Unlocking the Secrets of Client Accounting Services with K.C. Eames

Podcast

Summary

In this episode of Growing Your Firm, host David Cristello welcomes K.C. Eames, the Director of Client Accounting Services at Dark Horse CPAs. The conversation delves into the complexities of pricing in client accounting services (CAS) and the nuances that make it both an art and a science.

K.C. shares insights about the unique structure of Dark Horse CPAs, contrasting it with traditional accounting firms that operate on a pyramid model.

The episode emphasizes the importance of understanding both the quantifiable and intuitive aspects of pricing, particularly as firms navigate the evolving landscape of CAS best practices. 

Tune in to discover valuable strategies for enhancing your firm’s operations and achieving your goals faster.

Guest Bio

K.C. Eames currently serves as the Director of Client Accounting Services (CAS) at Dark Horse CPAs. With a career that spans over a decade, K.C. has cultivated a reputation for her innovative approach to accounting, particularly in the realm of CAS, where she has become a sought-after expert and thought leader.

Under K.C.’s leadership, Dark Horse CPAs has developed a robust framework for CAS operations, focusing on best practices that enhance client service and operational efficiency. She has been instrumental in creating tools and resources that help principals navigate the complexities of pricing and service delivery in CAS. K.C.’s philosophy centers on the idea that accounting is not just about numbers; it’s about understanding the unique needs of each client and providing tailored solutions that drive their success. This client-centric approach has led to impressive net promoter scores, reflecting the high level of satisfaction among clients and the effectiveness of the services provided.

Dark Horse Overview

Dark Horse CPAs: A Decentralized Model for Empowering Principals

Dark Horse CPAs operate under a decentralized model that grants its principals full autonomy over their individual books of business. This structure fosters a unique blend of collaboration and independence among firm owners, creating an environment that nurtures entrepreneurial spirit while still benefiting from the support of a larger organization.

Autonomy and Ownership

At Dark Horse, each principal functions as a firm owner, managing their own client relationships and determining the composition of their work, whether it involves Client Accounting Services (CAS), tax, or other specialized niches. This autonomy enables principals to tailor their services to their strengths and interests, resulting in a more personalized approach for their clients. They have the freedom to hire their own staff and manage their teams, allowing them to build practices that align with their vision and goals.

Collaborative Culture

Despite the independence afforded to each principal, Dark Horse maintains a strong culture of collaboration. The firm encourages principals to share information, resources, and leads, creating a supportive network. For example, if a lead arises that doesn’t fit one principal’s book, they can easily pass it to another who may be better suited to take it on. This cooperative spirit is further enhanced by regular meetings and communication channels, such as Microsoft Teams, where principals can discuss challenges, share insights, and seek advice from one another.

Supportive Framework

Dark Horse provides a robust framework to support its principals in their operations. The leadership team collaborates closely with the principals to ensure they have the necessary resources, tools, and training to succeed. This includes the development of pricing tools and client assessment worksheets that help principals navigate the complexities of pricing and client onboarding. The firm also conducts annual client book reviews to help principals assess their performance and make necessary adjustments to their pricing and service offerings.

Balancing Independence with Guidance

While principals enjoy the freedom to operate independently, they also benefit from the collective knowledge and experience of their peers. The leadership team serves as a resource, offering guidance on best practices and operational efficiencies. This balance of independence and support allows principals to thrive in their individual practices while still feeling connected to the larger Dark Horse community.

Conclusion

In summary, Dark Horse CPAs exemplifies a decentralized model that successfully combines autonomy with collaboration. By allowing principals to manage their own books of business while providing a supportive framework, the firm creates an environment where entrepreneurial-minded professionals can flourish. This unique structure not only enhances the individual practices of the principals but also contributes to the overall success and cohesion of Dark Horse CPAs as a whole.

Understanding Client Accounting Services (CAS) at Dark Horse CPAs

In a podcast episode featuring K.C. Eames, the Director of Client Accounting Services at Dark Horse CPAs, several key insights into the operations and best practices of CAS were discussed. Here’s an expanded overview based on the conversation.

Unique Structure of Dark Horse CPAs

Dark Horse CPAs operates under a decentralized model where approximately 36 principals, all CPAs, manage their own books of business. This structure allows for greater autonomy compared to traditional accounting firms, which often have a hierarchical pyramid. Each principal has the freedom to choose their niche, the composition of their work (whether it be CAS or tax), and even the staff they wish to hire. This model resembles a hub-and-spoke system, where the firm provides a supportive platform while allowing individual principals to operate independently.

Pricing Challenges in CAS

One significant challenge discussed is the complexity of pricing CAS services. K.C. highlighted that while quantifiable metrics such as revenue and transaction volume are essential, subjective elements also need to be considered. To address this, Dark Horse has developed a pricing tool that incorporates an “effort scale,” allowing principals to assess the complexity of a potential engagement. This tool helps establish a pricing range that reflects both the quantifiable and intuitive aspects of pricing.

