Outsourcing Financial Operations of Your Business with Josh Zweig | E021
Getting the right support in the evolution of your business.
In this episode of Financial Planning for Canadian Business Owners, Jason Pereira, award-winning financial planner, university lecturer, writer, talks with Josh Zweig, CEO and Partner at LiveCA. Josh Zweig talks about the benefits of outsourcing various financial functions and work to a professional accounting firm that can do it on your behalf, supporting ongoing engagement with your clients.
Episode Highlights:
● 01:10 – Josh Zweig explains what LiveCA does.
● 01:33 – Where is LiveCA’s physical location?
● 02:56 – How does their business model enable clients with their offerings?
● 05:05 – What is the best practice for efficiency?
● 09:07 – How often does LiveCA reengineer a client’s system?
● 12:13 – What is the first thing someone should contemplate when looking to potential outsource?
● 18:05 – Set up your system to scale.
● 21:09 – How does the pay-per-use business model change the relationship with consumers?
● 25:05 – Ask customers about their personal lives to be able to advise them better for needs that they may have never thought of.
● 26:53 – What should you look for in an outsource firm?
● 30:55 – How has LIveCA been able to help businesses during COVID-19?
3 Key Points
1. LiveCA has an account’s payable team, a payroll team, a bookkeeping team, and all of those teams work with their tech teams and their client service teams.
2. Outsourcing should serve as being a fraction of a full-time person.
3. LiveCA takes into account how fast a business is growing and they lay processes that are adaptable to even when that business hires more people.
Tweetable Quotes:
● “LiveCA is Canada’s largest online CPA firm and what we do is a combination of the tax and accounting that you would expect a typical CPA to do and we combine that with a knowledge of technology and financial workflow.” – Josh Zweig
● “Scoping is basically us going, can we help you? If so, here is what help looks like and finally, here is how much it costs.” – Josh Zweig
● “I would look at the outsourcing process as two-fold. One is, how are you doing the process? And two, who is doing it?” – Josh Zweig
Resources Mentioned:
● Facebook – Jason Pereira’s Facebook
● LinkedIn – Jason Pereira’s LinkedIn
● FintechImpact.co – Website for Fintech Impact
● jasonpereira.ca – Jason Pereira Website
● Linkedin – Josh Zwaig
● liveca.ca – Website for LiveCA
● josh@liveca.ca – Josh Zwaig Email
Full Transcript:
Speaker 1: Welcome to the Financial Planning for Canadian Business Owners podcast. You will hear about industry insights with award-winning financial planner and entrepreneur, Jason Pereira. Through the interviews with different experts, with their stories and advice, you will learn how you can navigate the challenges of being an entrepreneur, plan for success, and make the most of your business and life. Now your host, Jason Pereira.
Jason Pereira: Welcome to Financial Planning for Canadian Business Owners. Before we get started, just a reminder to sign up for my newsletter at jasonpereira.ca. Now on to today's show.
Jason Pereira: Today's show I have Josh Zweig, CEO and Partner at LiveCA. I brought Josh on the show to specifically talk about the benefits of outsourcing various financial functions and controller work to a professional accounting firm that can do it on your behalf, and really supports ongoing engagement with their clients. With that, here's my interview with Josh.
Jason Pereira: Hello, Josh.
Josh Zweig: Hello, Jason.
Jason Pereira: Thanks for taking the time.
Josh Zweig: Thanks for inviting me.
Jason Pereira: So Josh Zweig, CEO and Partner at LiveCA. Tell us a little bit about LiveCA before we jump into why I brought you on.
Josh Zweig: LiveCA is Canada's largest online CPA firm. What we do is a combination of the tax and accounting that you expect a typical CPA to do. We combine that with a knowledge of technology, let's call it financial workflow.
Jason Pereira: Excellent. So before we jump in, I want to make one other comment about something you guys do. Tell us about your physical location.
Josh Zweig: Well, the physical location of our firm, it depends how you look at it. I mean, certainly we are Ontario based firm, and licensed in Ontario, and across other provinces in Canada. I, however, happen to be in Buenos Aires.
Jason Pereira: Yeah, I mean, you guys have been kind of at the forefront of the remote work wave, well in advance of any kind of COVID crisis, and it occurs to me, I should probably get your partner on to talk about enabling that in business, given a lot of small businesses are probably looking for help there. But the real reason I brought you on, in particular, was to talk a little bit about your services, but also some best practices around them.
