The Wize Way

Episode 187: Vanity Metrics vs Real KPIs: Which Are You Tracking?

• Wize Mentoring for Accountants and Bookkeepers • Season 2 • Episode 187

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Are you keeping track of the metrics that actually drive profit and control…
 or getting sidelined by vanity metrics that make you feel busy?

In this episode of The Wize Way Podcast, Thomas breaks down the Fab 5 KPIs and why they’ve been refined over the last 10–15 years into a simple scoreboard that gives firm owners a full-spectrum view of how the business is really performing.

You’ll learn:

✅ Why output metrics matter more than input metrics (and how to spot the difference)
 ✅ The Fab 5: Revenue, Profitability, Lockup, Sales, and NPS, and what each one reveals
 ✅ Why write-ons / write-offs is often the hardest KPI to track, but the most powerful for protecting margin
 ✅ How KPI patterns tell a story and help you diagnose what’s actually happening inside the firm
 ✅ The monthly manager meeting rhythm that turns KPIs into ownership, accountability, and calm leadership

If you want to stop tracking numbers for the sake of it, and start using a KPI dashboard that makes decisions obvious, this episode is a must-listen.

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SPEAKER_00:

Welcome to The Wise Way, the show for accounting and bookkeeping firm owners who want more time, profit, and freedom and a business that can run without them. I'm Brent Ward, your host, and each week we deep dive into the real stories, proven strategies, and battle-tested tools from successful firm owners just like you. Our wise mentors want to share their journey of how they've scaled and systemized their way to freedom so you can too. If you're stuck in the grind or you're ready to scale smarter, this is your blueprint. Let's get into the episode.

SPEAKER_03:

