Productivity, Production & Profitability.
They play an important role to a successful bookkeeping business.According to our guest, co-founder & CEO of Receipt Bank, Alexis Prenn, bookkeeping should be a very profitable business and Productivity Manifesto explains how you can make this a reality.
Productivity Manifesto will help you learn how focusing on one key ratio can be the foundation for building a productive, profitable, and scalable bookkeeping business that’s ready for the future.
During this interview, you'll discover...
-
The importance of productivity in industrial scale
-
How technology can help clients and “wow” them
-
How technology can assist your staff and benefit them
To find out more about Alexis & Receipt Bank, click here.
To check out Alexis' previous episode, listen here.
To download his Manifesto, click here.
For his LinkedIn page, go here.
To check out his Twitter, discover here.
EPISODE TRANSCRIPTION
Michael Palmer: 01:10 Welcome to The Successful Bookkeeper podcast. I'm your host, Michael Palmer, and today's show is going to be a great one. Our guest is making his triumphant return to the show. He is the co-founder and CEO of receipt bank, which is the software that extracts key data from your bills, receipts, and invoices and publishes it directly into your accounting or bookkeeping software. Alexis Prenn, welcome back.
Alexis Prenn: 01:34 Michael, I'm thrilled to be here. It's a great treat to be back with you in the new year and I hope that we can form up the podcast today, conform parts of people's new year's resolutions that will make them a more successful, more profitable than in being of course, more productive. So I'm thrilled to be back and thank you for the invitation.
MP: 01:53 Yes, well I'm excited about what you've just said, which is, yeah, let's get this. Let's get this year started and I know we have talked a little bit before we started recording about productivity and production and profitability. So these are excellent things to be thinking about right now or really anytime, but what a great time of year to get started and change the outcome for 2018. Now, Alexis, before we jump too heavily into this, for those that may not have heard the previous episode and we have a link in the show notes to go to that previous episode, but could you just give a quick little highlight as to how you became Alexis Prenn and the CEO of Receipt Bank?
AP: 02:35 Indeed. Um, Michael Well received by is actually find it in September of 2010 and I'm probably, I spend most of, usually the first couple of minutes when I meet people, uh, explaining that we are, we're not a bank and actually we don't in the expenses management business, we probably were back in September of 2010 for about three weeks. Uh, you were, um, uh, in the sort of expensive business and receipts business, hence the name. But it's actually within three weeks or so of starting the business and going out to talk to accountants about what we were doing and why it would be useful and relevant for them and for the book, the bookkeeping services that they've been providing very rapidly. People came back to us and said, no, we want you to do invoices and credit notes and all of the costs of business. Our clients are delighted to raise their sales invoices, but they didn't want to deal with the cost and when after three weeks or so of listening to this pretty consistent feedback, we decided that we would, we would do exactly what they were suggesting.
AP: 03:33 That was the moment that we went into the field and basically bookkeeping productivity. If you think about it actually, you know the last really, really exciting thing, major things in terms of bookkeeping, we're probably about what 30 40 years ago would be with the app in terms of really two things, personal computer, Microsoft XL and of course for small business accounting applications, QuickBooks, Sage, Nyab or these sort of local desktop champions or personal confusing champions. Nothing much has happened in the last 30 or 40 years. I'm missing the bank by accident. Marginally back in 2010 I became a champion of bookkeeping productivity. Quite rightly. You pointed out that one of the pieces of low hanging fruit for bookkeepers is for a technology business to be able to do today's or extraction of their client documents, but obviously, we've expanded beyond that into a full suite of collection from their clients. Could it be mobile apps and so on. And the consequence of that is that we have also extended into, you know, genuine software automation and increase in the next probably six to 12 weeks, we will be launching a whole suite of machine learning and artificial intelligence solutions and will further boost productivity team. That's where we are today. Hopefully. Well, did it answer your question?
MP: 04:59 It certainly did. It's going to be exciting to see where you're moving with these new releases and it's always exciting to hear that people are able to get more done in less time. Eh, now we started another, that's the thing that we started talking about, Alexis, was this whole concept of productivity. And you had asked me the question, you know, are you familiar with the, you know, people talk about productivity as, oh, I'm getting stuff done in my day. Like it's personal productivity, but there's a whole conversation around productivity, uh, if from the old world around factories and being able to, you know, Henry Ford would come up in that conversation, right? So it has, things have changed, but let's talk a little bit about productivity. When you talk about productivity, what are you talking about?