Jason Pereira: Really, what you guys do is, I kind of look at you guys as the outsource bookkeeper, controller, accountant of choice for a lot of a lot of businesses. You really do take over those functions, holistically, for businesses. There's this kind of, as we were discussing before we started, when you start off and you're the sole practitioner, maybe not that big of a deal to keep up with this stuff. Then later on, if you get to a certain scale, it makes a lot of sense to insource that stuff, have an employee full-time that handles all that because it's a big enough job.
Jason Pereira: But there's this huge chasm in between where you maybe have gone beyond the capabilities or it's just too much of a distraction and it's not a big enough job to hire a full-time staff member. So let's talk about how you enable that, how your business model generally enables the various functions that you do, and how you can basically ... When that time is to seek out that help and when the time is to maybe contemplate in-housing, that help.
Josh Zweig: Sure. Well, you're basically bringing up what is the life cycle of what's called the financial workflow of a business. So if you're a new business and you're a team one or two, you're likely wearing a whole bunch of hats, you are the CEO, but you're also the accounts receivable associate, the accounts payable specialist, the bookkeeper, CFO, et cetera.
Josh Zweig: As your business continues to grow, I think the biggest question is, "Well, what tasks can you begin to delegate to others?" Whether that's someone on your current team or that someone else. I think the answer that question is fairly complex because it depends on the nature of your business. So for example, if you're the type of business that has a tremendous amount of contractors or because you're issuing a lot of commissions, maybe the accounts payable was a very admin heavy function, and maybe it makes sense to actually hire maybe a virtual assistant or someone internal that can help with other admin functions as well. On the other hand, if you're a SAS business and most of your expenses are in credit cards, maybe your financial workflow is fairly simple, so you can delay the process of any kind of outsource function or even delegation, right? So I think it depends on the nature of your business.
Josh Zweig: But in short, in terms of our business model, we have different teams for the different functions. So we have an accounts payable team that does that AP function. A payroll team, a bookkeeping team, and all those teams work with our tech teams and our client service teams. The idea is that through combining the two, if you think of a client service team is let's say your controller, and if you, as a business owner need something, you might go down to your controller and say, "Please take care of X, Y, and Z," be it the receivable, the payable, et cetera, and that controller will be in touch with the various teams to make that thing happen.
Jason Pereira: So, as you mentioned, the life cycle, this makes a lot of sense because when you start listening to business coaches about what it is that you should be doing in a business, as you mature, there's a big focus on things like automation, delegation, and outsourcing. I think, especially when you're outsourcing, you don't have to worry about filling the full docket of that employee's time for the full week, right? You don't have to worry ... You're basically getting a fractional piece of that person's time, as opposed to a full-time employee, which is more cost effective and can help you scale faster than say, if you had to take on the full salary. So much more effective in that regard. So I wanted to talk about a couple of best practices surrounding the different areas you guys cover, any area you want to discuss first and you feel you can add a lot of value there?
Josh Zweig: Well, first I'd like to discuss the concept of what it actually means to outsource, and I think you hit the nail on the head when you mentioned it, it's got to be a fraction, right? It's a fraction of a full-time person. So I think the first area of best practice I would highlight is the area of efficiency. So what I mean is let's take the AP function, just as an example because we talked about it earlier and let's say, the way that you're doing AP is a contractor is filling out a paper time sheet, bringing it to your office, you get their time sheet approved, and then you go ahead and write a check, right? And you gave it to that person. So let's say that's your process, and you go and say, "I want someone else to do this."
Josh Zweig: Well, if you want someone to do the exact same process, you really need a body. So maybe you're going to a temp agency to actually get a body into your office because frankly, to do anything different there, as far as outsourcing, it would be very difficult. So the first question I'd ask that person is, what is the opportunity to actually revisit that process? How open are you to change? And even though it almost sounds obvious, particularly in the times that we're in today, where a lot of us were working remotely, I don't think it is necessarily that obvious for many businesses.
Josh Zweig: So for example, if you're in construction, it's quite possible that some of the contractors that you're dealing with may not have the bank account and they may be relying on that check for a payday loan. So maybe automating your AP process, while it sounds great, isn't something that's actually practical because of the nature of your work or the people that you're working with. Right? So again, the first question I'd say is, what opportunity is there to streamline or make that particular function more efficient?
Jason Pereira: So in your process, do you go in to start off and basically say, "Okay, we've looked at how your operations flow and we believe we can take over X, Y, or Z, or if you modify the approach, we can do that?" And how often, I would say, with that result, is that result and you guys actually taking that on versus saying, "Look, I think this is a little bit beyond the scope of what we can actually offer."
