An interview with an accounting legend generating 50% of fees through advisory accounting.
If you have a tea break, spare 15 minutes to learn from an accounting legend about how he and his firm work with clients, consult, price services, set up systems, and as a result, how they are now generating 50% of their fees from advising their small businesses.
Ambrosiussen, The Business Accountants is based in Toowoomba, Queensland. Irrespective of where your accounting firm is based, you’ll learn something from this interview.
A note from Hannah Dawson:
I had the pleasure of meeting Peter 5 years ago in Sydney and a year later he was demo-ing Futrli Advisor back to me on his IPad, running through the RAG status approach he takes every month with this clients. He’s a maverick and he and his team’s integrity in approach has seen their firm transformed into the client-centric advisory success story that it is today. 50% of fees are now generated from the essential advice and trusted relationship they enjoy with their clients.
(The interview is between Peter Ambrosiussen (managing partner), Sam Wright (Partner), and Josie, Customer Success at Futrli.)
I joined in 2007 straight out of school. The ironic thing now is with Futrli and Xero, the jobs that I was doing that were the employable things then, really, doing transposing from bank statements to accounting statements, turning bank statement lines into spreadsheets to do and whatnot, mainly for tax purposes, really now, is redundant. If I was applying for the same job now, I’d have no fear in saying that I wouldn’t be needed for that particular work.
Our story probably starts with my passion for accounting. Starting out from uni, I was really fortunate with the first job I got out of uni, this is in the 1970s, working for an international shipping company in what was called their management services department. They had this really forward-thinking idea of using computers, which were very new things, for actually getting management accounting information, to make decisions.
And I was in that and fortunately for me, people above me kept leaving, I’d have a year in that job and someone would leave so I went up and up. At age 25 I was leading that department with the corner office overlooking the Sydney Harbour Bridge and the Opera House at 25.
But what that job did for me was to give me a real lesson for life where I could see how accounting really made decisions about which ships we would buy, how fast we would make a decision using all the information the computing information. We, for the first time, were sailing ships across the Pacific at less than full speed, unheard of, never done before, but we got permission. So I saw accounting really making huge decisions in how a company was doing, just making companies much more profitable, making decisions to really benefit the company.
So then, fast forward, thirteen years after that, I was CFO we had ships all over Australia, going to the west coast of America, all through Europe, our head office was in Sydney, then I came up to Toowoomba and started my own accounting practice. So my thinking was, that was what accounting was about: helping businesses. So using computing power, using management accounting helps make business stronger, making good decisions about financial. Basically, how do you take a business and use good accounting information to make it much more healthier, profit wise, cash flow wise, and helping the owners achieve their goals about why they went into business. Getting them doing more than just a job, to really becoming a fantastic investment.
And so then fast forward again, we got to know Hannah and Futrli and I saw all the computing that I’d worked in, all through my life, here was a software program that, just early days, I could see that it was going to do a lot. I think we’ve had Futrli for five years. We were one of the first ones to take it up. And over that journey it is just doing everything now. It was only been by my imagination what I’ve got it to do. So we’re getting it to do fantastic things for our clients. So, for example, I’ve got a client that’s said look ‘we make profits, but we can’t get any cash.’ so what we’re doing is using Futrli to set budgets so they now generate an extra 100,000AUD cash after they pay their salaries, debts and taxes.
That’s tracking against actuals and all the other key drivers, like gross profit margin, their sales pipeline, and they’ve introduced another service in a new market they had to break into, and we’re tracking that in the budget too. The owners have grabbed at it and they’re killing it - they’re over the moon. They’ve got simple monthly reports that they get, we’re using the daily updates, they’ve got snapshots, and their couple of KPIs they’re looking at there, they're updated automatically thanks to the synchronisation between Futrli and Xero.
There’s thirty-five years in five minutes!
That’s a lot going on there! What were you doing before using this technology? How were you doing all this?