AP: 05:47 Oh, I'm just leaning. You know, there is a, a swatch, uh, expectation that, uh, the bookkeeping a is a sort of honest Zion Croft and at the same disciplines of productivity cannot be applied to this and this craft-based business. And that just simply really isn't true. It may not be able to apply to everything, but there is a very material chunk of opportunity to take away someone more routine and repetitive functions and bookkeeping. I mentioned that obviously data extraction as being one, but certainly even things like storage, scanning, filing, collection, coding, all of these relatively mundane and simple tasks that repeat, I mean a small business, for example, we'll be using the same suppliers. You know if you look at a quarter, probably 80 80 90% of the transaction, the cost of the small business is exactly the same quarter one, quarter two, quarter three, quarter four.
AP: 06:48 And so the opportunity to streamline that and simplify that is there. We, when we started, you know, we were working on the basis of typically a bookkeeper, and this is a rule of thumb, we're looking after maybe 10 clients, so roughly 20 working days in a month. And a typical bookkeeper, whether they're working for themselves, whether they're working in an accountancy practice or a larger, maybe if a bookkeeping practice, a rule of thumb is that they might be looking after something in the region of 10 small business clients. It depends on the nature of the small businesses themselves. But that's a pretty good rule of thumb. And what we're seeing today is that by streamlining these repetitive tasks, what we are seeing is the bookkeepers are able to, to look after not 10 clients, but maybe 30, 40 or more, maybe weeks, anything. The expectation is over the course of the next coming years, uh, that that should be able to increase to maybe for a hundred.
AP: 07:47 And what that suddenly does is it's suddenly the opportunity for listeners of your show, uh, to multiply their productivity. So if they were just guessing, I don't know, let's say they were getting $500 to just keep the math simple, $500 a client and they're looking at the 10 of them, that's $5,000. Okay, thank you very much. But suddenly we're now in a situation where the, you know, after 30 times, and so now instead of making $5,000, they can make $16,000. And so this is a wonderful, wonderful opportunity to make profits to radically increase the rate if you'd like the returns per hour. Um, it's also by the way, um, the opportunity to, to shape the client experience that you're actually providing to your clients because things are happening really, really fast. Things aren't waiting until the third Wednesday at three o'clock for that slot when that particular client's work gets done. You're now in a situation where things can be happening much, much more regularly and the speed with which the client's book could have been maintained is also accelerating. The combination of putting money in the books, in his pockets or in the foams ball case, uh, at the same time shaping our client experience. It seems to us to be very exciting and compelling.
MP: 09:06 It is very compelling. And you know, the concept or idea that you've said going from a handful of clients to 50 clients, I mean, I'm sure there are listeners, right? Going, listening, going, wow, couldn't even imagine that. But what if, what if, and you're actually doing this, right? You're helping people do this. I mean, the impact financially to the business is incredible. And what you're delivering back to clients is incredible as well because they get more, uh, information were readily available and they make, can make better business decisions with more real-time data. Now you wrote a manifesto, the receipt banks productivity manifesto. Talk a little bit of why did you write the manifesto?
AP: 09:53 Ah, interesting to me that it was useful. I thought I'd be one of those things. I literally just sat down and braces. Um, I, I haven't thought about doing it before. Um, and I don't find that writing necessarily comes particularly intuitively to a Siemens. So this is one of the sorts of extraordinary moments when I want to just an urge to do it occurred. And it just seemed to me that I had as a result of my experience, my previous, uh, commercial experience, which was spent actually making clothing. So I'm probably one of the few people who, who is running at a technology business who's actually spent probably eight years actually involved in clothing manufacturing. One of the things about clothing manufacturers, as you do learn about productivity, the whole profitability of the business, is ultimately determined by how efficiently you can run, uh, your supplies or materials, uh, your costings, uh, and so on.
AP: 10:46 So I knew a lot about it and it just seemed to me there were so many people who were very experts at bookkeeping, very expert as accounting, but they really didn't know very much about it. I didn't think they knew very much about how to do productivity on a, on a sort of, to a certain extent, industrial scale, something beyond just completing the work that was in front of them. Genuinely building that the systems and the processes, uh, that would give them the kind of profitability that was there was available. I mean, it's not, it doesn't, it's not magic. It's just simply just uh, following the rule book and Hey Presto, you will get the results that you think you desire. So I wrote this a productivity manifesto. And of course, one of the interesting things devices is actually, you don't actually start with bookkeeping. You actually start with basically a data set that is conducive to how many clients you providing bookkeeping services to.