Okay. And then having it become a thing in your firm. Right. And generally uh connecting that towards how do you make any new thing a thing in a firm? And what and right, and so get right, we'll get right into it. So today we're joined here by myself and Danny here to co-hosts. And if you want to follow along or access any additional resources, feel free to uh check out, like save this file name, note this name down here, I guess, and then search that in the WISE vault. Okay, and this would be under the clinic recordings, which you know Selena will um be able to share. Alright, so we'll get right into it, and I'm gonna do I'm gonna demonstrate here by actually just going straight to the WISE hub. Okay, we'll go to our awesome uh friendly uh firm here, 23 degrees accounting demo account. Okay, so KPIs. All right, I've seen so many takes on KPIs in my time here uh as WISE Mentor over the six years. Accountants, we we love we love our ratios, we love our tracking, we love our metrics. Um sometimes we just spend probably a little bit too much of our firm's bandwidth uh trying to get numbers instead of uh working on them. Uh, but there's no question, when you see these, when you when you're able to keep track of numbers, you get that sense of control. Okay. And what we're trying to teach here at WISE is how do you not waste your energy? Okay, and I think this is similar to the the previous clinic on triage, which is like not about wasting your energy. Here it's about how do you focus on a set of KPIs that are actually important? And we have this one underlying principle that governs all of this, and that is it's about being output focused and oriented, not input focused. Okay, so what's what what does what do I mean by that? I mean you often would hear team members, or you might say to yourself, I worked very hard. I've worked 12 hours today, I've got 20 tax returns done, I've answered hundreds of emails, and these are all really good things. Like these things actually need to happen for the firm to function, but they never give you uh an answer to how how are we actually doing? Okay, like did we do those tax returns profitably? Um uh were the right people doing them? Uh what emails were we answering? Did they actually result in the client satisfaction improving? Right? And you often hear also in marketing people talk about how many views they get, how many impressions they get. And you hear the term vanity metrics. And what's really important is actually, are you making any sales from it? Are you actually getting any customers from it? So being output focused means focusing on the results, focusing on the outcomes, not the inputs. All right. And with the Fab Five here, these five KPIs right here: revenue, profitability, lockup, and sales and NPS, these have been refined over the last Jamie would say like 10 or 15 years to give any firm owner a complete spectrum, uh, full spectrum uh view of how their firm is actually going. Right. So I'll I'll go over each of these KPIs here. It's first revenue at our top line, and we're comparing what we're doing currently year to date versus our performance last year to date. And then against our year-to-date budget. Right? The change here, growth is our actual year to date versus the actual last year to date, and this variance is our budget versus our current year to date. Right. So that tells us are we growing? Are we actually meeting our targets? Uh, are we are we billing people the way we're supposed to? Are we actually charging for new work? Then we have our profitability uh here, cost of goods sold. We're showing cost of goods sold here and not overheads because cost of goods sold is something we can actually control. Okay, cost of goods sold actually outputs uh productivity, it outputs the revenue. And then we've got an IBIT as a consequence. Okay, so we've got IBIT here, uh that's after the cogs and overheads and our write ons and off. Now, the write ons and off I've seen is probably the hardest KPI for any firm to try and secure. All right, this is the hardest, this is the this is the KPI if you don't already do timesheets or have some form of budgeting job tracking system. Give yourself like three, four months to try and actually get this KPI. And so, what is this? Like, there's a pretty self-explanatory being you know, being as we're accountants. Write ons and off is something I noticed that we we don't really understand that well. Write ons and off, it's all about how much time did we spent? What was the market value of the time spent versus the actual amount we charged that job? Okay, or the budget of that job. So what did what how are did the teams uh was the team's time spent in the job um within the expectations of what uh the fees were were or the budget? Okay, and you can measure this in a few ways. If you're a right, if you're an hourly charged firm, this is pretty straightforward. Okay, like this is you build up your whip, you invoice it out. If you can't charge a portion of it, it becomes a write-off. Sometimes you add to it, it becomes a write-on. If you're a fixed fee firm, then you would still track this. But what you're actually comparing is you're comparing your fixed fee versus if I had to be charging this client hourly, right? The senior tax accountant at$180 an hour, the intermediate accountant at$140 an hour, the junior tax accountant at$100 an hour, a senior production manager's time at$200 an hour, a senior client manager's time at about$250 an hour, like at those sort of they're the current market rates. I feel like they should be higher nowadays, but that that's the current market rate. If the team was uh charging those rates, if the engagement was hourly, would you have made more money just charging the client hourly versus your fixed fee? Right? Like, did you actually charge that client better than if you just went with timesheets instead? So that's what you're comparing yourself against when you're doing fixed fees. The challenge with fixed fees is that often we'd bundle a bunch of services up into a monthly uh subscription cost, and we'll do sales tax or GST, and then we'll do an annual tax, and then throw in all these other little bits and pieces, and then charge the client something like$600 a month. And then when you go to actually track this right on and off, it becomes difficult because what exactly how how like how much of that annual fee do you exactly allocate to that individual uh item that you're that job that you're doing for the client? Um oftentimes we put this monthly subscription fee, we kind of like feel what we want to charge and we divide it by 12, right? Um in that situation, you actually do have to go and break that annual fee up into the individual jobs uh and then use