Modern Accounting Challenges: Tech and the Human Element with Chris Papin

Chris Papin returns to CPA Life’s Episode 51 for Part 2 of his conversation with host John Randolph. Their discussion shifts focus towards effective communication, training, and adapting to new technologies in accounting firms. Touching on the challenge inherent in teaching communication skills in a technical field like accounting, Chris stresses the importance of aligning that pedagogy with both internal and client expectations. But underscoring everything, most importantly, is the human element, something that cannot and will not ever be provided by the tech tools that accountants nevertheless need to adopt. Indeed, fostering those connections has been made easier through technology, and they will be more important than ever as the profession continues to evolve.

Transcript:

Thanks for joining us on CPA Life, where host John Randolph now continues his engaging conversation with Chris Papin of Papin CPA. They touch on the challenges and opportunities in modern accounting, communication strategies, the integration of technology in the workplace, and more. Welcome to CPA Life.

You know, if I say orange or red, which one am I talking about? If you see a different color than I do, that’s going to impact the end result. So that’s where that validate concept has come in. We need to realign and make sure that what we taught is in line with expectation on delivery. So how do you get that into your folks’ hands? How do you teach them to the next step? It’s hard. And I am no expert at it, but I’m the first to say I’m going to start and I’m going to try, because I’m going to get left behind if I don’t.

Absolutely. And in the marketplace today, I think that people are wanting to step into and grab ahold of those challenges as young professionals. Where there’s also a gap is most people that are going through accounting are not taking a ton of communication classes or business communication classes. They’re not learning how to have an engaging conversation, to ask questions, and listen. They’re learning the technical piece of it. So like you said, if you’re not teaching that person how to have those interactions and then validating those things, you can’t say to that junior accountant, “Hey, go have this strategy conversation with one of our most complex clients,” because they’re going to fail miserably at that.

We were picking on education in the pre-interview, and there’s an element in education where they always teach you to have an answer. And something I teach to my team all the time is if you are not strong enough to say, “I don’t know the answer to that, but I’ll get back to you,” you need to get on another team. Because inevitably you’re going to be faced with that. And I think having the courage to say, “Sorry, I don’t know. Give me a minute.” That’s okay, and that’s completely healthy in our world because… Curveball.

A client was teasing me the other day, sent me an email that I sat on because it’s multifaceted. His financial advisor sent me an email that is a mathematical formula, so I replied. And then the next one was, “Have you filed the return yet?” I replied with no, easy enough, right? And then the client in that email chain says, “Well, I’m sure glad you replied to him and not to me.” And I called him that night. He’s a dear friend of mine, so I’ve known him all my life. And I called him that night and I was like, “I will respond to you within 15 minutes as soon as you send me a yes/no question that I know I can answer yes/no to. When have I ever sent you a yes or no without you getting a reply?” And he was like, “Yeah, good point. I’m glad you called.” That’s some of the predictive stuff that doesn’t get taught. It’s fun to tease about, and he’d love the fact I’m talking about him, but that’s reality, and that’s not at school. That’s this blending of styles that we’ve got to figure out.

Younger generations are pretty good at getting in the different forms of communication. And, you know, we were teasing about it earlier. Like there’s a senior generation, us and above, they wouldn’t dream of sending a text message. That’s not professional. Half my client base expects me to text them and say, “Hey, go look at your email.” Just the way it works!

Yeah. I was talking to a friend of mine the other day about the whole concept of texting, communicating via text. And he was talking to his 22-year-old daughter who broke up with her boyfriend via text. And he was saying, “You know, I guess that’s just how things are done in the world today because that’s what she told me is, ‘Dad, that’s just how we do it.’” And he said, “I looked at her and said, ‘You better not do that to me.’”