AP: 11:41 It's slightly extraordinary how many, how many firms don't actually know how many clients are providing bookkeeping services to. So just the, just set up the framework to calculate what the probable activities, you know, use the ratio of one to 10 what are called, you need to know how many bookkeepers you've got the full-time equivalent. And you also need to know how many clients you got a combination of the two. So Hey, that's pretty much where it started. It was extremely well received. I think in the books business it would be being reprinted a few times. It's even printed in French as well. Um, but in thinking to provide the framework for, uh, for people who are looking to boost their profits, profitability as to the steps that they would need to take in order to do it. Sorry.
MP: 12:28 I love it.
MP: 12:35 I think what I heard you say, you know, I've read the manifesto and uh, and really liked it. It's, it's short, it's sweet. It gets to the point. Uh, but what you've said has opened something up that I think is interesting. A frame or a context that we could, we could listen or look through, look, read through it, which is if you want a business that runs more efficiently and to think more of this, this business that you're in as listener is in like a Henry Ford would look at one of his factories. So Henry Ford was one of the leaders in creating capacity and figuring out efficiencies and how can we get more cars off of this production. But a lot of times people will say they, they will cringe when we talk about, uh, in an assembly line, right? It's that you lose quality or you lose something when you have a production line.
MP: 13:31 But really it's the Henry Ford didn't lose quality. He actually improved quality. He improved a whole bunch of things. Right. And this is what we're talking about is to think of this from the eyes of your business. I think as the community of bookkeepers because so many are solopreneurs, right? Working for themselves. Even if they have a couple of staff, they think of it like it's that they are the business. But if you can separate you from the business, say ma I am a human being that I work for a business, it's called so-and-so's business. That's my business. But you're not your business. So this conversation is about the business saying what's good for the business.
AP: 14:12 Sure. It also, I would think that I'm not absolutely 100% that the agreement all, I would also just say one other thing, very hard to imagine the number of conversations that I have. I or my staff have. Uh, my colleagues have worked with clients all around the world but think, gosh it's bookkeeping. Not because they liked doing a bedroom suite, not cause they liked doing a pilot. Not because they like me out there clients and nagging them about documents that are, that are required for VAT or GST. Returns. Why they got into bookkeeping, they got into bookkeeping. Cause I had, you know I told them, clients, that the client is the client conversation where they're talking to, they're talking about a client business, which is what they enjoy Interbike the money that they can make with a very flexible self-employed lifestyle that they like.
AP: 15:04 There is nothing fundamentally joyful around filing a Starbucks receipt. It's not a, at least I would suggest the vast majority of people, it is not their primary motivation. It's about the clients and it's about the rewards, the income they can enjoy as a result and so the product is the manifest. It was really, really designed. You say, well let's put it, let's put in place a framework that allows you to track what your productivity actually is today and then to use a progressively in previous and some people will use, some people will use the extra productivity to spend more time with their families. They will make the same amount of money, but it will just take them a lot less time to do it. And some people will just simply get the bug and will want to expand and we'll want more money and we'll take on more staff and more clients and get into a virtuous circle.
AP: 15:56 How they have people choose to spend productivity entirely is entirely down to them. But what we can be pretty confident, I think, I mean, I've never made these ever said to me, I've got your license. You know, if you took away the filing, I would be, I would do the rest. You know, I couldn't possibly go down the productivity route because the finding is so rewarding stimulation. It's just simply not the case. And so we have a golden opportunity with some relatively simple foundations to put in place genuine productivity and, and quite rightly, as you said, [inaudible] to improve the quality of the product that we're actually providing to the clients at the same time. But, um, uh, you, you have to start somewhere, uh, measuring your existing products as a good place to start. If you're working, for example, as you mentioned, maybe in a small or indeed in a, in a, in a, in a phone, which is more than just one person.
AP: 16:49 I did a conference here in London, uh, just before Christmas and I've spoken for about 45 minutes on subjects of productivity. There were around about 80 people in the room and it just suddenly occurred to me as I was, as I was talking, I said there's a matter of interest. How many of you in your practices have implemented any kind of performance-based pay, productivity-based pay for your bookkeeping staff? Only two people have, only two people had. And so here we are in a situation where it's quite easy to do checkbook productivity. It's crazy. Oh well you know what I need to do then you need to go out and get Receipt bank and I need to do this, that and the other. And Isis is giving me a productivity manifesto. But you know what, if your staff aren't, aren't going to benefit from, from the productivity that they are intimately or it, it's unlikely to be successful.