that as uh the measuring point for the right on and off. Okay, and the the easiest way is this if you're an Australian firm and you're doing quarterly Basses and an annual tax return for a client, uh my math is not going to add up here, okay? And then you charge$5,000 a year for that client to like do the whole lot, you know, the individuals and there's a company in there. Um you might just go, okay, yeah, individuals have got properties, minus$500 out of that each uh person out of that five grand. It's got four grand left. Market rate for a bass, maybe five hundred dollars. That's about like two grand for them. And so you've got two grand left for the company tax return and financial accounts. Okay, so that it's not going to be exact. You can sort of ballpark it that way, but at least you have something to put into your carbon fixed fee setting. You have something to put into the budget in XPM, you have something to put against that very specific job in your Excel sheet. Otherwise, you are never going to know if you are undercharging that client or you're inefficient with the job until the finish of the financial year. And that is way too late. Okay, so anyway, I'm going too deep into that part. That's write and on and off. And then we have this write on and off percentage, which is uh the percent of that uh versus the um uh the IBIT. So that number's not that number what we're aiming for is about 10% uh positive. And then we have the whip balance. Now, whip balance is also another one that uh kind of it it's different for every firm. If you're an hourly fee firm, that's just really the total whip you've got before you've actually invoiced it out. If you're a fixed fee firm, then you have two options. You and then this is this is after you've actually proportioned out that annual fee to that job. You've got two options. Option one is you get the value of the work that is currently in progress minus the whip, if your firm had been charging hourly against it, and that kind of tells you, okay, this is how much left, how much work we actually have left to go. Right? If you're using carbon, you can put in a budget, and it's whatever the dollar value of that budget remaining is. What I like to go with is I like to go with what the value of the total value of the work that is in progress minus nothing. Okay, it doesn't matter if the client prepaid it or we've done work already. As long as this job is in progress, like as long as it sits on our desk and it's not lodged and completed and invoiced. I don't want this number changing. I don't want, I don't want to like offset it, I don't want to like minus it, I don't want to make it look as any better than it is. Until we finish the job, we're not even entitled to the money anyway. So I like to leave that number just a clean sum of it's all the jobs that are uh from ready to start, meaning we've got the information, the clients signed the proposal, we've it the job is like the job could very well start all the way until completed. All right. And that way the teams are actually accountable to completing the work. Because you know you know, like people can put time into work, it doesn't mean the job is actually completed. So, anyway, that's with balance. The there is an official benchmark for this, but you're aiming for somewhere about half of the average monthly uh budget that you do. Okay, so if you if you're a million-dollar firm and then average it, that's like 83,000 something uh every month, then your with balance you're aiming for something like 40,000. And meaning like you've you've got about a two-week turnaround time. You've got more or less, you've got like two weeks worth of work uh in front of um a new client coming in. Okay, and then we have debtor's balance, money people owe you. The revenue and number of days in a year, this whip balance and debtors all come together in this formula. I don't remember to give us lockup days. Right? And this number we're aiming for being below 14 days. The revenue and profitability, we're doing it on an accrual basis. Okay, like it's on an accrual basis. Otherwise, this otherwise, there's no such thing as a debt as balance. Okay, we want to see how much we've actually invoiced and then how much we actually have to collect. Okay, and so that's lockup, our third KPI. Pretty, you know, pretty standard so far. Uh and then we have our sales. Okay, we're starting to step outside the PL and uh other financial metrics over to sales. We've got prospects decline, percentage one. In WISE, there's leads, prospects, and clients. A lead is someone who hasn't everyone's definition is um different, but I kind of find that firms draw the line at whether to count them uh as a prospect, depending on if they've done a discovery meeting yet or not, or and all received a proposal. It's up to you. So a lead is someone who hasn't done a discovery meeting or received a proposal, a prospect is someone who has done a discovery meeting and or has received a proposal. Okay, and percentage of those that turn into clients. The met the benchmark here is 50%, and it seems really high, but this is these are people who have received a proposal, these are people who have done a discovery meeting. It's 50% to also become an KPI to the marketing to qualify, like the division two and division six to actually put effort into qualifying the right people before the senior client managers and client managers see them. Their time is very expensive and short. Then we have our fees one and loss. What this is measuring, it's up to you. Uh, you got two choices here. So I guess this is what we mean by customizing the Fab Five. You can either decide to only recognize in fees one and loss annual recurring revenue, your ARR, uh, or you can just recognize all new revenue. Like, even if like there's an existing client doing an entity setup, you might want to recognize that as well. My personal opinion, it's better to do annual recurring revenue because the way I see this fees won and loss and this net fees is it's supposed to help you look ahead and forecast what your team capacity needs to be. Okay, so if you're an$800,000 firm and you have built your teams uh to the point where it can service those$800,000 in fees comfortably with a little bit of breathing room. And Damien and Upa, it you will learn this over time. It's 10 to 15% is the surplus we want in additional labor versus the revenue that we actually plan to do. But suppose we're we're an 800k firm and we've got the team nicely made for 800k, and then the fees, the net fees one is 200,000. Or it's$50,000 after one quarter. Now, the typical senior tax accountant at 85% productivity at something like$180 an hour gives about$180,000 worth of capacity. So that says to