Onboarding and Client Assessment

When onboarding new clients, Dark Horse emphasizes fixed pricing rather than hourly billing. K.C. mentioned the use of a client assessment worksheet that evaluates the current state of a client’s QuickBooks file. This assessment generates a “health score,” which helps determine the level of cleanup work required and informs the pricing for the onboarding phase. This proactive approach aims to set clear expectations and avoid potential losses due to underpricing.

Continuous Improvement and Client Feedback

To ensure the quality of services and maintain healthy profit margins, Dark Horse conducts annual client book reviews. These reviews help principals assess their pricing strategies and service offerings, ensuring they remain competitive and aligned with client needs. Additionally, the firm tracks Net Promoter Scores (NPS) from clients every six months to gauge satisfaction and identify areas for improvement. A high NPS score, such as the 90% reported by Dark Horse, indicates strong client relationships and satisfaction.

Levels of CAS Services

K.C. outlined a framework for categorizing CAS services into three levels:

1. Bookkeeping: Basic services focused on reconciling transactions and categorizing them for tax purposes.
2. Outsourced Accounting: More comprehensive services that include payroll, bill pay, and sales tax management.
3. CFO Advisory: Higher-level services such as budgeting and forecasting, which provide strategic insights to clients.

This structured approach not only helps define service offerings but also aids in setting clear expectations for clients regarding what they can expect at each level.

Conclusion

The conversation with K.C. Eames sheds light on the innovative approach Dark Horse CPAs takes toward Client Accounting Services. By empowering principals, providing robust operational support, and focusing on client satisfaction, Dark Horse is redefining how accounting services can be delivered in a modern, decentralized environment. This model not only enhances the autonomy of individual CPAs but also fosters a collaborative culture that benefits both the firm and its clients.

Dark Horse CPAs: Client Book Reviews and Net Promoter Scores (NPS)

At Dark Horse CPAs, maintaining high client satisfaction and ensuring the effectiveness of service offerings is a top priority. To achieve this, the firm employs two key strategies: regular client book reviews and tracking Net Promoter Scores (NPS).

Client Book Reviews

Dark Horse CPAs conducts annual client book reviews with each principal. During these reviews, the leadership team collaborates with principals to analyze their client books, focusing on several critical aspects:

• Revenue Analysis: The reviews assess the revenue generated from each client over the past 12 to 24 months, helping identify trends and areas for potential growth or adjustment.
• Service Evaluation: The team evaluates the services being provided to clients, checking if the pricing has remained stagnant for extended periods. This is crucial for ensuring that the services offered align with current market value and client needs.
• Pricing Adjustments: If certain engagements have not seen a price adjustment in 18 to 24 months, the leadership team encourages principals to reassess these prices. This proactive approach helps ensure that the firm remains competitive and profitable.
• Client Composition: The reviews also consider the overall composition of a principal’s client base. If a principal aims to shift their focus toward more Client Accounting Services (CAS), the review process can help identify which clients may need to be dropped or adjusted to facilitate this transition.

Tracking Net Promoter Scores (NPS)

In addition to client book reviews, Dark Horse CPAs tracks Net Promoter Scores (NPS) to gauge client satisfaction. The NPS is a widely recognized metric that measures the likelihood of clients recommending the firm to others. Here’s how Dark Horse utilizes NPS:

• Feedback Collection: The firm sends out NPS surveys every six months to gather feedback from clients regarding their experiences with the principals. Clients rate their likelihood to recommend the firm on a scale from 1 to 10.
• Scoring System: In the NPS framework, scores of 8 or higher are considered promoters, while scores of 7 and below are neutral or detractors. This scoring system helps the firm categorize client sentiment effectively.
• Performance Benchmarking: Dark Horse CPAs has achieved an impressive NPS of around 90%, significantly higher than the industry standard. This high score indicates strong client loyalty and satisfaction, which is essential for the firm’s reputation and growth.
• Promotion Criteria: The NPS also plays a role in the professional development of principals. A high NPS score is a requirement for principals to graduate from the accelerator program to a full principal role, ensuring that only those who maintain high client satisfaction are promoted.

Conclusion

By conducting regular client book reviews and tracking NPS, Dark Horse CPAs not only ensures high levels of client satisfaction but also empowers its principals to make informed decisions regarding service offerings and pricing strategies. This dual approach fosters a culture of continuous improvement and responsiveness to client needs, ultimately contributing to the firm’s success and growth in the competitive accounting landscape.

Timestamps

[00:02:32] Unique decentralized firm structure.

[00:05:15] Technology-focused challenges in CAS.

[00:09:37] Client assessment worksheet and health score.

[00:12:05] CAS work composition flexibility.

[00:16:25] Client Net Promoter Score.

[00:19:05] Cohesive culture in independent firms.

[00:22:58] Levels of CAS packaging.

[00:25:04] Dark Horse CPA program details.