How to Drive Value for Both Clients and Employees with Henry Huie

Episode 26 is the second of a two part episode of CPA Life, and Henry Huie rejoins John Randolph to talk about his new firm and its subscription model where clients pay for ongoing advice rather than billable hours. A focus on building deeper client relationships puts the value in “value billing,” and empowers clients to ask for the help they need without worrying about fees. Further, by leveraging technology, Henry’s ideas represent a way for firms to beat the staffing shortage as a job in accounting with fewer hours, better pay and more meaningful relationships is sure to attract far more talent than the same old, legacy firm attitude.

Transcript:

Now let’s rejoin host John Randolph and Henry Huie for part two of their discussion on creating a sustainable firm. Welcome to CPA Life.

You know, one of the other things that you talked about in the LinkedIn post, and also something that you’re also doing in your business, you’re really focused on creating a subscription based model—not necessarily a time and billing model. It looks like—it sounds like—you consumed quite a bit of Ron Baker theology, if you will, to kind of head down that path. Tell me what stood out there to you and why that was the path you chose.

It just made sense. I mean, especially, it makes like much more sense as you progress in your career, and you develop the knowledge. A couple questions I usually pose, the question is like, a statement, first of all, is, as I become more efficient, I get penalized. So if I get things done quicker, I feel like I’m getting penalized, because I just get more work thrown my way. But the other question is, you ask the client, like, I can be working 80 hours a week, and I said, oh, Henry has this project in mind, you know, when is it done? I’ll be like, hey, I already worked my 80 hours. And the client can be like, I don’t really care, like, where is my stuff, right? So then that makes sense to me. And also, just the fact that it works in the marketplace, like I’ve seen it work before, right? It isn’t like, it isn’t theory. “Billable hours is the only way to do it, that’s how everybody does it,” no. And I’ve seen other people, it’s like, no, the client’s willing to pay $5,000 for this tax return, they don’t care if we get it done in two hours, or ten hours, or twenty hours, whatever it is. And it allows me the benefit of like, if it used to take me ten hours, and I can invest in technology, and it takes me you know, now takes me only eight hours, and then or maybe I outsource it, or I hire somebody that can do it even faster, because they’re just a pro at whatever this tax return is, right? I get to keep the efficiencies of it, as opposed to if I was at a big firm, or even I wasn’t a big firm and I did billable hours. Like I don’t know, I want to lower the client’s bill.

Yeah.

Like, if it took me less time, like I don’t, I’m not exactly sure how firms do it if they are truly a billable hours model, because with the advancement of technology, offshoring, it just logically makes sense that it just takes them less amount of time to do it. But I’m assuming they’re charging the same amount as they did the prior year, if not more with, like the increase in inflation. So yes, it makes sense to me not to tie your time to revenue.

Subscription basis is fantastic. We live in a world where people enjoy a subscription base, as well as in our profession with all the tax law changes, people want that people are asking for it. Like a lot of the clients that I’ve been talking to right now, potential clients, they say, I don’t have access to my accountant. And I’m like to be fair, do they know you want access to them? Like, is that part of the package that you’re like getting? Or did you both agree and say, hey, you’re just going to prepare my taxes. And so some of it is just lack of knowledge. But some of it’s just accountants don’t know that they’re asking for it, you know, they talk to me, you know. And so, subscription model is, I think the way moving forward for a lot of people, and people enjoy because now they’re paying for something and they’re not afraid to reach out for questions and get the help they need, as opposed to the billable hours models, like a phone call’s another like 250 bucks or 300 bucks, and then they don’t want to ask them.

And at the end of the year, they’ll be like, can you tell me about this tax saving strategy? Like how come you didn’t tell me the electric vehicle credit is like a non-refundable credit now, or how come there’s different things, limitations about the solar credit and all this kind of stuff? It’s like well, you never asked, like blaming the other side. And so I’m hoping with the subscription model, it’s like, you have a relationship with me—reach out to me anytime or based off my pricing guide, like, you know, whether we meet quarterly, monthly, twice a year, and maybe you don’t even need it, you know. But for the people that want it, you know, I want to give them the opportunity to have that that level of service that they seem like they’re asking for but not getting.