you, okay, look, if I keep up with this growth rate, I'm probably going to need to start a hiring process in the next quarter. Okay. And given this current labor market, you could probably start now. And it sounds really early. Like, why start so early? It's not that you actually need someone in that seat straight away, it's just so you can have a really, really, really long uh uh uh uh time period in which you can review resumes, you can do interviews, that you can actually conduct selection and then find the right person. That's what they mean by hiring slow. Okay, it it it hiring slow doesn't mean hire as late as possible, it means you kind of see it coming out a long way, and then you be you do it do it very slowly so that you can pick out the right people and uh give yourself an allowance for that person you pick not probably working out within their probation period, and you have still a handful of good candidates that you can still hit up. Um this will save you from having to hire because the team is complaining, because suddenly a big job came into the office. Okay. Uh it lets you see out further in advance. So this is for managing capacity. But yeah, so that's what how I mainly would look at it. And we use it in board meetings. However, it's just also nice to take a look at net fees one, all right. And fees loss is also a red flag. Uh if the reason. For the fees lost are anything to do with uh the client's satisfaction. Sometimes you'll just lose clients because they close businesses. That's totally normal. And then the last uh KPI here of the Fab Five is the NPSs. The NPSs ask the question on a scale of zero to ten, how likely are you to recommend our services, our firm, to your family or friends, or to be a client with us or to work with us. And you're aiming for a nine plus out of ten. When your client NPS is a nine plus out of ten, your clients will actually go out of their way to promote you. Any lower than that, between say seven and eight, they're kind of like neutral about it. And anything under a seven, they're going out of their way to speak poorly about you. Client NPS getting to a nine fulfills the first of four recommended um uh growth strategies that we teach here at WISE. The four being referral, monetization, digital marketing, and acquisition. But to actually fulfill referrals as a growth strategy, it's about achieving a nine out of 10 client NPS. Okay, so the first growth strategy is uh make sure your clients are really happy and then track if they're happy and then get the testimonials. It sounds sounds silly, but it it is it is actually quite a difficult thing in our industry. Okay, we're very busy, people asking us lots of things all the time, expecting quick answers to complicated questions. So this is a challenging metric for our industry and it's worth tracking. I think we've all been there where you would hear from a new leader or prospect, and you might ask them, Why are you leaving your previous accountant? And they would often say, I've sent I would send them an email and they wouldn't get back to me in like a week or two. Or that accountant wasn't productive enough. Okay, so answering client emails and being proactive is already going to give you an edge in this industry. It sounds, I'm not trying to make it sound simple, but that that really is the thing to aim for. So that's our first growth strategy. And there's also no point monetizing extra fees, doing digital marketing, acquiring another practice if we can't even keep our existing ones happy in the first place. And then we have team NPS. Team NPS is I like to think about it as the morale of your army, um, and in which you're like, I don't know, I don't know anything about the military. Maybe you're like a captain or something, and then if your morale is low, uh in battle, your troops are just going to find an opportunity to shoot you. Okay, they're gonna mutiny, or maybe you're on a pirate ship, they're gonna mutiny, they're gonna throw you overboard. You might tell them to do something and they're just not going to listen. The emotional bank account, uh, as we call it, is low. So you couldn't even implement a daily huddle with them, let alone say a deeper narrow team structure or a new project management software. If the team NPS is low. If your team NPS is a nine plus out of ten, well, you can be working with your team to implement things like the timesheet, weekly tacticals, the roles, and they'll listen to you. They'll actually be there with you, they're bought into the firm. So this KPI is pretty important. Uh, team NPS, if it's like traction on the road. If you don't, if it's not a nine out of ten, you're not gonna nothing you want is going to happen. Okay, not it won't actually happen. If the firm will just go and do whatever they want, and they're not already happy in the first place. Now that was like a very quick run through of the Fab 5. How these actual KPIs come together to tell um a complete narrative of where the firm is at is the real value. Okay, is the absolute real value. And now let me go through a few scenarios here. Suppose that you're looking at your Fab 5 at the end of uh um in a new month, in a monthly board meeting, you have and you're looking at a team and they've got a high whip balance. Okay, they've got a high whip balance, but they've got right-ons. Okay, so like they're actually um they're actually doing the jobs within budget, but they've got a high whip balance. What does that possibly mean? You know, what what what could it possibly mean? It means that, well, maybe the work, uh, maybe the work is really large, maybe they're stuck in a lot of admin work, a lot of non-billable work that's in front of their way. They're not able to actually get to any productive time on the job itself. Okay, so the team is efficient, but there's something blocking them. It's not to do with the team. You can't point your finger at them, uh, the accountants, and go, why can't you do a tax return faster? They're actually doing it very well. It's a write-on. Something else is happening. You would put your attention into the other parts of the firm, uh, like in division three or in division six. Maybe there are client queries that just never get chased up. It's just stuck. Time's not getting added, it's not getting any less, it's just not moving at all. Say you've got a low whip balance, and there are write-offs. So there's not a lot of work happening in the office. And when it does happen, um the team is actually going over budget on it. Sometimes when I see that, it's also correlated with a high cost of goods sold, above 40%, something like 50%. It's also correlated with surplus capacity that exceeds about 20%, 25%. And when I see that, and I've I've seen all