AP: 17:43 So there are relatively simple things to do and if you're tracking, for example, your bookkeeping ratio and your, your bookkeeping ratio in your practice has gone from say one to 10 to one to 20, you know, you should have been twice as profitable as sent back to share some of that with the staff to make that possible, uh, strikes me as being a very good, a very good deal. One of the things that I'm many, many people complain about is the inability to get good bookkeeping staff. And one of the reasons is because you can't afford to pay them, paid them well suddenly using productivity, you're in a situation where you can radically increase their income. You have a much greater degree of stability in your workforce and in the event that you find a really outstanding bookkeeper that you want to employ, of course, you can have the pick of the crawl because your productivity allowed you to pay them better. Is that helpful?
MP: 18:35 Very helpful.
MP: 18:44 It's exciting and it always comes back to, you know, my thinking there as you were speaking was, you know, really the people that embrace all of this new technology and really get it figured out and figured out from a number of perspectives. One is how can this technology help my clients, right? Because you know that, that's number one. How can this technology have my clients go? Wow. And then number two, how can I make this technology help my staff and have my staff benefit? Uh, I worked for, uh, for a while I worked for salesforce.com and one of the reasons, so salesforce.com for the listener, if you're not familiar with it, is cloud started off as a cloud-based CRM. And the way they built that CRM now it's changed dramatically. It does just about everything. Bakes bread, I think. But the way they started this was they made that tool enabled the salesperson to be more successful.
MP: 19:43 It wasn't about a man, they didn't build it from the perspective, let's help, let's help sales managers, you know, manage their staff better. They started with, how can we, if we can make salespeople make more money using this tool, we know we're going to be more successful because the adoption rate was incredible. Once you've got people using it and they understood it and it's like this, this makes it easier for me as a salesperson to use this tool. And that all rolled up to the leadership of management is that the salesperson, the person loved it, it helped them be more successful, make more sales. Therefore the data inside there helped managers manage better and give more analytics and information around what was going in the sales organization. So it was a win-win for everyone. Similar thing happening here, technology. Think of how it's going to help your customers. How is this going to help my staff? And then how's this going to help you? The business owner you're providing. And Receipt bank is one of those solutions that's providing the ability to do this today and continually will improve and do all sorts of new things. So it's the people that embrace that and think from those perspectives that I think are gonna win in the future.
AP: 20:47 Well, you'd have to be fairly pessimistic to think that things are going to stay the same. I mean, change happens. And, um, the one thing I see we can be absolutely confident of is the things are going to change. The exciting thing for bookkeepers and their colleagues and staff and so on. The exciting thing is that the tools that radically change what it means to be a bookkeeper way you can do it from, and indeed the nature of that role, you get more of the good bit and that in itself has got to be a good thing. As I say, I said earlier, you know, how people choose to use that isn't, you know, only working three days a week and for the five if it's actually scaling the business without taking on more. Interestingly, I think I may have mentioned this in our very first conversation was a, a very first accounting client.
AP: 21:37 In her case, she just moved to a smaller office. Um, she, she, I post all kinds of productivity gains. This is back at the beginning of 2011 and because she wasn't storing any of the documents on her premises, she simply canceled beliefs and moved to a smaller office and pocketed the rates. So people achieve differently, the financial outcomes he's indifferent, uh, different approaches. But undoubtedly the moment of the beginning of 2018 if you want to make more money out of your practice, the tools are available to do is the productivity manifesto helps you with, you know, pretty step by step and this is what you need to do counts. How many clients are doing accounts, how many bookkeepers you'd go, this is your ratio? Okay, well this is how we, how we expand it from a, you know, the opportunity to secure either the money all the time or possibly a bit of both.
AP: 22:28 There's never been a better time to do it. Well probably, probably without wanting to be in anyways the sort of scaling on. But the reality is other people aren't doing it. And of course productivity does, does give them the opportunity going to say they're going to take it, but they can achieve the same client outcomes that cost a lot less money. And so potentially, you know from a productivity perspective there is a powerful incentive to be ahead because you get to keep the clients. Whereas if other people are implementing productivity, they can produce a much better client experience for less money. And then, of course, you're in a, we have a problem with churn, client churn and of course very difficult to sustain a difference of height, the height of the churn.