I’ve said for I guess the last three years since we started seeing more of a value based or subscription based pricing model become more prevalent. And ironically, three years ago, our CPA firm that we worked with for a handful of years sold to a firm out of Tennessee that is a subscription-based firm. I’ve yet to ask over the last three years—I guess it’s been, this will be the for the fourth year—I’ve yet to ask, hey, how long did it take you to do my tax return? In fact, I don’t think I’ve ever asked anybody that. But what I have asked myself since we moved to that model three years ago, from a customer perspective, what I have wondered, is where in my mind, or where in anybody else’s mind, did we think it was okay to have one conversation around April 13, telling me how much I owe the IRS, and how much I owe you? Why any of us thought that that was an okay relationship, because most of those phone calls aren’t, hey, John, you’re getting a $18,000 refund, and you only owe us $6,000. Most of those conversations were the opposite of that—you owe the IRS $18,000, and oh, by the way, you owe us another 6, 7, 8 $10,000 for the work that we did.

So in a value based pricing model, a subscription model, I love the fact that conversation’s never had. I know what I’m paying every month. I know what I’m getting. And I know what I have access to. And it’s up to me to have those conversations or not, for the most part. So I think that you’re right, yeah, that there’s a lot of value in that. And it’s the name of it!

Well, I mean, there’s so many changes in the last three years that there’s so much value in that. Like, the things that I think have wrapped the top my head is may part of it, because I’ve seen a lot of mistakes done and people were asking questions, or a lot of assumptions are made, you know, you can get the advice that’s outdated, that applied last year that don’t apply this year. And so that’s what I’ve realized, that kind of confirms my assumptions, right? Like, of course, you can say like, oh, who doesn’t want to know their taxes, or who doesn’t want to save money, but these are real things where it’s just something simple. Like, hey, I’m getting an electric vehicle this year. And like, you make too much money. Like you don’t get that, like who told you you get that? Well, you know, my friend got it. I’ll say you know, the tax law changed, and like, now they’re putting limitations on it.

Or somebody says, like, hey, I bought a Nissan because I really want a Tesla, but they don’t have the electric vehicle credit. They brought that back, but you have different limitations. I’m like, well, crap, now can just return my Nissan Leaf. And like, I’m just like, dang. Like, I need to let people know, because some people don’t even know about these things, even professions, like even accounting professionals, because they’re just, like, constantly coming out with new things.

Or conversations, like somebody had a kid, you miss out like a $2,000 tax credit, and they didn’t question, they just assumed. Or like, they don’t look, you expect the client to like, look through their tax return thoroughly. And they don’t, they’re like, I trust you. And they’re like, oh, we got back roughly what we got last year. But you know, because everybody’s on this whole, I feel like our profession is too busy chopping down trees and not sharpening our axes. And we just try to sort of fly through these tax returns, get them all done and kind of have like the client say, like, call them up and say hey, did you review the return? They’re like, yes. And then you go through it the next year.

And so my business model is just to have more conversations with them, at least before the end of the year, if not, even more frequently throughout the year, because that’s where I think the value is. It’s not getting the tax return done. If you go to H&R Block, you go to a top 100 firm, if they’re competent, and they input the information correctly, it’s the same result.

Absolutely.

But the value is the information before the year end. Yeah, like telling them different things that they could do to potentially save money. If they’re looking at solar, they’re looking at electric vehicles, they’re a business owner, and they’re looking to save some money, looking at equipment, maybe looking to hire—there’s just so many different things that need to be discussed and doesn’t always even mean saving money. Sometimes just having the comfort that like, hey, I’m doing everything I’m supposed to. I had a client I just picked up that told me his friend, he said he had outgrown his S Corp, and he should be a C Corp. And I’m glad he’s asking me this question because I’ve analyzed, I’m looking at this like, I don’t know what your friend’s doing, but I don’t really see how that applies to you. But I can run the numbers. And so it gave him confidence that I ran the numbers showed him the lack of tax savings from switching, you know, he got comfort knowing that he was in the right entity structure, and I’m not sure if his friend’s in the wrong one or they just had different like situations, but people just apply like the same tax strategies for every single situation, and those conversations need to be had before. If he’s like, I don’t want to pay Henry, charging me 250 an hour, make the conversion, I come and do his taxes, I’m like what is this like, oh, I converted to C Corp on taxes because the tax rates are—but like yeah, but it’s a whole separate entity. Now the money’s stuck in there unless you want to bring it out and you get taxed again, it’s called double taxation. Like what?

Right.

And then like, little things like that. So anyways, I could go on for days like about how much value we can provide throughout the year, like I’m so disappointed sometimes that I’m like, I wish I could talk to all my clients and let them know.

Well, I think you touched on something, Henry, that I think is critical. You talked about how the value really is just in those simple conversations. And it may not necessarily be about specific questions or problems or challenges. We’ve moved a piece of our business, and we’re still migrating a piece of it, to a subscription based model from a talent advisory perspective earlier this year. And the clients that we’re working with on that model, we are having more just simple conversations that turn into strategy. They’re all growing, I mean, I don’t know of a CPA firm that’s not growing at double digit rate right now. It may be 10.2%, it may be 40%. But I don’t know of a firm that if they’re not doing things right, that isn’t growing right now.