almost every scenario here, but when I see that, I think of the um uh I forget his name is like Ron Dennis or something. The one of the bosses of McLaren F1, he said work expands into the um the time that it's given or the space that it's given. He didn't say that, but he quoted someone that said that, and which I remember. And to me, what that says is people got too much time on their hands. There's too much excess capacity. Um not a lot of work sits around, and when it does, it kind of just gets dragged out. It gets dragged out. So we've and then the high cost of goods sold along with the surplus capacity indicate they just got too many people or they're positioned wrong. Okay, uh a lot can be told uh uh about how the firm is going. When you have all these five KPIs together, it always tells a narrative. These are output KPIs, these are the results of things that are happening in your firm. When you see things fall below a benchmark, then you start drilling into it. Okay, when you start seeing write-offs, then you go, okay, can you guys pull up your write-ons off report? Can you take me through the reasons? Oh, you don't have any reasons. Can I take a look at the timesheets? Oh, we weren't doing the timesheets correctly. So I'm just gonna have to guess at it. But if you haven't done it properly and it's a write-off, I don't know how the write-offs will get better if you do if you did do it properly, because there'd be more time on there. So you would start drilling into the input KPIs, like the variables and the factors, only when there is a red flag here. Okay, and what you're looking for as a leader of a firm is that the managers are able to give you a reason and an answer that is consistent month to month, and they are clear on exactly what they're going to do about it. Uh and then you would be comfortable. Even if the KPIs are bad, it doesn't mean you're gonna keep feeling bad. It's just a cue for you to drill into it and interrogate the managers to ensure that they're across it. If they're across it, you can kind of relax because, like, okay, you know what's going on. Yeah, the client's this and that, and all right, all right. And what are you gonna do about it? You try and force them to take a bit more control over the situation, turn it into an action item, and then that's it. And if that's consistent month to month, and if the numbers are explainable, there's nothing to worry about. You can relax as an owner, you can you can kind of like release that anxiety. All right, you can release the anxiety and that stress and then focus on back on growth. If you're uh asking your managers about these KPIs and they don't know what's going on, then that's when you start to worry. Okay, then you ask them, well, okay, well, then let's kind of dig into it together because these are your KPIs to own. If all the KPIs here are met, okay, if everything here is hitting its benchmark, you're meeting your budget, you're doing write-ons, you got net sales fee uh one, you got client NPS nine and team NPS nine. What you need to do as an owner is leave the team alone. Okay, like you need to train psychologically your team that if you're hitting your benchmarks here, I could come to you with all the suggestions in the world, and you have a right to tell me to go away. Like, just go away. Like, clearly, everything is under control here. Uh, we're hitting all our targets. Go do something better. Okay, the team has the the mental uh space to go, we've got it handled, you can go do something else. And so, and it's in training ourselves as owners that if everything here is fine, we we kind of just need to relax. Like, things can always be better. You can always make a 30% IBIT a 40% IBIT, you can always achieve a growth target beyond whatever it is you plan in order to achieve the budget. You can always make any of these numbers better, but it's just about learning when to let go. Okay, so in in both cases, even if they're doing poorly or not, it should give you a means to just psychologically like disconnect and then go do something else. Uh now, so yeah, how frequently should you be reviewing these KPI dashboards? You should be reviewing them once a month with your managers. And so this um at the end of uh every month at the start of the new one, you would do a monthly managers meeting with where you would have your senior client managers in that room together with you, and then have them walk through the fab fives themselves. Like exp teach them the same way here and why as we teach uh firms what the Fab Five is. Teach what the Fab Five is to your team and get them to explain the numbers. And then you focus on asking follow-up questions and just listening. Okay, it's it's how you get a manager to take accountability for results, and then putting it into monthly manager meetings is how you make it become a thing in the firm. I think you had a question on Facebook, Hank, which was how do you reward people for doing their time sheets? Right? The thing is, when you start uh when you want to enforce something or when you want something to become a habit and then something that the team thinks about every day, make it a recurring agenda as part of a meeting rhythm. And just never ever skip over it. Always be bringing it up, always have it uh build up this habit so that managers think in the back of their head, um, the month's ending, I'm gonna have to explain myself for what these numbers are, and that they're going to be ready to actually uh uh prove that that they know what's going on. Okay. Uh any questions? That's a that's a that's I I touched on a lot of things like quite briefly, like what the five KPIs are, options that you can take in them, uh how you put them together in order to communicate a scenario when you are able to disconnect yourself from this and stop stressing, uh, regardless if the firm is doing well or not, as long as it's explainable or if they're hitting the benchmark. And then how to actually make it a habit, which is putting it in a monthly managers meeting and then getting the senior client managers to take ownership of it. It's it's a lot uh there. So if you've got any questions, uh oh god, that's fit. Sorry, my chat thing was all the way on the other side there. I didn't see that. Sorry, it's like uh edit. Uh okay, Damien. Um, I'll uh because you asked the question first. How do we get the staff NPS? Alright, uh I actually recommend you got two options. You you can just take your every Microsoft Forms or Google Forms and just have that question 0 to 10. How likely are you to recommend your family or friends to work at our firm and just send it out to your team every month? And then take the NPS of that score, or you can use this app here called Office Vibe.