Josh Zweig: So maybe I would talk about is our process for scoping a new entity and scoping is basically us going, "Can we help you? If so, here's what help looks like. Finally here's how much it costs." So in order to do that, the first step is, let's call it an assessment call, and usually I take all of that call. Then we walk through the financial workflow of that entity. So for example, how are they charging their customers? Is it on a subscription basis that's recurring that could be automated? Is it an invoice that has to be prepared based on a time sheet? Is it a product that goes out that can be itemized? Or is it somebody that has to assemble something and put together an invoice manually? So there's questions around that.
Josh Zweig: What kind of expenses do they have? So what payroll system are you using? Do they have inventory? Are they using an inventory system, right? So that's the first call. Then they document all that data and send it to our tech team. So our tech team, their accountants with developer backgrounds, and their job is to look at the data and say, "Well, based on the way this guy is doing the business, here are the apps that we think that they should use, or here perhaps more appropriately, are the new processes that we recommend in this particular situation." If it looks like we can actually help that particular entity, that these processes will work, then we move to that pricing function where we then price out the different functions, be it accounts payable, or payroll, et cetera, based on what we think would actually help the business.
Jason Pereira: So, I mean, at the same time, there's an incredible amount of value there because more often than not processes just evolve out of necessity and don't necessarily get changed as long as they work. Unfortunately, I've met all too many entrepreneurs who basically say, "Okay, every Friday I'm sending out the invoices," to which I respond, "You have a staff of 10 people. Why are you sending out the invoices?" And sometimes it's a conceptual giving up of control, or a comfort level that they just don't ... they want to know how much money is potentially coming in every week, and they just haven't crossed the bridge of say, "Well, I can still satisfy that desire by giving it to someone else or having something else done and simultaneously just having that information feed back to me," and just re-engineering that.
Jason Pereira: So I'm curious, how much of a business, when you go into it, do you say you kind of re-engineer the system? Like how many times do you go in and say, "Okay, these systems are well and in place and they work and we can just overlay on top of it," and how frequently do you go in and kind of almost have to reengineer the widget?
Josh Zweig: So I would look at the outsourcing process as twofold. One is, how are you doing the process? And two, who is doing it? So the who is actually quite simple, meaning once you have the process down pat, and you go, "Yeah, this is probably the most efficient way we could do things," then it just becomes who's taking responsibility. So for example, if we're talking payroll, do you have payroll expertise on your team? Do you have someone with that availability or capacity to run this? Or is that something that makes more sense to outsource because in order to do this, it actually means you have to bring on another body or reduce some of the more important things that you might be doing, right? So it becomes an order of priorities. So that's the who question.
Josh Zweig: The process question, which is the how, that's more complicated. I'd say the majority of the time that we're walking into a business, we are making some suggestion of an improvement. So you say the system and the system, I think, can refer to an actual accounting system. So maybe you are switching from a desktop accounting system to an online system. I think more often than not, we're actually dealing with a process change. So system, in that case I'd use as far as methodology, and just when we took the example of the accounts payable checks, maybe you're switching from a system whereby you're not doing checks anymore but you're doing direct deposit.
Jason Pereira: Yeah. So just basically ... and how much of that is just, would you say, people just haven't questioned or don't understand the other options out there versus just getting stuck in their own ways? I mean, I find when I talk to other practices or businesses about, "Hey, have you contemplated doing it this way?" It's just, "Hey, we've always done it that way. We never looked, we didn't realize this technology existed." Are some just kind of educational versus operational?
Josh Zweig: It's interesting times that we're living in because 10 years ago to do any of this stuff, and there was some of this stuff available, it was really difficult to find out. To start an online business and navigate whether it's tax rules or what apps you needed was an enormous amount of information that you needed that wasn't readily available. Now, fast forward today, I actually think the market is over saturated, meaning it's almost too easy to figure out what you need to start and because of that, you might actually be missing a lot of the nuances. So it's actually not that easy, depending on the nature of your business, to figure out exactly what apps to use because you might go, "Oh, well, QuickBooks online does everything."
Josh Zweig: Well, it could, but if you have a need for a specific inventory system, there are a hundred online inventory systems to choose from and all of them pretty much look the same if you do a Google search. So what are you supposed to do? Payment providers. There's a lot of online payment providers that handle, whether it's credit card processing. or whether it's actual accounts payable payments. So which one's better? So because of the amount, the overload of information.