So being able to have conversations with, you know, a firm owner right now that has 21 employees that does not have an internal talent acquisition HR model that we can speak to on a monthly basis about challenges, frustrations, issues, problems—put strategies in place that even though we don’t have an opening today, you know, we’re going into a couple of weeks back, really more than that, you know, we came out of the September 15th deadline, we had call setup with for those clients that say, hey, we need to start talking right now about what 2024 tax hiring looks like. Because the last thing you want to do is wait to get to October 15th, and at best, you’re going to be running after these people with the exact same people that are going to be running faster than you come October 15th. Let’s start right now. Let’s start interviewing right now, what do your plans look like? Well, I’m not going to be anybody till January, February. Okay. But let’s start putting a plan together to go after those people. So that we potentially make offers, potentially have those people lined up to start come January, versus trying to hire in December when nobody’s wanting to hire.

Yeah, they don’t need to feel like they can’t have access to you is my assumption. They get used to it.

Yeah, I think more than anything, Henry, it’s not even, hey, can I have access to Henry, or can I have access to John? It’s, in the world that we live in today, if there’s not that relationship there, everything is transaction oriented, you’re moving 100 miles an hour, yeah, the price of if I call Henry, he’s gonna charge me 250 bucks to answer this question. There may be a little bit of that. But part of it is, I’m just running 100 miles an hour and Henry’s running 100 miles an hour, he probably doesn’t have the time to answer this question. I’ll just, I’ll Google it, or worse yet, I’ll get an answer on TikTok or Instagram about what I should invest this money here, or do that. Where, in a subscription based model, I think what you get is, the first thought is, you know what, call Henry. Call Henry.

Yeah.

Ask him the question. You know, someone walks into an owner’s office and says, hey, we’re dealing with X, Y, or Z. What do we do? I don’t know, call Henry. Just call him, see what Henry says. And today, you know, I had a phone call on Friday with a client of ours, that’s part of our value based pricing model. And he called on Friday, and the simple question was, hey, I’ve got a director on my team that said something to me in passing yesterday. And I just need to bounce it off somebody because I’m not sure if I need to be concerned if he’s looking. You know, that conversation probably would not be had in there a great client, we’ve worked with him for five years, we’ve placed several people with their firm, but he probably wouldn’t think proactively to pick the phone up and say, hey, can I talk to you about this? He would have just gone on about his day and maybe stressed about it over the weekend. Versus hey, I just need to get this off my chest, and I need to talk somebody—you have 10 minutes? And I think that’s where the value occurs, is those conversations, build stronger, deeper, what I refer to as connective tissue.

Yeah, no, I think you’re absolutely right. Like we live in a world where like, everything is so transactional, like I just think of like, the dating scene where it’s just like, you’re swiping right swiping left and then like, you go on a date and it’s great. Like, cool. And then after like three dates, it’s like, okay, next. Like it’s so easy to find a different thing, right? Even in the accounting space, and maybe with the subscription model and building like that deep relationship. That is kind of the main thing I want is to build a much deeper relationship because I want the long term thing. I don’t want new clients that I pick up every single year that I can charge them, I don’t know, way too much money for. And I’d much rather have like a better relationship with them and for them to be continuous clients. And hopefully they’ll recognize the value of that, you know, through the subscription billing or value billing, whatever it may be. But yeah, the main thing, I think, right, is to build that connection.

Yeah, those things create more bonds with your customers than any invoice you send or any tax return you do. Those transactions, they help—they don’t hurt, they obviously pay the bills. But I think that, you know, as I’ve said in our business with salespeople so many times we’re so focused on getting a yes, we’re happy when we get that. And really what we need to understand is, okay, we got a yes, you said yes to us. Now, what has to happen for you to call us, instead of us calling you the next time there’s a problem, number one—then number two, what do we have to do to ultimately get to a point that we’re the only ones you call when a problem comes up? A simple yes isn’t good enough, we need to think past a little more than that, and one way you do that, as you build, you’ve got to have a relationship, those conversations have to occur, they absolutely have to occur.

Oh, yeah.

