Wednesday, December 31, 2008

Interesting Tidbit from CNN

Obama's paycheck bonus -You might not get a raise next year. But if the economic stimulus ideas being floated are any indication, you might get more money on payday anyway.

http://money.cnn.com/2008/12/30/news/economy/paycheck_stimulus/index.htm?postversion=2008123011

Stand by... for a... Correction/Retraction/Excitement?

Although I won't go into too much detail yet, it seems that the payroll business is just barely taking a hit this quarter. Yes, in this glorious economic scenario, most folks I've talked to in the past two weeks, in all timezones are reporting that they are growing and doing well.

Was I shocked? A little bit. Initially, folks were telling me that they had started to lose some clients, but not too many. They were adding clients as fast as they departed.

I am beginning to think that the initial losses may have been organic, and potentially regional. The number of startup companies that I am working with right now has remained steady, and they are very excited about getting into a business that is relatively stable during economic turmoil - and they are very aware of what they are doing.

Let me point out that December, January, and February are not exactly prime-time for getting an Accounting Professional on the phone to talk about software. If my own, qualitative analysis of new business coming my direction is any indicator... things are looking REALLY good for payroll.

Wednesday, December 17, 2008

What if the feds take over your client's bank?

I had an interesting conversation today with one of my clients. He is swimming nicely against the current, and is moving ahead and growing his payroll business. I say - good for him!

We were discussing the economy's effects on his clients and he mentioned that one customer had their bank taken over by the feds. This led to some interesting times as the takeover seemed to protect the client, while at the same time really screwed up the direct deposit process.

Apparently the feds left the account numbers in place, and changed the routing number, told the client to change it, the client did, then the DD didn't make it through and they said 'why did you change that number?'...


Needless to say, even if my rough translation of the story is only slightly accurate - if your client's bank closes shop, it is time to pay very close attention to the process.

I am hoping to get a more detailed report from my client and to update this posting with the true-gritty details... feds running around with fliers telling everyone that, "its gonna be all right... you're federally insured!"

This could be a great time to explain how holding their tax payments in your escrow trust account is a great way to avoid burrying the payroll in the backyard until payday!



















Friday, December 5, 2008

Twisting Chicken Little's Tale

This week I've been talking to folks about the intersection between their accounting & payroll practices, and the economy. I've been working on getting a better feel for the kinds of clients who are suffering the worst of it during the last three months. As a starter, here is a very partial list of the kind of clients who seem to be dropping off:

Car dealers, large and small… ancillary services associated with the dealerships such as autobody shops with exclusive deals… Realtors (surprise, surprise?)… Home inspection services… Small mortgage brokers… Some or all restaurant locations… Day Spas… Small to mid-sized contractors…

Well, the auto and realty industries are not likely to recover any time soon, but those restaurants, day spas, and contractors might have a chance!

Now here is where my Organizational Management brain starts talking to my keyboard... those of you reading this, whether you know it or not, have a pretty good understanding of how this works. The ultra short form of what the field of Organizational Management attempts to do is this: build and/or clean things up where business processes collide with HR management. As an accounting professional who has insight into the payroll of multiple clients, you get to see a little bit of everything. You know who the client’s suppliers are, how many people they employ, if they own or lease their properties and even if the IRS is likely to find anything ‘odd’ if they came sniffing around. The client may have even confided in you through casual conversation, or asked your advice about an HR issue they are up against. In other words, there is no one else out there with a better understanding of what is under the hood, either making that business purr like well fed cat, or run in circles like a gerbil in one of those hilarious plastic balls.

The question right now is what can you do with this knowledge that will help a troubled (not hopeless) client keep their head above water?

I would put on your graduation hat, flip the tassel back to the other side and put pencil to paper to write a mini case study on one of your clients who is in trouble. Start by writing down everything you know about the client. Nothing is irrelevant. It is likely that a troubled client has not changed much since the economy did a high-dive into an empty pool three months ago, and if they did, it was probably a band-aid on a gaping chest wound (I did remember something from Boy Scouts!).

Take this pile of data, and throw it a mixing bowl with the ingredients known as ‘Recession’, local variables, and a healthy dash of fear. Stir it up in your head and then start brainstorming about why the client is feeling the pain.

Imaginary Case Study:
Let’s pretend that the client is a five location restaurant owner. After stirring the pot, we realize that they have two of their restaurants in troubled locations. One is next to a mid-sized manufacturer who you know just laid off 25 of 200 employees. Not only did they lose 25 potential customers, but the rest of the employees are brown bagging their lunches now. The other businesses in the industrial park are also likely to be feeling the pain and looking at some strategic layoffs to keep afloat. The other troubled location recently opened and was strategically placed next to a brand new business park that now has 10% of its pads filled, and lots and lots of, “Build2Suit… For Lease… and Vacancy” signs everywhere. On the other hand the other three locations are in secure areas for drive-by visibility from all walks of life and haven’t seen any significant drop off in clientele. The business is on sound financial footing, other than taking a big loss from the two sites that aren’t performing. They lease their locations from a property management company, and have been in the black for the past five years – until Q4 of CY08.

Now with your knowledge of their business, could you put together a scenario in your mind where they could live or die this year depending on core decisions made about the two locations that are not performing? Can you assist them in either unloading the properties, or mothballing them, or re-structuring their operation to remain or become successful?

