By James Shaw, COO
We were on a call about our own taxes. Not a big deal, not a dramatic setting, just the kind of strategy call you have with the firm that's done your books for years. She asked if her numbers matched ours, and I said, "My numbers are up to date every hour. My numbers are better than your numbers."
I didn't mean it as a dig. It's just true, and I'd sooner say it than sit on it.
She's the owner of the CPA firm — we'll call her Renee, and her deputy Paula, who does the actual digging with me later in this story. Renee didn't take it as a dig either. And she's like, we don't know if we're making money until April the 17th every year.
And I'm like, well, that must be terrifying.
She said they're kind of used to it. I'm not sure "used to it" is the same as fine, but I understood what she meant. Her firm's whole job is telling other businesses whether they're profitable, and she was telling me, plainly, that her own firm doesn't know until the tax return tells her. Every year, one day, and before that, nothing. So there's no bad month flagged in March, right, no good quarter confirmed in June. You just don't know, and then the answer turns up about a year after it would've been useful.
Here's the thing though, and I want to be fair to her about this, because it's not a knock on her or her team. Her numbers live in Asana, in spreadsheets, and in QuickBooks, and none of those three things talk to each other. Nobody built the pipe between them, so nobody's sitting there ignoring a dashboard. There's no dashboard. There's three places with a third of the answer each, and nobody's job is to add them up. Once a year somebody rolls it all together by hand to see what actually happened. If you've got money in the bank, you assume you're fine, right? That's not how it works, but it's the only signal most businesses get all year, so it's the one they use.
A CPA firm, the people other businesses pay to tell them if they're profitable, flying blind on itself. I found that more interesting than alarming, if I'm honest.
So I started pulling the thread. I'm not an accountant, mind, but I know what our own numbers look like, so I wasn't selling anything, just asking questions about her data the way I ask them about ours. What rate does this person bill at? Depends. Depends on what? Well, some people have four or five or six different billable rates depending on the type of work. Fine, how do I match a time entry to the right rate? That's where it got sticky. Paula walked me through it: someone clocks time against a code, the code is supposed to map to a rate, but the mapping lived in her head and in a proposal document from whenever the client signed, not in any system that updates.
Then there was the box. Every timesheet entry had a billable or unbillable flag, yes or no, and I assumed that flag meant what it said. It didn't. Some work marked "unbillable" was actually client work under a package deal, so it counted toward someone's utilization even though no invoice went out for it. Paula had to walk me through why a "no" could still mean the person did the work.
Utilization is just how much of someone's week actually gets billed to a client. I found one case where a spreadsheet showed 81% utilization for the month, and the timesheet data underneath it said 29 hours unbillable and 14 hours billable, which the sheet scored as 40%. Two numbers, same person, same month, off by more than double, and neither the spreadsheet nor the timesheet system was going to flag that on its own. Somebody had to go looking.
That's when Paula said it out loud: "This is too complicated. It is too complicated and we know that, but just hearing somebody else say that is just very justifying." I liked that word, justifying. She wasn't embarrassed. She'd known it was a mess. She just hadn't had anyone from outside confirm it wasn't in her head.
I didn't pitch her anything in that conversation. I asked questions about her own data until her own spreadsheets stopped making sense to her either, and then I kept asking. That's the whole method. I didn't have to convince her anything was wrong. You just keep asking questions, and eventually the spreadsheet disagrees with itself, and she's watching it happen.
Renee became a client after that. And this is the part I still think about more than the April 17th line: she started sending her own clients to us. The person whose job is other people's books looked at how we track ours and decided her clients should have the same thing. I didn't ask for that. She looks at other people's books all day, and she decided her clients needed what we've got. That tells you something.
Most businesses don't find out until the one day a year someone forces them to look. Tax season is just the one day the tax man makes you add it up. The number was always there. It was just sitting across three systems that never talked, waiting for April.
If you want, the first pass is just a look at your own numbers. What's the first thing you'd like the answer to? Start the conversation.