One of the things that I wanted to touch on with you, in the firm that you’re building is you’ve worked remote, you’ve spent a lot of time working remote over the last few years with your career, I’m assuming that the model that you’re looking at is building a firm that’s more remote-focused, not everybody’s sitting, you know, in your neck of the woods going into a central office. But outside of that, the challenge that the accounting industry is faced with right now is obviously, there’s a drastic shortage of people—less people coming in the front door than going out the back door right now. One of the things that we chatted a little bit about before we hopped online, and even some information we traded back and forth in an email is, you made a comment that you think accounting is one of the best jobs out there.

It can be.

I like that, “it can be.” If you’re sitting in front of a group of kids contemplating, hey, do I go down this path of accounting in college, or they’re sitting in college wondering, do I go down this path of public accounting, what are some things that you would say to them to, to let them understand that, hey, there’s some amazing opportunities in this space?

I would tell them, I guess, like what gets them excited? Which would be like, you can make a lot of money in this profession. And it could be staying within a firm, but if you want to make a lot of money, and not work crazy hours, you are either going to have to find a more modern firm, that there aren’t as many, or you have to build your own firm. And so I probably tell them, it’s like, for right now, I probably tell them to go get experience, which is working in a public accounting firm, and see it for themselves. And if it’s for them, great. Because I don’t want to be the one that says like, Big Four, Top 100 is like a complete “no” for everybody. Because there’s people there that have built really successful careers and are super happy. They’re just different people.

Right.

But just knowing that if it doesn’t fit there, that there are other alternatives, I think for me is I’ve noticed a lot of my peers, as they progressed in their careers and started families because that’s when that tipping point happens, and they’re like, I can’t do this anymore. Because I start a family or I have a family now, and I’m going to take my family over work. And when you’re tied to minimum billable hours, it’s hard to do both, like, there’s no shortcut there, right?

Like, what it would be like saying you work 55 hours as long as you get whatever your stuff you need to get done, right? But then you’re like gaming the system, which is like, you know.

Anyways, I would tell them, like, there’s a lot of money to be made especially if you stay within the traditional route, or the way I went is, develop the experience, gain experience, gain the network and the knowledge, and break out on your own, and you get to decide how much you want to work, how much you want to charge. And you get to make an impact in these people’s lives, especially work with business owners, right? Like they’re in business to provide for their family as well, just like you are. You’re able to help people and make an impact on them while making a living and not working crazy hours if you lean on technology, and the other available resources available to you. And then just kind of see the responses.

I mean, honestly, the first thing I probably would have asked them is like, what motivates you? I don’t know what motivates the new generation, but my assumption is money and not working as much. At least that’s what everybody says, is the issue with public accounting is like, we work too much and we don’t get paid enough. I’m like, cool, let me tell you how to get both. But some people might say otherwise, right? Like I always ask them what they want before I give them an answer. But based off the numerous articles that have come out, it seems like those are the top two things that the newer generation want.

I think you’re right, I think that there’s a nice balance there. And from what I’ve seen, I don’t think that it’s—I think that the generation is coming into the workforce today and even one generation up from that, I think more than anything, what they’ve realized is something that you didn’t realize in your generation, something I know that my generation didn’t realize is, there’s a point of efficiency that gets chunked out the window, after you’ve put in more than 50 to 60 hours. The quality of your work is going to just dissipate tremendously when you’re working 70, 80, 90, 100 hours. And I think that the generation is coming into the workforce, they get that, they realize that, they see that, they understand that. And you can’t argue with the science behind it.

But I think you’re right, I think that there’s a lot of opportunity for those young adults, to have great careers in public accounting—get some training, potentially, in a large firm. But again, as you mentioned, there’s a lot of great modern minded firms out there, there’s just less of them, but there’s a lot of great modern minded firms out there. Future Focus firms where employees are the priority. You’ve just got to be willing to come in and pay your dues, roll your sleeves up and work, because you’re not going to be able to hide in an office of 20 people like you can potentially hide in an office of 220.

Yeah, I think yeah. So maybe that’s just there’s so many opportunities, right? Like, you’re first starting out, you might want to be hybrid, you might want to be part of the team and do the whole annual retreat thing. And, you know, that’s kind of why, as much I love working from home, I love doing these QuickBooks Connect the digital connections. Like I love human interaction, like I’m not trying to be like, come and stay at home. But I like to have the options.

Yeah.

And so yeah, I just tried to be an open book with everyone. So I love to hear what like the new generation want, but I’m pretty sure those are those are the two main things that they say, because they I don’t know if firm owners don’t look at Reddit or Fishbowl, like, they’re an open book, they tell you exactly why they’re not going, why they’re quitting.

Yes, they do.