That’s a good question! That’s the beauty of today - technology cuts back the man-hours, significantly. We used to use a lot of spreadsheets and had corresponding man-hours to update them. Tech has enabled us to unlock more value for our clients, because we can operate more efficiently and can give them faster information a lot more timely. For us to do monthly reporting was too expensive, but now we can do it for a lot of our clients and they’re of really good value. It’s lowered our costs, but increased our speed. And it’s increasing our margin.
Sam, anything you want to add to that?
Yes, Peter used a fantastic example of one of the clients he’s been working with, with that cash scenario. But, one aspect that I really like, and I have one client in particular who loves the feature where we set up a board for each relevant member of their staff, and they can only see the account that they have responsibility over, in their job. Facilities manager, or sales. So working with the leadership team in this organisation, they love this program, because we can set a budget overall and then filter through to live information for each relevant staff member, so they can see how they’re tracking for that month or quarter and how they’ve progressed.
It’s actually much better feedback for their staff members, from a quantitative point of view for budget analysis. Everything from repairs to cleaning supplies, you name it. That’s helped a lot. And it’s live. So obviously, they have a great bookkeeper on site, but that just flows through live, they can open it on their phone and they can see where they’re at against their budget. It’s a good management tool, and a good conversation starter, at the very least, in the team. And we’ve also suggested that to another client, who we’re looking to take on and increase our work with in July, and talking about how we can set up a board for each of their relevant staff members, and tailor it to each of their staff members and how that helps with setting targets, ownership, setting boundaries. The versatility of the product and the security settings you can use to help tailor the product have been really helpful.
With regard to these types of services, I know a lot of firms, and I would imagine this isn’t you, they’re stuck in pricing based on hours. Tell me, how do you price your services?
Well, Sam only started in 2007, so he was very much about timesheets, we got rid of them two months after we started. We work on a value cost model. We’ve been doing that since 2007.
We have a conversation with the client, we treat each client as an individual.
We find out what it is they’re trying to achieve.
We find out what challenges it is they’re facing, what are the pain points they have in their business.
Then we work out which services will help them achieve their objectives.
So in the first meeting we have, we agree on the objectives they want to achieve, working out which ones we can have some influence and support them on.
Then, in the second meeting we’ll have our proposal with a few options of service levels. We’ll talk through how those objectives can be achieved with various services. So from the client’s perspective, they’re not looking at it from a cost perspective, they’re looking at it as a return on investment. If we spend this money with you then you’re going to help us achieve those objectives. So that’s worth that investment.
We’ve had clients that are looking to grow their business, clients that are employing people, clients where we can make a real difference to their business. We have a discussion upfront about fees, I’m not saying that we have them make a decision right away. We encourage them to go away and think about it. But at least this way, once we’ve agreed the fees then that’s final and neither of us have to worry about the them.
That’s been working since 2007. Once we started going down that route of value pricing, our business has just ballooned and increased because we weren’t just trying to have a little coffee meeting and throw a budget at them. It wasn’t just a service here or a service there, our service offering became far more holistic.
We’re at the point now where Sam doesn’t do any tax work at all, I don’t do any tax work, we have another colleague, Michael, that doesn’t do any tax work. And we have a number of people who are progressing up to doing advisory work. At the moment our business is about 50% tax and 50% advisory.
That’s awesome. So how quickly after getting Futrli do you think was it that you were thinking ‘we’re making money from this now’?
See, I really love what we do. I love what I do and the contribution I make to the team because there’s no transposing that we have to do now, because it’s hooked into Xero. It’s live if you've made a change it’s in there within a second. But the point being that reconciliation we don’t have to do and transposing.
We still make sure that the source data is correct and that filters through to the program which puts it in a way that it illustrates the trends, the results and the ROI.
It makes the job much more fulfilling because the client really values the face to face contact. They don’t care much for how long it took you to reconcile or transpose or anything like that. From a nuts and bolts perspective, for me that’s where I see it being most rewarding.