SPEAKER_07:

But you know what?

SPEAKER_03:

There are probably better ones nowadays, but we've uh people in WISE have been having a really great experience with this tool. It tracks the NPS and it gives you this overall engagement score. And depending on every week or fortnight or month, it will send out to your team a set of random questions that come from a set, and then you get these breakdown questions like relationships with manager, um you know, or all these other bits and pieces, and then kind of gives you a bit more detail into what the actual actual team is feeling. Um, that's yeah, that's office vibe, it's a it's pretty good. And uh Edit and Mina and Hank having uh uh a good conversation there. Um, did you want to share about that? Uh Edit, your write ons and off being your porous stat. How's it frustrating you?

SPEAKER_02:

So I'm running a slightly, yeah, same concept, right on, write off, but basically I'm running a this is how much you should be charging based on your charge out rate rather than fixed fees, and we're constantly on certain jobs running at 60-70%, which basically tells me that senior people are doing work that they shouldn't be doing. Which really frustrates because you're kind of leaving money on the table. So it's all fine and well that you know the job rate works out fine, but actually the this is the maximum we should recover from those hours is not working fine at all. So yeah, that that that's a very big frustrational one.

SPEAKER_03:

So you're you diagnosed you you you drilled into it and found that it was because your mat your managers spend more time on the work?

SPEAKER_02:

Yeah, the managers are doing time that should be delegated, is one issue. The other issue that transpired was actually to do with pricing, which is the manager wasn't increasing the pricing in line with the client growth. So we're trying to cover more transactional stuff for the same fees, which of course will erode the margins. But is the is a combination of those two is like oh just frustration.

SPEAKER_03:

It's it's um those two uh conclusions there prove how important it is to track it, the right ons and off. It is probably the most important KPI, um, in my opinion, amongst uh you could do net fees and write on and off as the only KPIs. Like I to me, that's the most two significant KPIs on this Fab 5. But yeah, it's I and I see that quite often, Edit. In in most firms, the managers are working the hardest. It's the and the team members aren't. It's always the managers that are doing like 110% um productivity, and the team members aren't. I guess because our industry culture is we promote the people who work the hardest and who are the most capable. We don't necessarily promote people who are okay at it, but then really great at training people and then handing out the work uh to other people. So we didn't we don't train people to become managers. Uh, but yeah, your that pattern is definitely one I've seen a lot. And the undercharging uh of the clients as well. Sounds like you have an SOP there uh to increase the fees based off the growth of the clients, which is great because now you have a way to hold people accountable. How how long have you been tracking the right ons and off in your firm?

SPEAKER_02:

Oh, quite some time. So several, I'm gonna say several years, please don't shoot me, but I've been tracking it for several years. But I made a very, very, very stupid assumption, which was that if you look after a client fee base, you look after your recoveries and you look at your recoveries and take corrective action. And three years ago, I was like, well, actually, something's not right here. So I aligned the prices and I assumed that the message got through and it was working fine. And basically, I just found that our margins were eroding again, and I'm like, what's going on? What's going on? What's going on? And yeah, then I found out that maybe I should have kept more of an eye on it. So it's on me.

SPEAKER_03:

Oh, but it gave you visibility.

SPEAKER_02:

I and that's more than I've always had the visibility, that's not the problem.

SPEAKER_03:

Yeah, but uh well, yeah, but uh sure, every firm will have you know work needed to get the team. It's hard for a client manager because their nature is to please the client, and we've all like every owner has been there, like our their nature is to please the client, and they uh develop relationships with them that almost look like friendships. So it gets it, it's it it's one of our weakest qualities uh in the accounting industry. But that's awesome that you've been able to at least uh show them that this is affecting the margin of the firm. Like if you expect a pay rise at the end of the year, I don't know where I'm gonna get the money for that if we don't actually. increase the prices.