MP: 23:14 Okay, useful.
MP: 23:20 Absolutely. I mean not that, that's a big one right there is that, what do you do? You know you've got this extra productivity. What do you do with that? That time that you've, you've gotten a resource, right? It's money, it's time, there are resources that you're now gaining. What do you do with that? Well, go talk to more customers, build more relationships with people. If you're not doing, if you're not getting this gain, your competitor is. And so, you know, if we think, if we bring this back to very simple farming, everybody understands, well maybe not today, but farming is such a good analogy there. It was a good analogy, right? You got two farmer's fields, one who embraced technology, right? They're going to be able to get the field, uh, so they're going to be able to have more time to expand the fields so they can produce more or they can make bigger crops.
MP: 24:06 That money that comes back, they can invest in more equipment, more resources. They become the more successful farmer because of investing in technology, the right investments, of course, there are all sorts of things you could go and do. Are you doing the ones that are proven, the ones that give you the predictable outcome, of course? But you know, this is the way to think. This is your livelihood, this is your business. How are you going to make your business grow and flourish while it's embracing things that work and giving yourself the opportunity to have the edge up on your competition? So I just absolutely love it and it's a great conversation for this time of year, you know, we don't like to date the podcast, but I have been dating them just because I think it's snatching around the beginning of the year. This is earlier a year. And so we've got the receipt bank's productivity manifesto. We have a link to it. It's, it's very short, but it has some step-by-step actions that you can take and follow. And I recommend that you go ahead and do that.
AP: 25:04 Well, I, I think your list as well. So often people struggle if they say yes, I'm interested in that, but they don't take the first step. And the productivity manifesto is really designed to be the first step that you can take. Uh, I was literally just looking at it tomorrow. And in fact, the last paragraph is also kind of useful for your listeners who are thinking, well, you know, I'd like to have more time with my family. I'd like to have more money or like to do a bit of both. You know this is a very particle guide, a very simple step, genuinely simple steps as to what you do. But the conclusion in the last paragraph actually says productivity never ends. There are always areas for improvement and analysis. Uh, and you know, once you've got your ratio from one to 10 to one to 20, you can get into one 50 or done to a hundred. And of course I've in many ways as the, it's a fascinating challenge, uh, and the sort of cerebral game about managing your business and not actually being part of the business that actually managing the outcome of the business. And, uh, I think this will be, I hope, a useful tool for many of your listeners, uh, to make that transition. Right. I hope they take it.
MP: 26:15 I do as well. And so as a takeaway is something to do. Schedule yourself an hour or, or even 30 minutes, you know, you're listening right now. Maybe you're driving, so don't do that now, but take time to schedule a time to review something like the receipt bank's productivity manifesto and look at what's happening. Because I would assert that what gets in our way is that we're constantly doing it, doing it, doing it, doing the work, doing the way that we've always done it. And we don't take time, carve time out of that schedule to actually look at new things and figure things out and make exciting new steps forward. So this is an opportunity, uh, at this time of the year to say, okay, I'm gonna investigate this. I'm gonna look at how can I move on? How can I AA understand what is my current rate of productivity? Cause this manifest will help you figure that out. And then what is it that I w what's a goal that I can set it at and what's some technology? What are some things that are happening in the industry that are going to help me be more effective, more profitable? So it's an exciting time to do that. And Alexis, thank you so much for coming back and sharing this manifesto with you and your experiences in what you're doing over at receipt bank.
AP: 27:24 Michael, it's really a treat. Thank you very much indeed for having you back. A Happy New Year's, new you to know your listeners and I will, I will not use the, uh, the time over the course of the next six months to come up with them. Subject, uh, emissions listening to have any thoughts about what that subject might be. I'd be very happy to hear from them. So thank you for your time. Thank you to your listeners for their interest and if there's anything that I or any of my team can do to help them on that journey where I need to have you out.
MP: 27:52 Excellent. And we'll, we'll have a, some links on where you can go and shoot that information or suggestions to Alexis, uh, whether it's via Twitter or your LinkedIn, something along those lines. But let Alexis know what you're challenged with, where you're heading and what you'd like more of. Uh, he will definitely love to hear that.
AP: 28:12 How, how'd you lose them?
MP: 28:13 Excellent. That wraps another episode of the successful bookkeeper podcast. To learn more about today's guest and to get access to all sorts of valuable free business-building resources. You can go to Thesuccessfulbookkeeper.com until next time,
MP: 28:27 goodbye.