So, you know, it’s just learning that there are different forms of communication. How do we blend those in the marketplace, still deliver the service to the customers we want to have, but also delegate and train our people up so that there’s a challenge to them and how they grow their careers and interact. We dealt as an industry on the recruiting side of things, you know, 20 years ago with the creation of Monster and CareerBuilder, and everybody’s saying, “Hey, as a recruiter, you’re going to be out of a job.” And kind of what you were saying a minute ago, I said for years, “Look, we’ll be out of a job when people no longer want to go face-to-face, eye-to-eye with people and engage in a conversation because as long as there is a need to do that, as long as there’s a need of people working with people, we’ll always have a job. Because it’s not just about technically what does this person’s resume say or an algorithm says we need this and the resume says we’ve got that, make an offer. It’s so much more nuanced than that in accounting. And AI is so much more than just, ‘Hey, ChatGPT, can you run this reconciliation for me and send it to my client?’” Because I can’t speak for all of your clients, but I can speak for me. I may place accountants, but I’m not an accountant. I need some very rudimentary explanation about my P&L on a monthly basis. And ChatGPT is not going to do that for me.

And something that’s important inside of here, and you’re speaking to it in different ways, but when I deliver a Profit & Loss, if you and I were looking at the screen right now and your Profit & Loss said you made $17 million, and I told you, you’ve got a $7 million tax bill. Are you prepared for that? Right? I can see you smile.

Yeah.

And if people are listening, you can’t see our verbal interaction and our hands and all that nonverbal—that changed in a digital environment. That doesn’t exist in Technology Land. So to your point, when ChatGPT sends the financial, cool, awesome. You automated that out the door. That does not mean people translate what’s at the bottom of that screen. And that’s really where I think the value set is.

We adopted years ago—we adopted video reviews of tax returns, and surprise surprise, clients that are listening, we can see whether you clicked the video or not. But what we ran into was people were asking, “Hey, did you include that one thing? I don’t know where to find it because I’ve never done that before. Did you include the sale of a vehicle, for example? Did you get that big transaction we did?” They just needed somebody to say, “Hey, look here.” And it was tough during the tax deadline because everybody would say, “Well, nobody’s available to sit down with me.” And we’re like, “Because you’re not going to ask the one question, you’re going to spend three hours babbling about nothingness that doesn’t get us to a tax deadline,” so we all fought each other.

In the last two years, this video review concept, and there’s a client who knows exactly who I’m talking about, and I guarantee you he’s not listening because that’s not his style, he replied with, “Thank you. You saved me from calling and asking the dumb questions,” but it’s, there’s still a human element. Even though that was a one-way delivery, we’ve got to keep the door open to the two-way delivery piece of this because without it, what’s the point?

Well, you know, even taking it a simplistic step farther, the person out there that may be great at what they do, you know, whether they’re a mechanic, a plumber, a recruiter, a lawyer, whatever, they may be great at what they do, but they just don’t get the number piece of what they do. And so when you have that conversation of, “Hey, here’s your P&L, and you generated half a million dollars in revenue last year, and your net income was, you know, $250,000,” there is obviously the person that looks at it and goes, “Well, I ain’t got $250,000 in my bank account. Help me understand. How did I make 250? I didn’t see 250.” And again, just that human interaction that needs to be there is critical.

Well, and sometimes, I mean, kind of the way we talk internally, is that clients think bank statement accounting, not P&L accounting. There’s lots of conversations where, you know, you’re onto something where they’re saying, “Well, it didn’t feel like I made $250,000.” No, it doesn’t because everything costs more now, probably it’s more like you made 200. I hear exactly what you’re saying. But the first thing internally, we’re going, “You deposited the money. How on earth do you not know how much you made?” There’s the beauty of sitting down and having the conversation. You got to connect the dots on both sides. I’m the first, like, sometimes we misinterpret.

You know, another good client story on this kind of interplay—I could visibly see him when I delivered his tax bill to him. Like he’s starting to squirm. Like, “Hey, what’s up?” “This is a lot more than I anticipated. When you told me the safe harbor number, you told me something significantly less than my total tax bill.” For those of you that are listening, that’s technical speak, for safe harbor means don’t pay penalties and interest, not total tax bill. Total tax bill is a different number. And I’m like, “Okay. Explain to me what’s up. You remember what a safe harbor is. That was our last conversation.” “Yeah, but I don’t understand how it’s so much less than…” “Ooh, so pause for a minute. Tell me what a safe harbor is.” He repeated it back. I mean, swung out of his shoes with reset. “You think a safe harbor is a truck, and I just handed you a boat. I missed,” but therein lies the expectation piece.

