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I suck donk at taxes. I take too long. It’s because I try to clean everything up and tie everything out. What the hell kind of upside-down world is this where other accountants condescend to me because I’m too much of a perfectionist? It’s like fat people turning on you because you like donuts.

I thought we were all supposed to be perfectionists. The kids who grew up to be CPAs were the ones who got beat up on the playground for correcting the cool kid. He’d say, “Nice Toughskins, lamewad.” And we’d be like, “They’re not Toughskins, they’re Wranglers, husky Wranglers.” And the next day he’d be like, “Nice bruise, loser.” And we’d say, “It’s a contusion, not a bruise.” Vicious cycle. You remember.

But I got into this profession because of my attention to detail and because I’m great with numbers. And I get it. My Zoloft-quality OCD-level attention to detail can be a liability. Because of it I am often the willing victim of “scope creep.” (I am never the willing victim of Cavity Creeps.) Scope creep is when you perform duties beyond those for which you were hired. You hire me for a tax return, and I not only prepare your tax return, I also clean up your entire QuickBooks file. Boom. Scope creep. Going above and beyond is great customer service. Unless you also try to charge your customer above and beyond the agreed-upon price. Then you’re just being a donk.

As a profession, we’re supposed to be great with numbers. That’s what we do. We’re the Incredible Hulk of business data, just instead of anger being the trigger for super strength, we’re consistently good with numbers and generally keep our emotions repressed. And just like Superman loses his super powers around Kryptonite and the Hulk (presumably) loses his strength when given nitrous oxide, there’s something that makes CPAs as stupid as a graduate of Devry University.

My daughter is a talker. Always has been. Never stops. And she’s smart. Great with people. But then we went to Disneyland and discovered her Kryptonite: Ariel’s Grotto, “Character Dining.” Throughout your meal, Disney princesses visit your table. It’s a magical place where little girls can feel like princesses and their Dads also feel like princesses. While waiting to be visited by Mulan, I asked her what question she wanted to ask. (I tried to get her to ask Mulan about the mistreatment of underage workers in China’s booming manufacturing sector. She decided to ask if she had a boyfriend.) But when Mulan came to our table, she turned my daughter stupid. Her eyes got as big as toilet seats, she got this cheek-cramping grin on her face, and she couldn’t say anything—not even ask any questions about underage workers or boyfriends. Between Mulan and Aurora (that’s Sleeping Beauty, dumbass) she snapped back. But every princess gave my genius offspring a Belleobotomy. Something eerily similar happens to us as CPAs.

About half way through my first tax season, I was told that the partners at my firm didn’t want to give me any tax work because I was too slow. Ridiculous! Right? Did you even pick up on what happened? Minimize the spreadsheet and focus! I was a salaried employee. I had surplus capacity. The firm had excess work. But they didn’t want to use me because I was slow. They would rather pay me to do nothing than pay me to do something in a less-than-optimally-efficient manner. That’s like firing up your 1972 AMC Gremlin and then leaving it idling in the driveway because you don’t want to be seen driving a 1972 AMC Gremlin.

The partners in my firm lost their super powers and were turned stupid by the billable hour. Billing by the hour is accountant Kryptonite. It makes an otherwise intelligent CPA firm partner as stupid as a monkey that knows sign language: the monkey thinks it’s pretty smart because it knows sign language, but it’s still just a @!&%ING MONKEY!

We are smarter than that. We created and perfected highly precise cost accounting methods, yet we refuse to use anything more sophisticated than hours-times-semi-arbitrary-rate for all of our internal calculations. As a profession, we need to pull our head out of our tax hole and abandon timesheets and billable hours. Yeah, billing by the hour is really simple. But beyond that, it sucks at every level. A better way exists. And even partners hate filling out their timesheets. Mostly because it sucks donk.

 

Greg was born in Akron, Ohio, in the shadow of the Firestone tire factory. He began to swim competitively when he was eight, swimming for the Mountlake Terrace Lemmings. He graduated in 1995 from the University of Washington with a math degree. He chose math for the ladies.  After serving ten-years as an 8th grade math teacher, he decided it was time for a career change, mainly because he “couldn’t stand those little bastards.” He began his accounting career with a local CPA firm in Orem, Utah, where he consistently failed the QuickBooks ProAdvisor advanced certification exam.  Greg currently works as the Controller for the Utah Valley Physicians Plaza. He lives in Provo, Utah, with his wife and two kids. He enjoys eating maple bars, drinking Diet Pepsi, and swearing.