Josh Zweig: I actually think we're almost on the complete other side of the spectrum, where it would be quite helpful for someone to have worked with these particular apps to say, "Look, I can tell you that the user experience and this particular payer app is much better than this one for the following reasons if you're this type of business." Frankly, I don't think that information is that readily available online, to that level of subtleties. So that's why, yes, this is a matter of their education, but not necessarily education as far as there are options out there, but which particular option is right for you.
Jason Pereira: So it's kind of gone from the paradigm of, "We don't know it exists," to, "We know it exists, but oh my God, there's 12 vendors and I have no idea where to go." That's where, yeah, the experience ... It's the old saying about how no battle plan survives first encounter with the enemy. You may think that this app is going to work perfectly well, but until you actually start applying it to your business, you don't really know.
Jason Pereira: I think someone like yourself has probably seen a gamut of different businesses and knows different vendors and what works where is incredibly invaluable. I mean, I get the same kind of inquiries all the time about softwares in our industry, and just had a conversation yesterday about financial planning software ,and the first question is always, "What is your client base? How are you servicing them? What are you doing?" Because it's not the software that's going to solve your problem, it's the proper software applied to the proper situation.
Josh Zweig: Yeah. I agree with that.
Jason Pereira: Let's talk about, we're good to move on to best practices, when contemplating, what's the first thing someone should contemplate when looking to potentially outsource? Like what are the key variables or factors that they should think about and then what should be involved in the process of finding the proper people to outsource to?
Josh Zweig: Okay, so we've already covered the first, let's call, pillar of this, which is, let's call it open to change, right? You need the right mindset to go through the outsourcing process and you need to succumb to the fact that it's likely that you're going to have to make some changes, whether it maybe might be minor, but in your business. So I'd say that's the first best practice is actually being open to change.
Josh Zweig: The second piece of this, I think, is more of identifying what you're looking for. I think it's no different than shopping for any other product or you have different ranges of quality, right? So if you're car shopping and I go, "Oh, I need a vehicle." Well, "Do you need an SUV? Do you need a station wagon? Do you need a used car, a new car?" The answer to that question, there is an objective answer, like, "Everyone needs a new SUV." It has a lot to do with the type of person you are.
Josh Zweig: I argue the same about your business. So are you the type of business that
requires, let's say, unlimited support and you don't want to pay per use, are you the type of business that has a lot of complexity? Are you a larger business? Are you a fast growing business? And you need a firm that can accommodate fast paced change? So again, I think, I think the second piece of this is identifying what kind of consumer are you? What is important to you as a consumer because that will dictate what direction you take in terms of sourcing your outsource provider.
Jason Pereira: Good. So like you said, that's the first couple of pillars. What else? Once they actually start that pursuit and finding the right relationship, what does that look like?
Josh Zweig: So once you identify that you're, let's say looking for, in our case, I mean, we're not a cheap provider. So we are one of the more expensive providers in Canada, but we have a well-defined ideal customer. So in our case to bring more of a practical example. In our case, we typically work with customers that have at least a million dollars of revenue or more, our average customer is probably maybe between three and 5 million and growing. They probably have a head count of maybe at least five people, not to say we don't work with people less, but it gives us you a sense of, there is a little bit of complexity required in this kind of business.
Josh Zweig: So in terms of how to select a provider and best practices, I think the first thing is actually walking through that firm's discovery process. So with us, for example, if you're a business and you don't fall into our ideal category, we'll be up front with you and say, "Look, this is what our price is. Our price are basically fixed, whether you're a hundred thousand business sole proprietor or a million dollar business, it's going to be the same. So here are some other options for you to check out," for example.
Josh Zweig: So going back to this, if you do go through our process, or discovery process, I think you get a pretty good sense of the confidence that you have in that particular firm. So I would challenge anybody that's looking for an outsource provider to actually walk through that firm's discovery process and then ask yourself, "Does this firm have a process where they know what kind of customer I am? Do they have a way of assessing who I am?" Because if they don't, and this is unfortunately all too common in industry where you go to a provider or you say, "I want the following services," and they go, "Cool. It costs X."
Josh Zweig: I think how could you possibly select the partner based on price alone? Particularly if you're looking for that person to, in some cases, replace a current body, right? So this is not a product that you don't have. This is no different, I think, than the hiring process of an employee. Imagine an interview process went, "Hey, how much do you cost? Oh, you're the lowest salary. Okay, cool. You're hired." To me, that's the equivalent of basing an outsource provider decision on price. So I think the idea is go through their discovery process and almost consider it like an interview process of a new candidate that you hire full- time.