So it’s this, again, it’s this two-way, but we have to create space in there, and it can’t fall on firm owners. I know there’s got to be a handful of firm owners sitting here going, “I can’t have that conversation too. I’ve already had that conversation,” and this is where you’ve got to empower your people, whether it’s video or notes or CRMs, or we use note-taking tools that summarizes conversations. So people can do a live search back through it to say, “Has Papin talked about Safe Harbor with this guy? If so, cool. If not, that’s okay too.” Just little stuff as we go.

Well, and the beautiful thing about doing it in a, for lack of a better way to put it, in a vacuum where, you know, maybe it is in a video-type situation, you can work with your team on, you know, “Hey, you don’t need to send take one, because take one may suck. Let’s work on that. Put a script together. Make sure that you’re hitting the high points. Make sure that you’re giving them the information that they need.” So again, that whole mindset of delegation as a way of elevation, I think, is really a unique way to approach things because with the tools and the technology we have today, you can upscale people in a safe environment where you’re not just throwing them out there.

Yeah. Do the return review. Send it to me, and I’ll tell you if it’s good or not. Then we’ll send it to the client. Easy.

Yeah. You’re giving that person the ability to build some confidence, build some skillset, and also build some credibility with the client that, “Hey, maybe one day I’m going to hand this client off to them. So let’s start building some credibility there.”

You know, one of the things I wanted to ask you about with the way that you structure your firm now, again, we talked about this a little bit. You were talking about, from a pricing standpoint, how you guys have structured things, and there’s some constraints that you have because there’s the law firm side of things, the accounting side of things. Talk to me about that, because I know that in a perfect world, you were saying, “Hey, we’d love to get everybody to a subscription-based model versus a time and billing model.” Where do you see the value that lies in that, and how do you blend those two things together?

From the beginning, I am a business owner too. I don’t like surprise bills. I hate it when my insurance comes due because all of the insurance shows up at the same time. And I’m not a finance style guy. We’re paying for it all at the same time, but that’s a big check when you got to pay for three firms. If I live that way, I’m pretty sure my client hates it when I send them a big surprise invoice on a tax return. So that’s kind of where I want to get to a fixed fee model, 100% fixed fee, but that all revolves around scope. What is included? And I’m borrowing from a friend on this, but how much is a bag of groceries?

Depends on what’s in the bag.

Depends on what’s in the bag. You’ve heard it before, right? So therein lies the scope conversation. And the law firm, particularly with our professional standards, there is a time component that must be tracked, so we still track it. We’re still mindful of those different disciplines and requirements. Because I think it’s one component of many. But if I’m using technology software tools, I’m not manually calculating a tax return. No one has for the last however many years since there’s been an e-filing requirement. So why are we charging by the page? That doesn’t make sense.

So I think looking through that kind of lens, there’s a complexity factor, there is a system, there is a knowledge base. I’ve been doing this a long time, and I can probably guess if you’ll give me certain demographics about a financial structure, a tax type, a behavior type, there’s value in that. And that’s what people are seeking out. Just because I can say within the first 30 seconds of a conversation, “This client falls into this grouping,” doesn’t diminish that it took me a minute to do it. So therein lies kind of all these—kind of a stew mixture, and you got to get all the ingredients put together, and you’ve got to line them up to client goals and purpose. If they line up and the client buys in, green light. And this is where I think people get lost. Like, “You’re charging how much for…?” It depends. It really depends on what’s on the backend. If you look at our fees and say, “You’re charging that much for a tax return.” Well, yeah, my fees are unreasonable for a tax return, but we’re doing so much more. You have no idea. And I guarantee you, the client can’t enunciate it because if they could, they’d be doing my job. I tease about that not because my clients are unsophisticated, it’s because it’s my specialty.

