkeeping, because their functions, their tasks. And that's where this idea of controller came to mind because there is the the traditional role of the financial controller. But more and more that the accounting firms that were working with their role has moved from technician to being very much this controller flow of data flow of information. And I think that's a really important part is is sort of renaming reclassifying, I mean bookkeeping, for for all intents and purposes, bit of a misnomer at the moment or any more, because we don't use books. And it really is managing that flow of data from all of those data sources, making sure that it gets into the right spot, as you said that duplication and, and helping the traditional bookkeeper for want to a better word, helping them understand the change that they're going to go through as well. absolutely critical to success. Because we do see that a lot, don't we that the partner, the owner, they want this, they they recognize that the billing by the hour is is isn't going to pay for them because technology is doing a lot of the heavy lifting. But they're then paying their team by the hour. And so there's this disconnect through the business because if I'm sitting there as what I was a traditional bookkeeper being paid by the hour, and then all of a sudden there's technology a bill calm, a receipt bank and a gusto. We're going to come in and take over a lot of the traditional tasks that I was doing. There's not much what's in it for me in there, if anything that's taking away hours from my day, which is how I get compensated. So there's a real disconnect through the organization. Isn't there a penny? Yeah, it doesn't have to be that way. People shouldn't be afraid of the future. I know many people, you know, I grew up reading science fiction book, you know, I'm like, cut my teeth on Star Trek, you know, that kind of thing went to Star Trek conventions. You know, the whole night before Comic Con would even existed. My kids thought I was insane. But, you know, this is a book called AI. The robots are coming by a guy named Oppenheimer. And there is a chapter with that he does on this for accountants and financial people. And it's funny because he wrote this book about four years ago. And that section of what he describes, the future accounting firm is going to look like, you know, there was an article in ink magazine just last week describing this is what the future of accounting is going to look like and, and years ago used to talk about how accountants had centers of influence. You knew the local banker in your town, you knew the local insurance agent that you worked with, and you knew the local attorney, then you all kind of shared you know, that referrals, yeah, right. But you're going to add, you're going to continue those relationships. You're going to be the driver of those relationships for your small business client. You're going to be the manager, because you're a small business client. If you think the technology is running you like is a new app, it does this bubble, you can get this, you can get that you, your small business owner is getting the same thing. They're getting the same thing from their vertical trade journal virtual meetings, the whole nine yards. They're getting hammered by their clients, why don't you take this kind of payment? Why don't you do this? Why don't you do that? They're getting it to the justice as running as fast as they can, on the operational side of their business. They need somebody to hold their hand on the financial side of their business. And they need somebody who can take that financial information, and not just produce financial review papers. But tell them, tell them, you can expect this to happen if you continue to do things this way. Point in case, we have a quick time because this one was one that really speaks to what happens when you just want to do somebody's tax return. God guy last year, the his tax guy called me up and said, Would you just clean up his books, and then give them to me, and I'll do the tax returns, never seen the guy before. never even met the guy never talked to, right. didn't know anything about his business and his name did not describe it. I can guarantee you his name did not describe his business. And so we just went through and we just reconcile, bum bum bum bum bum bum. And that's all we were told to do. Just to reconcile, I sent it back to him. I said everything's reconciled everything to a tee matches. I don't know if anything's allocated correctly. Because we don't know anything about the business. You didn't tell us? Anybody goes, don't worry. I know the guy personally, we're going to sit down and all I line it all out. Great. This year comes up. And he goes Penny, could you just take him and like actually turn him into your monthly and take over his monthly? bookkeeping. So use that term, we are a debit and credit organizer. So I did it. And my team reconciled because nothing had been reconciled since the last time we did the books. But 2019 is to do his tax return. So again, ready to do is 2023 in turn, and I called him up. And I'm looking at it and there was some weird stuff in there. And I call him up. And I said, Ramon, can I just ask you kind of business email, which is something his tax accountant should have given me. And I kept on asking him, he never responded. And he goes, Well, we do baseball tournaments. And I said, thought that guy. I know who you are. Your team is amazing. I've seen them play in the little leagues. And he does little league bait. He does training, coaching and stuff a little league baseball teams, does a great job. And that explains a lot of the stuff I was seems like how much money do you spend on batting cages? What do you do all that stuff. And but the real kicker was at the end when we got his bat, his his his income. And I looked at his income compared to last year. And I went there's something there's something really odd here, because there were huge deposits that did not match he had every month, you could see the deposits coming in, he deposited money on the same two days of the month. They were always very similar in size. And there were six instances where the deposits were way too big. Right? And I just simply asked him, I said, so what's that money coming from? Did you put money into your company? Because sometimes you'll see somebody do that. And the software automatically says its income. Yeah, if somebody is not paying attention to it, they'll just go, okay, accept it as income. And he goes, No, I bought a batting machine six times over this year and, and bought it for a client and then they just reimburse me. I said, Well, let's take that off you're gonna have and he goes, Well, why what is what does that mean? And I say, Well, I'm sure that your tax accountant, the he goes, Well, we do discuss it at the end of the year. I said, Well, it's good for us to know this because now it's going to be separated out as reimbursed income. Because, you know, I knew we knew that he was buying bats and selling those but that's different. This was like a even just transfer. And so you know, it's kind of like those little things. If the accountant that was doing his tax return had wanted to, could have it taken on his climate all year long and work with them on this Those kind of little things. I mean, all it took was a few minute conversation. And now the guide like just thinks I'm like, the best