Jason Pereira: Yeah. I mean, it's interesting because I think there's a couple of use of accountancy and financial support that you provide. One is, it's a necessary evil and to get it done because we had to file taxes, right? So oftentimes when you perceive it that way, it becomes commoditized in your mind and therefore it becomes a just get it done, low value type thing. Although I will say anyone who's got that mindset listening to this podcast really, really needs to change their mindset because I've seen a lot of things screwed up over the years by the low cost accountant, or the one that they just outgrew and did not move beyond.
Jason Pereira: The second piece, I think speaks in general towards comprehension of value. Anyone who basically says, "It's going to cost X," without fully deep diving into your business and fully understanding what it is that they're doing, it's a bit ... Here's the problem, same thing in my business. People don't turn away business enough, right? They don't basically worry enough about client fit. They just vacuum up whoever they can because when you start off, you vacuum up whatever business you can to stay alive, but sometimes you just never break out of that mindset.
Jason Pereira: The last part is, a lot of times a lot of what people come to the counseling world for, in general, is they think that, "Oh, you guys are going to come up with all this crazy tax stuff to save me a bunch of money." Well there's only so many things that can be done within the tax code, and that's not the case, right? Where I think where your value proposition is different, and one of the reasons why I brought you on, was that you're more about enabling the day to day operations of the business, which is something that can be incredibly powerful and liberating versus just the entire general conception of, "File my taxes and make me pay less."
Josh Zweig: Yeah, no, I agree with that. So if you want to piggyback onto another best practice there, which occurred to me as you were speaking, I would call it, set up the system to scale. Now I go back to that second point that we talked about, which is what kind of consumer you are, but let's assume you are the type of business that is planning on growing. So I'd ask you, "How long is it going to take for the system to break with this?" So if you go through the pay per use model and let's go back to our example with that person that wrote checks as the contractors walked in with their particular time sheet. If you're five contractors, okay, fine. If you're a hundred, well, that system is going to break. So I'd ask you, "How long until that actually breaks?"
Josh Zweig: So when we work with companies, we try to get a sense of how fast they're growing. Then we try to lay out processes that say, "Hey, whether you're five employees or 50 employees, this will actually be the same." I can tell you right now, this system will break maybe once you're 150 employees, at which point you should probably hire a full-time payroll person. Right? So I think part of another best practice is getting a deep understanding of when does this system break? At which point you then have to make full-time hires for some of these functions? At which point you have to change the processes?
Josh Zweig: So if you're the type of person ... and I don't necessarily think that everyone needs to take accounting super seriously, there are businesses that maybe they only do need to do it once a year, and don't worry about it, and you've got few and far between, right? But I think if you have a growing business, you actually do need to take this seriously because kind of the point is that mentality will break very quickly.
Jason Pereira: While I generally agree with the statement that maybe everybody doesn't need to do that, I think that the piece missing there is the experience art of it. All too often, I hear the same experience from a lot of people dissatisfied with their accounts, which is, end of the year, they take him everything and the accountant turns around, says, "Oh, here's what you owe the government. Here's my bill."
Jason Pereira: There's no ... No one likes a shock, right? No one likes to ... At the end of the year, we can debate whether or not you should give the government an interest free loan or not, but frankly, no one loves the entire, "You owe this five figure, six figure amount, and by the way, here's the bill for it." It's just a broken experience. So I would say that at least some level of basic engagement or understanding is required on all relationships.
Jason Pereira: I want to come back to what you said specifically about pay use versus kind of ongoing relationship. I find that pay per use and I get approached by this in my business on occasion too. To me, that entire model, just the transactional nature of it, just changes the dynamic of a relationship to no end, right? Because then every time someone utilizes your services, it becomes a cost benefit analysis, as opposed to almost a sunk cost analysis, right?
Jason Pereira: "I've already paid for this. I can utilize his services. I'm not afraid. I'm not going to reach out for something pointless because I'm too busy for pointless stuff. I just need to get this thing taken care of," versus, "If I do this, they're going to build the X. Is it really worth it?" And then maybe they fall on the wrong side of that decision. I'm curious because you guys were probably one of the first companies I saw taking on kind of a retainer based, like ongoing engagement model. How do you feel that's changed the relationship in general with your customers versus the traditional model?
Josh Zweig: Well I'm quite opinionated about this subject. I would argue that you can't, I would stand behind and say, "You actually can't have a true advisory relationship with a customer if you're pay per use." The reason is, is because of the way in the incentive system work. Incentive in a pay per use system is, "Don't use" is, "Use only when needed." Unfortunately, I mean, having worked at a traditional firm prior to a LiveCA, all too often, the partners at the firm would get upset and go, "Oh, I can't believe the customer did X. That was so stupid, if only they came to me." Well of course, they didn't come to you, you charge 400 bucks an hour.