Category:
CPA firm
Comments:
13
  • On 05-05-2012 at 11:35 am, Greg Kyte said:

    Resources to help get you away from the billable hour:

    Online community
    http://www.VeraSage.com

    Journal of Accountancy article
    http://www.journalofaccountancy.com/Issues/2009/Jun/20091530

    Firm of the Future book
    http://www.amazon.com/The-Firm-Future-Accountants-Professional/dp/0471264245/ref=sr_1_1?s=books&ie=UTF8&qid=1336235506&sr=1-1

    Reply
  • On 05-05-2012 at 3:49 pm, Casey Quinlan said:

    Boo-yah! Billable-hours as a model for services revenue is crazy. Figuring out what your bundle – that grey matter between your ears, and the magic you can do with it – is worth, and then charging for the use of that bundle in a both-sides-see-value way? That’s the only way. IMO, at least.

    Oh, and here’s something you MUST do before your Disney Princess is poisoned by the bull*&^% apple that Disney-Princess-hood is: watch Miss Representation”. With your daughter. Now.

    http://www.missrepresentation.org/

    Reply
  • On 05-05-2012 at 5:47 pm, Jody Padar said:

    First of Greg…What you were doing was not Taxes…So how can you Suck at them when you aren’t able to actually do them with the level of technical skill they deserve. What you were do was filling out forms.

    Step back for a second, although I don’t bill by the hour and you know that I am a verasage fan. Billing by the hour was not your problem as to why the partners didn’t like you. The problem was they said they were completing a tax return and what you were doing was two very distinct and separate functions. One being an accounting function of QB clean-up and review and the second being a tax return (compliance). It wasn’t your fault that the partners didn’t know how to see them as two parts and such sell them as two distinct pieces. Part of it is the firms fault and part of it, I blame on accounting software marketing which says you can run and do all your accounting needs indepentantly of a CPA. However, the huge missing piece is that due to the timing of tax season the poor tax return doesn’t get the attention or time that it deserves because it is overshadowed by the clean up. That be said you can’t do any planning in March. So it’s value is completely belittled as to being just a ‘get the numbers on the form”. Making someone such as myself cry, because I am a lover of all things tax.

    So don’t say that you are poor at taxes. How can young staff even really learn the art of taxes when they don’t have time to ponder them do to “Tax Season” So Get the accounting software cleanup and review out of tax season so that during the crazy time of the year you can prepare the taxes with ease and actually think about tax opportunities. And if you are in that client file all year in a fixed/value priced model you can enjoy the sexy tax pondering all year long and really teach young staff about tax opportunities or choices.

    Taxes can really be SEXY if they are given the time and attention they deserve.

    Reply
  • On 05-06-2012 at 9:33 am, Greg Kyte said:

    Jody – That’s super insightful! And I think most CPAs would agree with the idea that staff need to learn how to do taxes and not just UltraTax. But behaviorally, they will favor the short term rewards of the status quo, and they have the rationalization that when they were staff they “eventually figured it out.”

    How do we battle DIY bookkeeping?

    Reply
  • On 05-06-2012 at 10:32 am, Ed Kless said:

    Neat post, Greg.

    One minor quibble – the phenomenon you are description is called scope seep, not scope creep. Scope creep is when the customer asks for more than what was originally on the scope document and the professional does not properly process a change request/order. Scoop seep is when the professional does something over and above what the customer asks for.

    Reply
    • Jason Blumer

      On 05-06-2012 at 11:19 am, thriveal said:

      I thought scope ‘seep’ was when Greg Kyte’s diaper leaked.

      Reply
  • On 05-08-2012 at 11:33 am, Benjamin Sargent said:

    Hey Greg,

    Great post. I’m low-man on the totem pole and the only millenial on staff in my firm, so I’m going to push your point one further: What do you think about how staff get compensated? I’m lobbying hard for a value based compensation plan in our office because it seems like the industry standard for accountant’s value is “attendance based” compensation: the longer you don’t get fired, the more you get paid. In a value based billing environment, is it possible to have professionals without vacation time? without timecards and without standard office hours?

    It obviously requires the right staff, but I’d be curious for your thoughts because I like your enthusiasm.