thing since sliced bread, which I'm not. And that really, you know, it wouldn't. There's probably a ton more wrong with that file. But even I don't know, because I don't know, jack about counting. But that was obvious to me. And, but those are the kinds of that meeting. He said, How will you send me a contract? And how soon can I sign up with you? I had no intention to taking supply. I don't particularly want that kind of client. It's not the kind of client I want. I want firms. I want accounting firms and bookkeeping firms, CPA firms. And business away. Yeah. And Penny, I think that's absolutely right. Because you sort of talked about some articles and ink magazine and Oppenheimer and that type of stuff, which will be available on the website as well, that you can download and have a read of, but a lot of these websites talk about how accountants and bookkeepers, they're the they're the accounting and bookkeeping industry is the one most ripe for for the machines to take over. Where whereas they sort of rank the different industries and all that type of stuff and, and accountants is typically in the top five, where machine learning and artificial intelligence etc, are going to take over the the industry. But your example right there, Penny is demonstrates the transformation that the practitioners need to make. So rather than technicians, they need to be the ones looking over the books, having the conversations with the clients, flagging anomalies, that's really the new role of the accountant and bookkeeper and they're not going away. Artificial learning machine, artificial intelligence machine learning, not going to replace the accountant, the comptroller, the bookkeeper, they will replace the data entry the and and and those functional steps and tasks in the bookkeeping or accounting process. But they're not going they'll never replace the relationship of picking up the phone and saying, Ramon, what's happening in this business? Because this doesn't look right to me, that will never go away. The really exciting thing though, is I can do that with a much broader client base, have those types of relationships? Then if I was doing the the debits and credits manually, for for a much smaller number of clients, does it mean Penny if you if you're doing the books, the physical books, what 12 clients a month is pretty much how much one person can handle it? Well, if you're doing it the old fashioned way, def do it the old fashioned way. Whereas leverage technology. I mean, I've seen sole practitioners doing the monthly bookkeeping for 60 and 70. clients. Yeah, I have clients like that. I have sole practitioner accounting, bookkeeping firms, who do they outsource it to us, and they can't have that relationship because we give them the space to have the time. The client. exactly want that relationship? I just proved this. But but but you but whether you're a sole practitioner, whether you're 100 person firm, the the value that you bring to the relationship is the relationship is the beat the ability to pick up the phone and say something doesn't look right. Do you have 10 minutes to talk through this? Or what do you want to achieve out of your business? Where do you want to go? But we've got to leverage technology. We've got to identify the get the right processes in place, get the right team on board the right clients that will allow us to leverage technology because it's solid. Yes, we get to do this. Yeah, we get to do the fun part. If you find having the relationship with the client is the fun part. Not everybody does. Yeah. You have to figure that out about yourself. And I think that's probably where our next podcast will dive into. It's identifying what it is that makes you happy. What are the what are the activities you want to do? So yeah, yeah. And if you want to run a kick ass payroll company, fantastic. If you want to run a kick ass tax department, fantastic. Yes, yeah, exactly. You can, you can, if you decide that's what you want to do. Whereas there's a lot of everyone out there. Not everyone, but there's a lot of pressure out there to become this trusted advisor and pushing people into this trusted advisor type role. I don't quite know what trusted advisors and maybe that's a whole nother podcast that we can talk about what is advisory. But yes, that's definitely I think I you asked me that. And I said, Well, when I do it, definitely Pull on it just booked financial and accounting firms, there are 20 different definitions. Yeah. You know, and the whole premise of this podcast is to sort of look at all the strategies to grow your practice are out there to grow your business, they're out there. But it's about identifying who you are and where you want to take your business. And then the practical steps to get you there. And so that really is the premise of this podcast is not to push you into a push a round peg into a square hole. No, that's not right, a square peg into a round hole, not to try and force you down a particular path. But instead to give you the confidence to say, this is what I want my business to be. And this, these are the practical steps that I'm going to take to get there and and across the experiences a penny and I and then we'll bring special guests in to share their experiences as well. We'll share with you how firms around the country and around the world. Building kickoffs, payroll, businesses, building robust tax departments, building, virtual controller and part time CFO businesses. And we'll also share with you some horror stories along the way. And the lessons that we've learned. So Penny, I'm really excited to that we've got our first episode under under our belt, or we're about to have our first episode under under our belt, thank you very much for giving me the kick up the ass to to get this off the ground. And I'm really excited that we can use this podcast to share our experiences that we that we've gained from working together across the last 1015 years. I just hope it's valuable to people. We do we have had quite a bit of variance on experiences and countries in on sizes of firms. So it's in dealing with apps. Yeah, no, we both dealt with them. right from the get go. And, you know, it's it's not the end all of everything. It's not the beginning of everything. It's just another tool in the toolbox. Yeah, absolutely. And I, we won't be the ones giving you the latest updates and the latest news on the apps, head over to David Leary, and Blake Oliver, their accounting, cloud accounting podcast, they're really great in terms of keeping keeping you up to date with what's happening on the app space. But as penny Said, the app is is a tool, but it's it's every practitioner, Every business has the same access to that app. So it's how you implement it with your clients and with your team that is going to to be what success or how we can base success. Well, let's first define what we want our success to be. Mine wasn't taking that client. Yeah, you have to say no. So next episode on strategy in the virtual controller, we're going to talk about defining what it is you want, what it is that you don't want, and why that's important to laying the foundation to to your successful business. So Penny really excited. Ladies and gentlemen, sa t vc.co is the website for links to the articles for sign up to the newsletter etc. So that's s a TV see.co. We look forward to seeing you on the next episode of strategy in the virtual controller. Bye