SPEAKER_01:

Um but that's that's all did you see it correlate with uh I mean you you mentioned margins but did you see it in uh uh the client NPS was like the clients were they were they happier for it or I couldn't tell you because we actually have got quite a high client retention rate so um I don't think that generally there was an issue with client service levels um and and I don't think that any clients became more loyal because we were stupid and didn't charge them enough so I don't know um I don't think that RMPS core would have increased because of that no okay it's just a thing yeah I agree okay well thanks for that um edit and Mina you shared your experiences um increasing prices uh in response to dealing with write offs and how did I go you know for to share for the benefit of the room if you don't mind hey Thomas um similar to edit we didn't have a visibility problem we just were uncomfortable right so we were scared of um how the clients would respond or you know we didn't feel that we were because we were so busy that we were providing like top notch like service to warrant the increase if that makes sense um so we resisted for probably a decade in that in that journey Thomas um but we found that most of them if we segregated them out and then just sort of honed in on you know this is the client meeting we're having we're gonna discuss how things are going we just follow the prompt um you know what are we doing well you know how are you finding our services can we be doing anything more because sometimes in that more they might put up their hand and that makes the repricing conversation a lot easier because we're adding and repricing the the scope of services um but overall the bigger ones um there was zero um fall off and it was the smaller ones where we were never going to be able to keep them happy we were never going to be able to increase the price it was never fast enough it was never you know cheap enough so and those ones they just naturally we're we're able to replace them so easily Thomas in the current market um because there's always clients putting up their hand and wanting to go to other firms and then because they dropped off we find ourselves like even though they were small they occupied so much time like they would want everything done outside of our system so we wanted to do everything electronically everything through the programs and they're the ones that are like no I don't feel I don't want that I just want to keep sending you an email or I want to keep posting you stuff or whatever it is. And the time capacities increased um yeah so I don't think we even if we knew what the write-offs were we just didn't do anything about it far fast enough because of the uncomfortableness.

SPEAKER_03:

Right it's yeah it's so uncomfortable to sit down with a client and and and and and have them rate you like tell tell me how uh we're going with you um are you happy or not and it's so true uh 20 uh I guess the 8020 rule 20 of the clients also give us 80% of our problems and just and 20 of our clients give us 80% of our revenue but the ones the 20% who give problems you know correlate with the the the lowest fees uh even so um good job being able to identify them using the right on and off as a trigger point for that and actually taking the courage to to actually get in front of them um hopefully that helped uh everyone and Hank did you want to share how you started using carbon to send out weekly reminders is that for um is that for your timesheets or do you want to go ahead and share we we use them for timesheets and we also use them for updating uh the the workflow too because a lot of a lot of people don't update the workflow so they they don't actually like complete the work the project when they're done or move it to the next area so we've been working on that doing weekly minders uh using the automated uh weekly minders with carbon so that way um we don't have to constantly remember to do it and it's helped out a little bit i mean there's still always we still have to do retraining and still remind them uh a little bit better but we only started it maybe a few months ago so it's helped out a little bit more good stuff good uh good using the system you have to reinforce it so in every way we can use reminders use the weekly meeting rhythms to be able to have it become a habit um ed uh uh would have said it takes six months to get rid of an old habit and then six months to implement um a new habit right so that's uh it's good thing that you put that in place uh joy you said does anyone have a questionnaire sample for nps what questions to ask i'll i'll i'll put this one in the chat the end the the nps question you can put that question in like any form with the client nps you can bulk send it all to all your clients twice a year um you don't have to do it at the end of a job you can just send it to everyone twice a year uh your existing clients and then your team you can send it to them monthly right um I would say uh hope hopefully that helped who who here has uh been in the process of implementing the fab five and is kind of stuck on like one or two of these things here it's not sure how to quite get that NP like that number itself oh good and who here reviews their fab five monthly with their managers already okay that's probably something to start uh Aaron um maybe I'll I'll put you on the hot seat um do you review or you didn't put your hand up but like would you start reviewing your Fab5 together with your managers? Because I know this is an area where it can get sensitive because you know teams are seeing numbers and yeah what are your thoughts on that?