The other side of that is oftentimes clients believe that if it says tax, it’s my problem. But oftentimes, I’ve only been hired for income tax. So there’s firm owners are going nuts right now, and they’re like, “Oh, I hate this. They call me about sales tax and payroll, and I’m not even their payroll company.” I get it. And that’s where the value set that we talked about at the beginning, we’ve got to be able to have open dialogues to say, “Hey guys, let me give you a quick little glimpse. Let’s build space in our engagement so I can give you some back and forth.” That’s where the safety of—we need to know bandwidth for a specific client. And it’s not just ours. Yeah. There’s variables to that: right person, right seat, right bus. If you get that right, the rest takes care of itself. If you’ve got the teenager driving the bus that doesn’t have a driver’s license, that’s a recipe for disaster.

Absolutely.

So I know that’s kind of an abstract way of arriving at… We want to be forward-looking. We want to create space to have those open conversations. And most people don’t want that hourly, fearful, “Oh, I called you. I got a $150 bill just for asking a question on my return.” Every client I’ve ever talked to hates that. So therein lies some value inside of just let’s create an environment that is healthy for all involved. If a client doesn’t like what you have to offer, you do not have to concede your price to keep the client. You could just say “no thank you” and move on. That is an option. Yes. But I think we get inside of our own heads and say, “I’m going to lose a revenue stream, and what if, and how,” why are you letting a client tell you how to run your firm, especially when you know they don’t know how to do it? Yeah, that’s kind of what it boils back down to for us.

Yeah, I’ve said for the longest time, I have never asked my tax accountant, “How long did it take you to do my return?”

No one does.

Yeah, I don’t care.

Well, right up, unless you get a surprise bill, and then you might read it and say, “It took that long?”

Well, honestly, since we moved to a firm that, you know, our firm was, that we worked with was acquired, and they went to a subscription-based billing model, and ever since that happened five years ago, the thing that makes my life pleasant is that I don’t get a surprise bill on April 15th, April 14th. And when I say a surprise bill, I don’t get a surprise tax bill either. There’s been a plan put in place. There’s been discussions of what this potentially could look like: If we head down path A, this is probably what we’re going to be looking like; if we head down path B, this is what we’re going to be dealing with. So which path do we want to walk down this year?

You know, there was a year, two years ago where we made the conscious decision to pay the minimum amount we needed to pay on a quarterly basis because there was some growth that we were looking at. And I felt like the ROI of taking that money and using it for salaries would be significantly higher than paying the IRS and dealing or not paying the IRS and having some kind of a penalty at year end.

Yeah. A little bit of penalty and interest. It’s another form of a loan.

Exactly. And so that’s the path we took. But knowing that upfront and being able to have that discussion that I could pick the phone up and call my accountant and start a conversation with, I know that causes a tremble every now and then of, “Hey, Chris, I was thinking,” where, you know, there may be some trepidation on your end when that phone call comes in, but you’d much rather have that phone call than, you’re dealing with a box full of receipts and Excel spreadsheets in January, having to do six weeks of adjusting journal entries and wondering, “Hey, where’s the P&L for the warehouse that we had last? Oh, you sold that? Yep. When did you sell that? How did you structure it? What did you do with the money?” All of those things that you would have loved to have known about.

All of that is what I’m saying we need to build space to have conversations about. And I’m 100% with you. What you just said, most clients ask for when they say, will you please prepare my tax return? But internally, to a firm, tax prep is one task. All-encompassing relationship. So again, if you think I only prepare a tax return, you’re nuts. And John, you’re all over this in the sense that you want that two-way street. Where it gives us trepidation is when it’s like, “Hey, I have an idea about the thing I did six months ago.” If that’s a surprise to me, we got a problem. If you say, “Hey, I’ve got an idea in about 60 days,” we’re all-in.