Jason Pereira: Yeah, they're disincentivized from the beginning.
Josh Zweig: So why would they call you to ask question when they think they have the answer themselves? Because if they have to do the cost benefit, "Well, a phone call to so-and-so is about 400 bucks. This thing that I'm doing, it's not that important. So I'm just going to go ahead and do it." I think it's almost impossible to get out of that in the pay per use model because, as you said, it forces you to make a buying decision every time you have a question. I think that true advisory actually comes from not reactive advisory, meaning because a customer reached out to you, but it's proactive advisory. It's very hard to do proactive advisory, and say, "Hey, I'm going to call you, and by the way, I'm charging you for this phone call." Not too many people are going to be cool with that.
Jason Pereira: Yeah. I mean, copy and paste everything you said for your industry and apply it to mine. I think that there's again, whereas the pay per use model disincentivizes interaction with the professional, some sort of ongoing comp model, whether it be like retainer-based, or on monthly fee, or what I have going with AUM, the reality is, is that it changes also the incentive of the vendor because we are compensated on a ... We know what we're going to bring in from that client. We need to profit from that client. We have to do it through one of a couple ways. We have to deliver that service effectively in order to be profitable. But beyond that, we can't just under service them because then the experience breaks and then we lose the revenue, right?
Jason Pereira: So it's a dual incentive. It basically pushes us to be efficient, but simultaneously focuses us on client experience. That's where the engagement point and the advisory piece comes from, is that we have to continuously find ways to deliver value to clients. Otherwise, they're just going to leave, right? Because they're going to do the math, maybe they're not doing the math per transaction, but they're going to do it at least once a year. So I think that that sort of ... I agree with you, any kind of relationship with an advisor that is core to your business. I would like to see more lawyers adopt the same model as well, should be preferably an ongoing billing as opposed to a one-off or transactional based.
Josh Zweig: Well, I agree with that. Going back to, you mentioned transactional versus developing a deeper relationship. I mean, if you look at ourselves as human beings, it's very difficult to develop a relationship with somebody when 100% of the time you're talking about with taxes or legal or financial, et cetera, and not too many people want to be billed, I don't know, 10 bucks, to ask how their kids were.
Jason Pereira: Nailed it. Absolutely. Yeah. I mean, and the thing is, is that maybe someone says, "Well, yeah, I don't really need you to ask me how my kids were." Well, maybe you do because maybe God forbid the kid was disabled, came into some sort of struggle or maybe just even the existence of them creates some sort of opportunity for planning around them, to support that child, or as a tax planning opportunity. Like the more we get to know people's people's lives, the more we uncover the opportunities that we didn't know existed, as advisors.
Jason Pereira: It's funny, I often say to clients like, "Look, most of the calls I'm going to have with you are going to be about your personal life because you don't even know the things I can help ... Even if I try to explain everything and do to help you, I don't necessarily know everything about your life until you tell me." Then when you tell me, it's like, "Oh, I can help you with that." Typically the response is, "I didn't know that," right? Because it's really hard to create a checklist of every possible opportunity that exists to help someone in our two fields, right? Only through those interactions, we find other opportunities.
Josh Zweig: Sure, what's the Henry Ford quote, right? Which is, "If I ask customers what they want, it would be a faster horse," and if you're only serving customers when they ask you a question, you don't have the opportunity to dig a bit deeper. Like you said, whether it's about their family life, personal life, whatever it might be, to actually uncover something that they might not have thought of.
Jason Pereira: Exactly. Any kind of advisory relationship type business, that's just paramount. Right? You absolutely need to understand as much about that business as possible. I mean, it's a challenge. So we got sidetracked there, but it's a valuable one because I think that conversation is going to resonate with a lot of people who listen to this podcast who are in more knowledge or advisory or support based businesses because what we just basically talked about applies across the board almost.
Jason Pereira: So beyond that, so we've covered off kind of best practices of when to seek out source consultancy and whatnot, and how to basically do that. We also talked about the value of ongoing engagement in relationships. What else would you like to talk about? Like, I mean, there's any number of ways we can go with this, everything from best practices on vendors for technology or billing? Like what do you think is the most resonant thing you can basically bring to the table here?
Josh Zweig: Well, so I guess I'd argue ... I mean, it depends on this call, what you think people would find interesting because going back to sort of the idea of outsourced bookkeeping or outsourced accounting, you can get quite technical, which is, how many touch points do you think is valuable for a business? Do they need a weekly bookkeeping, daily bookkeeping, monthly, et cetera. So maybe a question is, where should you start? Right? Like what should you look for when you're looking at an outsource firm?