What if we advised the client to make the following changes:

Properties A, B, & C (doing well in high traffic areas)
  • Don’t fix what isn’t broken
    Property D (losing business, but not failing, in the impoverished industrial park)
  • Modify their operation to keep costs down
  • Reduce their hours of operation
  • Reduce head-count
  • Take a shift or two as the manager/owner
  • Modify the menu to 100% value items
  • Get on their feet for some direct marketing to the local businesses
  • Recession coupons, etc.
  • ‘Bailout Burgers’
  • ‘Economic Stimulus Energy Smoothies’
  • …you get the picture
    Property E (throwing away spoiled food in empty industrial park)
  • Cut their losses and break the lease
  • Mothball the operation until things get rolling again


    This client could be seeing black in a sea of red, sooner than their competition, after taking a mild, but humbling hit up front. If they take your advice to take the steps today to make tomorrow brighter – you will have a client for life.

  • Tuesday, December 2, 2008

    The Sky Is Falling!

    What strikes fear into the mind of the client – and how to relieve it before they run straight for the nearest burning barn


    (Part 1 of an ‘Interactive’ article)


    People are afraid. Yup, we sure are. The way the news reads, those of us who built our bunkers in the 80’s for the upcoming Russian invasion should be proud (I should be so lucky…)! The end is near, and the people who hid their money in the mattress will be the next Nouveau Riche! (well, this one might be true).

    Now… what can we do to put on our blinders, turn away from the hordes of ‘Chicken Little’ wannabes on the TV news, and convince our clients to do the same? We know the truth, and the truth is that if a payroll client takes their payroll back in-house, it won’t save them one thin dime.

    At our core, we are all about our gut instincts, and don’t really care for numbers all that much (yes, even accountants). I recently picked up a new book by Daniel Gardner entitled, ‘The Science of Fear’ and strongly recommend it to anyone who is looking for a way to educate their so called ‘intuition’ into having a heart to heart conversation with the other half of their psyche know as ‘reason’. Daniel’s book inspired me to try and relate his, “Science of Fear” to the reaction of clients utilizing a service such as payroll outsourcing during the…

    DOOM! DOOM! DOOM!

    …‘economic crisis’ we are experiencing today. The memory of watching the movie Ice Age with my kids came to me just now as I cheerfully typed DOOM repeatedly. In particular, the scene that rolled through my mind was when the soon-to-be-extinct dodo birds started chanting, “Doom On You! Doom On You!” to the lovable characters, only to gleefully fall to their deaths as their fear of ‘The End’ came true despite their careful efforts to preserve their species.

    We need to figure out how to help our clients avoid extinction as bad only seems to become worse, as our country and the world stumble their way down the muddy path toward what we all hope is the light at the end of the tunnel.

    Let’s start by exploring how we nabbed the client in the first place. This might help us to understand what triggers are being pulled in their mind as they begin to panic.

    There are a number of reasons that a client came to you to handle their payroll needs. Let’s start a list:


    • A referral from another client? (Yes!!!)

    • Your winning smile?

    • They or ADP or Paychex blew up a tax payment and they had to eat some P&I sandwich?

    • Their payroll person quit or was terminated?

    • They let go the person who was doing it and saved some bucks?

    • …the list goes on


    Now that you have a reason fixed in your mind, think about the client who came to you for that reason. Upon their arrival, you made things better for their business, and possibly for their personal life as well (assuming late nights trying to figure out payroll for their employees the Thursday before payday).


    With these lovely thoughts circling in our mind, just for argument’s sake, let’s pretend that they are just getting nailed by the economy right now. Sales are down 30% or more... they can’t get the credit they were previously approved for to fund the new expansion (because the FDIC & company chained the doors of their bank)… there is a handwritten list hidden in their files cobbled together one late night in October numbered with who would go first, and why, when the layoffs begin. They are feeling desperate, and are afraid that they might not be able to ride this thing out.


    Scary stuff. I just gave myself the chills!


    First of all, I pray that this isn’t happening at your practice, and that your clients are calm, collected, and not feeling this kind of pain. Unfortunately, lately, in many cases, the question isn’t will it happen, but when will it happen?


    Scared people do silly things, and that includes the consumers who spend their dollars at your client’s place of business – just as your client spends their hard earned dollars on your service.
    If the client is truly in trouble, there may not be much you can do, other than to refer them to a good attorney. What we need to concentrate on are those clients who are not in the soup yet, but are watching, getting big-eyed, and becoming very, very afraid.


    What we need to think about is how we can preemptively make a move to shore up our relationship with the clients who are in a weak position in this market, but not in imminent danger of failing. What can we do to help them both in terms of keeping their payroll account and thereby protecting them from messy tax implications, overhead, etc. as well as help them shore up their own business practices to weather this storm with us?


    I am looking for reconnaissance from the field:

    • What are the classes of vulnerable clients you see out there?
    • Your ideas related to what can be done to both retain the vulnerable client, and help them through this
    • If you are successfully working through this with your clients, what strategies can you share with your peers via this medium?
    • Other insights?
    • I am asking you, the reader for input on these to help me fill in the blanks, but more importantly to help your peers to help their clients.


    If you are willing to contribute your knowledge, please send me an email at: lcashwell@adaptasoft.com. If you’d like to remain anonymous, but still contribute, be sure to indicate that in your message.

    As I call on payroll practitioners each day, I will be asking them all for their input on this, and will share my findings in Part 2 of this article which will be titled, “The Sky Is Falling! – Strategies From The Trenches (Part 2 of an ‘interactive’ article)”. I hope to, with your help, be privileged to title the third installment, “The Sky Is Falling! – Success Stories From the War On The Economic Downturn”.

    If you are kind enough to contribute, with your permission, I would like to attribute your ideas to you and your company. I will be posting a live feed on this topic directly to my blog in the interim between ‘official’ articles.

    Oh yeah, I almost forgot. If you aren’t my client, this isn’t a sales ploy, and you won’t be solicited during any conversation you open up with me on this topic. Let’s just try to do what we can to help our peers and ourselves through these interesting times.

    A printable version of this article will be posted on the right side of the blog tomorrow