    Reply
    • Jason Blumer

      On 05-08-2012 at 1:05 pm, thriveal said:

      Dude, we are doing this in our firm! We have what’s called a ROWE (results-only work environment). No dress codes, no employment agreements, no vacation time, no timesheets, no nothing! You are valuable simply by what you achieve. To be truthful, we are in the process of rethinking how we pay our people and we want to move to a value-based, results-only pay, but it must be implemented slowly over time.

      Thanks Benjamin! Great questions. BTW, you need to be in THRIVEal dude: http://thriveal.com/thriveal-cpa-network-membership/ Your people are there!

      Reply
  • On 05-08-2012 at 1:56 pm, Greg Kyte said:

    Benjamin-

    There’s a lot to unpack here. First off, before becoming a CPA, I was a middle school math teacher. In public education, you climb up the pay scale two ways: longevity and further education. Nothing else. You could be the crappiest teacher in the district, but if you were there for 28 years and had a PhD., you had the highest pay. Most CPA firms have a similar M.O., and it’s hugely de-motivational to your best people.

    I have always thought it was effed up that CPA firms bill by the hour, but pay their employees on salary. It’s like buying gold by the pound and selling it by the foot. Since I hate the GD billable hour model, I say keep your people on salary and start value pricing.

    Jason (above) once said, “If you suck, you suck at everything.” The billable hour sucks, and it makes everything else suck. There is no value-based compensation under the billable hour model. Under that schema, your ONLY value is attendance based, specifically time spent on billable work.

    Value-based compensation requires at least three components. First, you can’t bill by the hour. Second, the firm must ensure quality hiring and retention. If HR sucks, everything sucks. Third, management (or partners or whatever) needs to have the balls to (a) give exceptional employees more compensation regardless of their tenure and (b) develop true value in their staff by making every employee exceptionally valuable to customers (as opposed to an exceptional cog in the firm’s wheel). Developing indispensably valuable staff requires management to take lots of time to reflect on what is valuable to begin with which is a lot harder than it sounds.

    Ron Baker says that Peter Drucker says that all knowledge workers are volunteers – not employees – and they need to be treated as such. Some of the best in our profession (and in the teaching profession) leave because their true value is not recognized and is not properly compensated.

    It’s fun to pretend like I know what I’m talking about.

    Reply
  • On 05-08-2012 at 8:22 pm, Magen Smith said:

    Great great comments here! Benjamin, you should really consider joining us in Thriveal. We have lots of great discussions there about value pricing, ROWE, networking, blowing stuff up, etc. But be warned, we will push you into firm ownership. I am a millennial as well and run my own firm.

    The traditional CPA firm really doesn’t teach anything. Well, not anything good. I didn’t learn taxes (According to Jody), I don’t think I learned much accounting, I couldn’t talk to clients so I didn’t learn selling or problem solving. What I did learn was how to fill out a time sheet and punch numbers into software. I also learned that there had to be a better way to serve customer and make a difference in their lives. Zoom into me leaving the traditional firm.

    Anyway, good post Greg!

    Reply
  • On 05-15-2012 at 12:16 pm, Benjamin Sargent said:

    Wow, great comments everyone and thanks for taking the time. I’m going to continue to stalk your blog, and I’m also looking into the membership. I too am a fan of demolishing the existing business model in favor of something that meets the needs of the best and brightest of the future, and I think there’s a great opportunity to “re-brand” accounting into something a lot more fun and useful than filling out forms and verifying information. I’m looking forward to throwing some ideas around with this group.

    Thanks!

    -Ben

    Reply
  • On 05-11-2015 at 3:39 pm, Callie said:

    It’s interesting that CPA firms price their audits on value and worth; they estimate a job’s price in advance, offer it to a potential or existing client, and stick to the agreed-upon amount. Clients don’t object to fees they’ve already accepted, and it’s up to the firm to make the job profitable.

    Yet, the same CPA firms don’t do the same thing for tax work, outsourcing, consulting, and other services. They switch to a billable-hours mindset, which inhibits quality work by pressuring each staff member to hurry through a project and tack extra hours on to the invoice.

    Sometimes, a job takes longer than anticipated. Sometimes, the budgeted hours far exceed the reality. If a firm’s well run and staffed with competent people, it all works out. There’s no need to nickel-and-dime clients for every 10 minutes of time.

    A contracted fee, agreed-to in advance, is in everyone’s best interest. There are no unpleasant surprises for clients, and the efficient jobs more than absorb the under-billed jobs.

    Reply

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