Gary Cokins: The Truth about Activity-Based Costing

How to implement progressive management accounting techniques.

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With Steven Sacks
The NEW Fundamentals: Thriving in Disruption

Management finance expert Gary Cokins says there’s nothing wrong with activity-based costing. Except that you’re probably doing it all wrong.

MORE GARY COKINS: The Myths of Performance Management

MORE STEVEN SACKS: Effective Networking is an Art | Business Development Activities Shouldn’t Be a Chore | CPA’s Best Role: Leveraging Knowledge, Not Just Process | Avoid Last-Minute Deal Making | Five Common Negotiating Mistakes | The Myths of Performance Management | Business Is About Relationships | Reaching for Authenticity in Client Service |

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The problem is, Cokins says, it’s convenient for the accountants to allocate the overhead based on allocation factors, like labor hours, number of units produced in a manufacturer, headcount, number of employees, and square feet, even though none of them reflect the unique consumption relationship between how the outputs products and services consumed.

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When Cyber-Crime Hits Close to Home

Financial services are a prime target.

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With Steven Sacks
The NEW Fundamentals: Thriving in Disruption

With cyber-crime growing by leaps and bounds, accountants are caught in the cross-hairs, cyber-security professional Jill Cagliostro tells Steven Sacks for CPA Trendlines.

MORE: Effective Networking is an Art | Business Development Activities Shouldn’t Be a Chore | CPA’s Best Role: Leveraging Knowledge, Not Just Process | Avoid Last-Minute Deal Making | Five Common Negotiating Mistakes | The Myths of Performance Management | Business Is About Relationships | Reaching for Authenticity in Client Service |

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Cagliostro, senior product manager with Splunk, a data management and security company, says “cybercriminals are getting more advanced. They’re finding new avenues and new ways to get in every single day.”

“And beyond that,” she says, “they’re also communicating with each other. So they’re able to share these new tactics and techniques amongst each other to become more proficient together.”

Key Takeaways

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7 Signs Your Accounting Firm Agreement Falls Short

Will it work and does it make sense?

By Steven E. Sacks
The NEW Fundamentals

Earlier I discussed that engaging in what is considered conflict avoidance can undo the progress a firm has made. This can be because of complacency, frustration, intimidation or a host of other issues.

MORE: Effective Networking is an Art | Avoid Last-Minute Deal Making | Business Is About Relationships | Can a CPA Firm Be Different in a Changing Market? | A Rapidly Changing Business Environment Requires Flexibility | Another Meeting?!?! … Sigh | Organizational Trust: Top-Down and Bottom-Up | How Can Change Management Really Produce Change? | Trust: One Building Block of Success
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Some things are intuitively understood, but it’s those occasional sticky matters that tend to make situations unravel. Establishing and keeping agreements helps to avoid confrontation; the one typically arising from someone promising to do something in a timely and complete manner and within a specified budget. Even if the firm’s board casually agreed on a matter, something can go awry and threaten the direction of the firm.
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James Lopiccolo: Sell Service, Not Hours

Small firm attacks the big issues with novel strategies.

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With Steven Sacks
The NEW Fundamentals: Thriving in Disruption

The accounting profession is “stuck in a rut,” says James N. Lopiccolo, founder and managing member of Capocore Professional Advisors, in Lake Orion, Mich.

He says CPAs can’t see “the challenges that are coming by from other non-CPA firms.”

MORE: Effective Networking is an Art | Business Development Activities Shouldn’t Be a ChoreCPA’s Best Role: Leveraging Knowledge, Not Just Process | Avoid Last-Minute Deal Making | Five Common Negotiating Mistakes | The Myths of Performance ManagementBusiness Is About Relationships | Reaching for Authenticity in Client Service |

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Lopiccolo’s answer is offering service agreements, instead of billing by the hour. Risky? Sometimes. But clients love it.

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In more than 31 years of public accounting, Lopiccolo has worked in business advisory, tax, and accounting for a multitude of industries including contracting, manufacturing, medical, professional service companies, and real estate. He serves on the Michigan CPA Association executive committee and the finance committee, and he is a two-time chair of the AICPA Small Firm Practitioners Task Force.

11 Key Takeaways:

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Effective Networking is an Art

Four people meeting for business lunchListen to learn … about the speaker and yourself.

By Steven E. Sacks
The NEW Fundamentals: Thriving in Disruption

There is no one right way to effectively network. You can join boards, attend conferences and sign onto various electronic forums, among other ways. No matter how you decide to get yourself “out there,” the critical factor is the approach you take. “How may I help you?” is the positive, proactive way to establish a relationship.

MORE: Avoid Last-Minute Deal Making | Five Common Negotiating Mistakes | Reaching for Authenticity in Client Service | Deadlines? Ha! Don’t Make Me Laugh | Organizational Change Starts and Ends with People | Busyness Isn’t the Same as Productivity
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You as the networker are seeking to build a relationship. If the other person or group benefits from your effort, think of it as an investment for the future. If you are looking for an immediate quid pro quo, it will become transparent to the other party. When you offer assistance, be authentic and sincere in your words and actions. Follow through on your promises.
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The CPA’s Best Role: Leveraging Knowledge, Not Just Process

David Bergstein says you’re wasting your time and your client’s money if you’re not focussing on the future.