Jason Pereira: So let's say that people have heard this conversation between us and they're like, "You know what? This is me. I need to look to outsource, and get these efficiencies." What are the first steps they should undertake when looking for an outsource consultant or bookkeeper such as yourself? Sorry, you guys do a lot of stuff. So outsource support. Let's talk about that.
Josh Zweig: I think there's an important piece around change management, right? Which is if you're starting to do this, and hopefully you're starting to do this when you're not too big. So meaning you're not 50 people and the CEO is doing this stuff and he really wants to get it off his plate. Maybe you're doing this when you're a growing organization of maybe four or five people, and you're thinking about this because you know that if you spend more time doing the thing that's the core competency to your business, then obviously, you can continue to grow and generate more income, et cetera. Right?
Josh Zweig: So let's say you're doing it at that stage, which I think is the more appropriate stage, if possible. So then I think it becomes change management. Meaning, if you're the type of person, which is often the case when people look at outsource, that you've been on top of this for two years. As the CEO, you've been doing your books every single day, you look at these every single day, you're doing your cashflow planning, you're holding onto bills and deciding which one to pay. You're not going to get that from an outsource firm because what you really just described as a full-time relationship and hey, if that's what you want, and you want to spend, I don't know, $80,000 on a full-time controller. Cool.
Josh Zweig: But, if you're looking to delegate this function, you got to be prepared that it's going to look different than when you did it yourself. It's not just going to look different because someone else is doing it, it's going to look different because you only have a fraction of a person, right? Which is basically the definition of outsourcing versus a full-time. So that means you have to adjust your expectations.
Josh Zweig: So a lot of times when we deal with that type of business that has been doing it daily or weekly, we try to reset the expectations and going, "Well, what are you trying to achieve here?" And I think when, when people are pushed, they kind of realize that this is just something they've been doing in a certain ... they've been used to doing things a certain way, but it actually, isn't making a massive impact.
Josh Zweig: So when I ask people, "Why do you need daily bookkeeping?" "Well, I just really like it." "What kind of information? What new information are you gathering from doing?" Like I said, in some cases, it's just the neurosis almost like during the times of COVID, when people check the news every four hours, like as if something else magically is going to appear. So we encourage people to say, "Hey, let's first start with a monthly close, let's get your books closed by the month end. Let's get your AP into a 15 day cycle, not a daily cycle. Let's get your payroll into that 15 day cycle," if you're paying weekly or whatever the case is, and let's talk about what impact that might have, what information, what decisions are you going to base on your books?
Josh Zweig: I would argue that the majority of cases, people start to relax a bit and they go, "Oh, I guess I don't really need this every single day. I guess I can ..." It begins to take up the less mental space and all of a sudden they're comfortable with these monthly discussions where they can actually let the accounting running in the background, and then dedicate some more focused time to actually make some of those accounting decisions or business decisions based on the numbers.
Jason Pereira: Yeah. What you described as almost my personal journey to a T. We've been dealing with this for a while, but literally, yeah, I did all the bookkeeping on a daily basis, all this stuff on a daily basis. When you start off, it makes sense, right? Because you're more concerned about cash flows and whatever else, but sooner or later, you get to a point where you're not worried about having it down to the dollar on a daily basis. That just becomes an exercise in futility. I agree with you, it's, "What is it you're really trying to accomplish?" And more often than not doing it daily, unless a you're really, really, really tight cashflow business, adds very little value.
Jason Pereira: So I, having gone through that kind of a progression myself, and the progression of slowly handing more and more over time, realize that those little bits of time were really starting to add up and we're adding very little value to the business or better off done by someone else. So there's an endorsement of the personal experience that I actually went down to let go of those reins.
Jason Pereira: So before we wrap up, I want to talk about, in particular, how your experience and the businesses experience in the age of COVID, particularly, I mean, you specifically deal with small to medium size enterprises in general who've been very hardly hit by this. How have you been able to add value and basically support them in this relationship throughout this?
Josh Zweig: Okay, well, let's separate that question into two components. The first component is what measures help businesses? So the what, and then how. Meaning how do we actually provide that what during this time? So the what, in March, when the shock hit and businesses began to close and everyone starts to freak out as to what do we do?