How has it affected your staff? How does the team feel about the fact that Ambrosiussen is so dedicated to this aspect of assisting businesses? Compliance is something we have to do, but this is where it becomes more fulfilling as an accountant and where the mission of the business really lies.
I guess, we’ve got a very clear core purpose which is to empower business owners to achieve their goals and standing with them through thick and thin. So, all our staff embrace that and even people that do our compliance, we’re always looking for ways to add value to that.
We don’t see a compliance job as getting it done and getting it out and back to the client as quickly as possible.
When a client rings up, they may say something like ‘how do I finance this particular asset?’ We don’t just say well we have all these options or these for a higher purchase. We say “Hmm, that’s interesting, I’m curious as to why you want to buy this piece of machinery” and then we take those conversations and work out how we can do that.
We always look at how we can add value to those interactions. I guess that as a part of our value pricing we have unlimited access, so clients have unlimited access to us, phone calls, emails.
But we do have a mechanism in there, so that it works two ways. It gives the client the ability to know that they can contact us any time and we have permission to contact them.
For example, Michael was out visiting a client on the premises yesterday and on the way back he dropped in to see another client he hadn’t seen in a while and spent a good hour or two with the clients there. Just getting up to date, checking up on issues and talking those through. It’s doing those kinds of things. It’s understanding the value to the clients.
We do get quite a lot of service changes come from those conversations, so it’s worth the time to invest.
Is there anything else you guys wanna talk about? The practice, when you started to where you started today. Futrli played a large part in your journey - where do you think you’d be without it?
I think we’ve been working on trying to get much more timely information to our clients. Working with clients on a monthly basis, now, has become affordable and has become something that’s now worth a lot of value - for instance being able to nip things in the bud, quickly with clients.
And they’re engaging a lot more.
What we’re about is helping them move quicker to get to their goals. And if we can add value on a monthly basis, that speeds up that process.
Whereas before, there were time constraints to our way of working, economically it wasn’t viable. So I think the changes in the last two years, with Futrli, has allowed us to do that.
The clients love it, we love it and it increases the revenue!
But that’s a leading indicator for us!
If we’re not delivering a lot of value, if we’re not giving timely advice and interaction, clients aren’t going to pay for it - they won’t value it.
That’s where Futrli comes in with the synchronisation and I guess the live reporting, where it’s timely feedback.
I guess personally, I’m excited for what’s to come with Futrli. So not resting on your models, or our models the deeper information, that sort of CFO style of analysis that’s done automatically by the program. And for us to look at it and check, rather than crunch the numbers ourselves.
And the interaction with other programs and APIs, the direction that Futrli is going in, it’s exciting. As partners in that, we don’t want to see any reduction in, or lowering of trajectory. We want to see you guys aim for lofty heights and keep aiming for that because we want to really encourage that, and we’re really excited by that.
And I guess that’s going to be one of those services that our clients have an increasing demand for, that outsourced CFO. And then Futrli plays a big role in being able to provide value for our clients and doing that and reducing our reporting time on that side of things too. Another little thing, the other day we were working with some clients who were kind of on the knife edge and I wanted to run a weekly cash flow, but not with spreadsheets. I wanted to use Futrli - turns out Futrli does that!
You only just found that out?
So I had them in yesterday, lined up their Xero accounts and we had a weekly view that would project cash out instantly.
Things like this cements our relationship and services we can provide with clients even deeper.
And the automation doesn’t replace us. The clients need us by their side to help them be able to use this because it’s the application of that information - that’s where our value is.
You can give anybody a page full of numbers and graphs but, unless you know how to interpret it and work out well that lever needs to be pulled and then this one and then that will achieve this.
You’ve hit the nail on the head.
We’re there to make that front work so much more easy for you so that you can those really meaningful relationships to help them achieve and grow, hire more staff, don’t hire more staff - whatever that may be. But help them make those decisions, before they make the wrong one.