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With Steven Sacks
The NEW Fundamentals: Thriving in Disruption

To be more competitive, CPAs need to shift their focus from compliance service to process-oriented, value-added work, veteran CPA David Bergstein tells CPA Trendlines. This means working with clients to understand their business operations, competition, and financial challenges, such as liquidity, solvency, and profitability.

MORE on VALUE-ADD: How CAS Communications Are Different | How Value Billing Eliminates Guesswork | Avoid Last-Minute Deal Making | How a Great Managing Partner Impacts Firm Growth | Tax Season Client Meetings: Kill Them Now | Do You Give Yourself Too Much Credit? | The 17 Rules for Making Partner at a CPA Firm | Family Feud Isn’t Just a Game Show

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See more CPA Trendlines videos here | See more David Bergstein here

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The Key Takeaways:

  • Accountants need to switch their focus to look to the future and real-time accounting, which means that the right way of doing things these days is to take advantage of all technology and automation.
  • It’s a small and mid-size business that doesn’t have a bookkeeper, that doesn’t have an accountant, that doesn’t have a controller, that doesn’t have a CFO that looks to CPAs to help them. CPAs’ advantage is to use that technology to automate all those processes and then spend time selling value-added services.
  • Today, to be successful as an accountant, you must identify what platform or platforms you’re going to use to capture your clients’ data at the source to move it through the system.
  • Payroll tax processing services can be expanded by setting up the human resource tools that go with it. Beyond processing payroll, CPAs can find ways to get lower workman’s compensation; automate the onboarding of employees, and provide various benefit options.
  • As part of the de-emphasis on process, younger staff members don’t want to do vouchering anymore, which will be supplanted anyway by automation. So, it’s great for firms to offer more training opportunities to their younger staff regarding analytical thinking, selling, and how to consult with clients to find out what their needs are.

 

Transcript

David Bergstein, interviewed bySteven Sacks
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Avoid Last-Minute Deal Making

Woman and man shaking hands across a deskFive questions to ask.

By Steven E. Sacks
The NEW Fundamentals

CPA firms often believe the most crucial part of negotiations to close a deal happens at the final stage of talks. But in order to have a satisfactory conclusion, you must set the tone at the beginning stage with an honest and forthcoming discussion based on mutual benefit – with an underpinning of respect and trust.

MORE: Five Common Negotiating Mistakes | Courtesy Still Matters | Bigger Firm, Bigger Thinking | 5 Steps to Better Time Management | SWOT’s the Purpose? | Is Your Firm’s Culture a Magnet or a Repellent?
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For young professionals, it is never too early to evaluate your negotiation aptitude. Think about this as a process with key milestones. This gives you the chance to make modifications along the way and to avoid the last-minute pressures of bargaining that can remove the advantages you have created. Adhering to a game plan will reduce the chances of objections from the other party, or even worse, the backing out of an arrangement that you considered to be a “lock.” This can be applied to discussions involving a promotion or a pay increase.
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Five Common Negotiating Mistakes

Three people speaking by videoconferenceYou’re after success, not a “win.”

By Steven E. Sacks
The NEW Fundamentals

We enter into negotiations every day without realizing it, whether it is on a professional or personal basis. Irrespective of whether it is a contractual transaction between a company and vendor or if a husband and wife are deciding on which couch to buy, each side is seeking to gain something. Neither side may get everything it wants because an all-or-nothing-at-all approach will be a barrier to making any progress.

MORE: Courtesy Still Matters | Business Is About Relationships | Can a CPA Firm Be Different in a Changing Market? | A Rapidly Changing Business Environment Requires Flexibility | Another Meeting?!?! … Sigh | Organizational Trust: Top-Down and Bottom-Up | How Can Change Management Really Produce Change? | Trust: One Building Block of Success
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Negotiating involves getting and keeping agreements that work for all parties. You can reach an agreement but the issue is whether you can maintain the agreement and the relationship built around it. Both sides need to have a sense of “victory” or at the very least, feel they have not lost, because if this should occur then further conflict will result.
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Courtesy Still Matters

Business people laughing at lunch in a cafe outdoorsWhy aren’t you more successful? Make sure this isn’t the reason.

By Steven E. Sacks
The NEW Fundamentals

Technology has overtaken the traditional forms of communication that include face-to-face interaction, telephone conversations and of course, the handwritten or typed note slipped into an envelope, affixed with a stamp and dropped in the mailbox.

MORE: Business Is About Relationships | Reaching for Authenticity in Client Service | Deadlines? Ha! Don’t Make Me Laugh | Organizational Change Starts and Ends with People | Busyness Isn’t the Same as Productivity | Staff Orientation: A Little Investment Goes a Long Way
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But wait. How can professionals succeed if the situation calls for in-person interaction if they have not been given the necessary training in the art of a conversation? Whether you are involved in a job interview or entertaining a potential client over a meal, how you exercise the appropriate behavior will determine whether a relationship is forged or tossed on the pile of failed results.
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