Yeah. I used to have an employee that would come to me and she would always start her conversations, this was years ago, she would start a conversation with, “Hey, I need your advice.” And she would explain something to me and then I would tell her my thoughts and she would go, “Yeah, that’s not what I did.” So it took about four or five times till finally it got to the point where she would come to me and she would say, “I need your advice.” And I would say, “Hold on, do you need my advice because you’re going to make a decision or are you looking for validation because you’ve already done this? Just let me know now. Which path are we walking down?”

Well, and there’s that human element coming out again, right? We ask for advice when we want validation. And again, I’m not faulting anybody for that. It’s just, that’s who we are as people. You’ve got to learn those elements in there. I had one of those too. And we dubbed the client, we always had to play fixer. And no matter what path they chose, it would be wrong. So we would have to go back and try to fix and paper up and do whatever it was. But it was a fun relationship because they knew it too, and they were okay with it.

Yeah, you figure out a way to, to have those conversations a little bit more proactively. I mean, Chris, you’ve obviously put a lot of work into laying the foundation for a really bright future for your firm going forward and what you’ve built to this point. If someone is wanting to learn more about the firm, about the road that you’ve traveled over the last few years, or if someone is possibly looking at making a career change, what is the best way for them to get in touch with you, find out a little bit more about opportunities that may exist there, or get some advice from you on things they’re struggling with?

The two things that I always kind of put here are, first and foremost, find me on LinkedIn. Just search for my name on LinkedIn. We push out free content that helps business owners, employees, people, families. Some of it’s just me, random thoughts. And, you know, sometimes that’s great, sometimes you’re going, “That guy’s nuts. Let’s not do it like that.” But I think somewhere in there, creating familiarity is helpful. And we all fight the same battles.

The other piece would be to reach out to my firms, go to our websites. It’s PapinCPA.com, PapinLaw.com. It’s pretty easy to chase down what’s there, but we are always open to, whether it’s a client relationship, new employees, we want positive relationships in our lives. When that relationship develops, the rest takes care of itself. I have no idea where that’s going to go. And I know I’ve said it more than once, but there’s truth in it. Our director of operations I met hiring for a different position. Flat out told her, “Not hiring you for this job. This is not going to meet you, but I’m keeping your resume and I will call you back.” Fast forward, here we are a handful of years later, and there’s nothing we do she’s not involved with.

Wow.

So those are those where I say, you’ve got to be on both sides. I’m always looking to meet good people like you and having opportunities to be on podcasts like this.

Yeah, those conversations really are priceless. And in the world that we live in today, there’s so many tools and technologies that we can use to have those conversations. It’s one of the things that we talk to candidates and clients about all the time is, look, I’m not saying that I need to hear back from you and you say, “Man, that’s exactly what I’m looking for. If it’s everything that I want, checks all the boxes.” If you just get back to me after I send you information on a firm or on a candidate and the response is, “You know what, there’s enough there. Let’s have a 30-minute conversation. Let’s figure out if there’s enough meat on the bone and do we take this thing a little bit farther?”

But, you know, with technology today, again, the ability to hop on a Zoom call, hop on a Teams conversation, be able to look somebody in the eye, have that call and go, “You know what? I think there’s something here. Let’s dig a little deeper.” Or like you said, with this other person that’s now your director of operations, “Hey, I don’t think this really comes together today, but let’s stay in touch because you never know what tomorrow is going to bring.”

Yeah. And there’s an authenticity that you’ve got inside of there. If anybody has listened to any of the podcasts, there’s an intentionality and an authenticity that’s woven in that’s maybe not spoken sometimes. In the handful that I’ve listened to, I get a sense that you and I are going to go have coffee or whatever it is that we go have and love every minute of it. And we only know each other virtually. That’s the beauty of technology and all of these diverse ways. And yeah, why not? Why wouldn’t you? I think that’s what people are seeking in today’s world.

Absolutely. I think that we’re all seeking, you know, some way to connect, some way to take a step, one more step down the road, and if somebody can help me take that step, all the better. So, Chris, thanks for joining us today on CPA Life. I’ve enjoyed the conversation that we’ve had.

Same here. Appreciate the opportunity again.

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Modern Accounting Challenges: Tech and the Human Element with Chris Papin

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