And instead of saying like, huh, maybe there’s a problem, and maybe we can try to fix it, because they’re telling us it’s like, a company that gets feedback, right? And they try to like adjust to it, like, oh, you wanted like an iPhone, like, oh, you guys wanted this. So we added this feature, like, we hear you, but we don’t think that it’s the real issue. We’re going to do this. And it’s like, okay. I never understood that. Because I talked to a senior manager and they’re just like, pay them more and have them work less, doesn’t work, because to go from 55 hours to 40 hours, you lost 15 hours of billable time. And then they want to hypothetically, double their salary. It’s like a double whammy coming on both directions, like Henry, it’s just never gonna work.

I was like, you’re right. And that’s why people aren’t coming into the profession. Like, you don’t even have a chance to convince them otherwise. They’re just saying no, because they’re like, I heard I get paid $65,000 a year, and I have to work 80 hours during springtime. Is that true? Like, well, yes.

Yeah.

Like, count me out. Like, but you can make a ton of money in 10 or 15 years as a partner. They’re like, I don’t have time to wait. I’ll go into data analytics and make 85 to 100 the first year, and even though I’m never gonna make more than 150.

Yeah, I think the fallacy that people don’t want to work hard is just that—it’s a fallacy. I mean, I’ve got a great friend whose son, late 20s, early 30s, he’s 31, maybe—came out of school, went into public accounting, went to work for a Big Four firm, got sick and tired of investing the ton of money he invested in his college education to come out and make $65, $70, $75,000. His dad was an entrepreneur. So he knew how to work hard. He worked hard his whole life. Well, five years ago, he decided, you know what, I want to make money. I’m gonna go start my own company. This guy’s an accountant with a tax background and a CPA. What did he do? He didn’t go start a CPA firm. He went and started a roofing company. They’re at about five years in business, and they’re approaching about $7½–8 million in revenue this year. And he’s, you know, single kid, 31, 32 years old, making great money, working his tail off. He’s got 10 crews working for him.

Oh, wow.

So you can’t sit there and tell me, hey, we lost this kid because he didn’t want to work hard, and he just wanted to make a whole lot of money. No, no, he’s willing to work hard. He just wanted to see a return on the investment that he, you know, put $80,000–90,000 on the table for getting a college education, and he wasn’t going to see it for a long time in the current public accounting model.

And I think that there’s some motivation there that we just need to like you said, go on to Reddit. If you don’t want to sit and talk to your people, go to Reddit, go on Fishbowl. You can easily see what it is that they’re talking about. So a lot of opportunity to fix problems without even having to sit and engage with people one on one, just read what they’re saying, what they’re talking about.

And I mean, you’ve obviously put a lot of time into building out what the future could look like for your firm. And again, correct me if I’m wrong, but the name of the firm is Chrome CPA, correct?

That’s the website, ChromeCPA.com. But my firm name is Chrome Accounting, LLC.

Chrome Accounting, LLC. The website is ChromeCPA.com?

Yes.

I mean, you’ve obviously put a lot of thought into what the future is going to look like, laying the foundation now—like you talked about, building a firm, not a job. Congratulations on what you’ve already accomplished. If somebody is wanting to learn more about what you’re doing, how you’ve done it, you know, be a voice like others have been for you, whether they’re an employee at a firm today, and they’re questioning what the next step looks like, or they know that they’re stepping out—if somebody wanted to get in touch with you, someone to reach you, have a conversation with you, what is the best way for them to do that?

I’d say follow me on LinkedIn or connect with me on LinkedIn. And if you have specific questions, DM me on LinkedIn. I’m trying to be always on there, and that’s probably gonna be my primary platform that I want to send this message out because that’s where a lot of people are at contemplating these decisions is going to be on LinkedIn.

And you spell your name Henry Huie, H-U-I-E, correct?

That is correct.

So if anybody is looking to get in touch with you, connect with you on LinkedIn, send a message on LinkedIn, pick your brain on LinkedIn to learn a little bit more about what it is that you’re doing and how you’re doing it. Henry, I want to thank you for joining us today on CPA Life.

Thank you so much, John. Thank you for having me.

You’re more than welcome. If you’ve enjoyed what you’ve heard today, give us a like, leave a comment below for Henry, for myself. And if you don’t want to miss any of the upcoming guests that we have, and we’ve got several lined up, that you’re probably going to want to grab a hold of some of their information that they share with us—do yourself a favor, do us a favor, subscribe to the podcast on the platform of your choosing. You can find us on pretty much any podcast platform that you enjoy listening to. In the meantime, though, we look forward to sharing more insights with you about CPA Life. Until next time, have a great day.

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Important Links:

Chrome Accounting, LLC

Henry Huie on LinkedIn

How to Drive Value for Both Clients and Employees with Henry Huie

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