Josh Zweig: The first thing that we started doing with customers, rather than sending a generic COVID email that we got from, I don't know, maybe 50 vendors of, "Hey, it's COVID as you heard. "So we decided we don't want to do that. Instead, we want to reach out individually and provide something of value. The first thing that we could do a value was cashflow planning. So we created a cashflow template that could be customized for each individual business. Basically, each manager would reach out to the customer and go, "All right, let's hop on a call and let's talk through what could the next couple of weeks look like? Do you have enough cash? Do you have to do layoffs and let's make some decisions quick?" So that was the first what.
Josh Zweig: The second what, and this is a big group of stuff, are all the benefits, right? So the benefits of the Canadian emergency wage subsidy, which involves a few complex calculations to be able to provide that, which is a big benefit if you can get it. There's the CERB, which is the 2K a month, if someone needs to step away from the business to take care of the kids, or is sick, or what have you. There's this small business loan and there's a whole host of other benefits, right? Each of these benefits, it's actually not that simple to understand. So a big part of the COVID support from an accounting firm is helping businesses understanding what the benefits are, if they're eligible and then actually going ahead and applying for those benefits. Right? So, so those are the big what.
Josh Zweig: The how I think ties nicely into what we talked about earlier, which is the idea of a retainer, right? And I think the whole idea of a retainer, and I think talk about what a customer should try to get past, is, "Well I didn't use you that much this month," and therefore I want to pay less. Well, "Hey, go pay for use." But all of a sudden, here we are in COVID and we as a cyclical business, generally, where we're chatting to our customers, maybe every once every quarter, all of a sudden 400 customers want to talk to us at once, instantly.
Josh Zweig: So I think the beauty of the retainer model from a customer perspective is that all of those things, like I mentioned, the wage subsidy and all these other benefits that I know other accounting firms were just scrambling to figure out how they bill for these, and imagine if you're a business that's about to lay off 50% of your staff and your accounting firm says, "I'll help you, but it's going to cost you five grand." You're going to go, probably, "Insert expletive here." Whereas we're going, I think this is falls under the support that people are paying us for, and it just happens to be that they need us more than ever right now.
Josh Zweig: So we decided, during COVID, to shower our customers with more support than ever. I think because of that, a lot of customers decided to keep our retainer, despite having to make some tough decisions in their business. So us jumping in and saying, "We're going to support you during this time, apply for all these benefits, doing the cash flow planning. You don't need to pay us anymore, this is part and parcel of the support to you," I think is a tremendous benefit for a customer, and then is more indicative of what an advisor relationship should look like.
Jason Pereira: Yeah. I mean the entire transactional nature of the norm, right? It's being a penny wise and pound foolish, right? If you're like, "Well, I only want to pay for what I use." Well, that's fine. But the difference is, is that in cases like this, I mean, we don't look at the retainer as, "Yeah. Some of it's for months where, you know what? I didn't get full value out of it." The rest of it is almost think of it like an insurance premium, right? When poop hits the fan, that is a disproportionate amount of work that if bill four would basically again, be like, "Oh my God, why do I ... I got five grand, 10 grand," whatever it is, now, at the worst possible moment.
Jason Pereira: It also, again, like I said earlier, the ongoing compensation model. It changes the dynamic of how you think of your business. You guys are out there saying, "We need to add as much value now as possible because this is when they really need us." Whereas everybody else is again, "How do we bill for this?" Right? Which always comes down to, "How do we make money off of this? And what is the place that they will accept for it?" And at the worst, literally the worst possible time, not great to be sending out those bills.
Jason Pereira: So I think we've really hammered on a point that I really didn't think we'd get to, which is again, the method of compensation and the impact on incentives and how that can drive better experiences and almost ... I might need to rename the podcast episode because of that. But I agree with you fully. So glad to see you've done that, and frankly, I'm sure that the clients you have are forever grateful for it, and that will speak nothing but positive reviews of your people because of it. I don't think you guys are ever going to lose business because of lack of service that's for sure. So before we wrap up, where can people find you and learn more about what it is you guys do?
Josh Zweig: So people can go to our website. It's www.liveca.ca. So L-I-V-E-C-A.ca. Not to be confused with live.ca, which is Microsoft. You'd be surprised how many support questions we get for people's email, or you can email me at josh@liveca.ca.
Jason Pereira: The Microsoft thing I never thought about. Anyway, Josh, thank you very much for your time.
Josh Zweig: Thank you Jason.
Jason Pereira: So that was my interview with Josh Zweig at LiveCA. I hope you enjoyed that and I hope you take time to look into his services. As always, if you enjoy this podcast give us a review on iTunes, Stitcher, or wherever it is you get your podcasts. It really does help people find us.
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