SPEAKER_05:

Yeah I think it's a good idea we don't do it but I it's definitely something that we're we're looking to implement to because yeah we're noticing that there is a lot of work being done on jobs by managers where it should be being pushed down to juniors.

SPEAKER_03:

So and how did you notice that what numbers just our websists getting a bit out of control and we've also been looking at our total employment costs versus our revenue and we're um about 1.6 which needs to be a bit higher uh was that a ratio yeah so our yeah costs uh oh that was your your wages cost divided by your gross profit that ratio yeah revenue yeah oh that was the make simple numbers or something ratio so we're sort of looking at more trying to get that up to sort of two and a half to three times yeah I think we have a lot of put-up pickups put downs which is causing inefficiencies so it's sort of taking too long to do jobs. Right so it's surfaced through the high whip balance and it's yeah it's very visible right like just work there's just work sitting around you can see it on our lodgement list. It's the one thing the ATL also kind of helps us like hey um these still aren't done uh gives us a percentage to track as well uh yeah managers uh delegating down is the biggest thing so hopefully when they take ownership if it's like yes we should be training them to be better managers and and then telling them to delegate the work having them take ownership of the Fab5 creates the need for them to do it it's like well now you're just gonna have to be explaining this to me and what you're gonna do about it and if there's a red flag in here with this whip balance you're gonna be reporting weekly what what exactly does the team have to do? Like what what is the issue? It's really easy for us also to sit there and go you need to do this you need to do that it's always a lot better if you know the answer to see if you can ask ask your managers in a way where it it comes out of them like they they kind of just tell you yeah I I thought that was the case uh and then them beginning to take ownership of it and then saying that this is here to help you if if you me if the if these numbers are all great I'll leave you alone like I I I don't even want to be nagging you about it. I don't even want to be I don't even want to be thinking about it. So yeah this will be good to put in front of them some owners might find an issue with the team seeing profitability. And the way I put it is we expect at least an IBIT of 30% and if we're not a win-win win for the clients the team and the shareholders well the shareholders aren't winning well we just sell this thing then what's the point of stressing about running a business if you're not going to be making any money so everyone can just I guess you can go find a manager position at another job or something else. So it it's there uh you know if you can think about it the cost of goods sold is the team's ibot like so to speak it things have to actually be balanced. Uh okay so if you the the the key the the the thing to tie this all up is you want to be delegating to someone in your firm to can be completing the Fab5 for the firm okay that person could be uh an admin person it could be an internal bookkeeper accounts payable like just it could be anyone right but this is something to be delegated uh and then prepared for you uh in which your team and all your managers are going to present to you every month okay that's kind of where you're trying to head with this you're trying to get the team this to report these numbers to you right it's not you working really hard to try to get these numbers done and then you look at it okay you should be spending 80% of your time interpreting and then questioning and trying to understand these numbers versus putting them together yourself. And they don't even really take that long anyway okay so that's getting giving the team uh the means to report to you on performance okay rather than just hearing like random bits of good news and bad news that they're trying to share with you just to pass the meeting. Uh okay uh thanks everyone for joining today's topic session on the Fab5 it's it's a lot in there it's really hard not to go into detail in any one part of this and I know if you've been part of WISE already you've heard us go over the Fab5 again and again in that case just focus on making sure that it stays delegated and then interpreting these numbers in different ways like just as a thought exercise take your fab five and just imagine that the numbers were different what would that mean in your firm okay like like think about it this way if my firm was not finishing work or if my firm was uh not growing or if the team was unhappy if we weren't closing clients what would that look like what would your fab five look like in that situation it's something to think about it's not I would call that a quad uh four to be honest like almost like a delete but uh it it it's just being able to prepare yourself to recognize when there are actual red flags but there's not really anything you need um to do uh but yeah from this if anything from today imagine you know if your numbers were different what's what would different scenarios look like in numbers in your firm okay I hope today was helpful to everyone even if you've heard of the fab five before Damien and Upa did today's session on the fab five uh make sense to you did it um uh do you see it applying and actually helping in your firm uh yeah definitely great great okay thank you Aaron thank you great oh well uh yeah so if you want to work with a wise mentor setting with your Fab5 interpreting it implementing things um talk to Christy and she can talk to you about a WISE GPS which is like a business plan looking at your firm and uh seeing where it currently is where and helping you make a plan on where you want to take it.

SPEAKER_00:

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