The Power of Standards
In every profession and industry, standardization is a key to success, serving customers, and scaling effectively. Lego has mastered the standardization process to deliver quality and consistent products to all their customers. Their manufacturing process is bordering on legendary, with in every individual piece being measured down to the last micron.
In a process so precise, mistakes are bound to happen, but Lego has mastered their process to near perfection. Only 18 pieces in every million have a manufacturing fault. That’s 99.9982% of their production that comes out perfect. Not only that, but they control their standards to ensure that no individual piece they produce is single use.
Their standards ensure that customers are provided with a consistently reliable product while also offering infinite flexibility - all these pieces will snap seamlessly together regardless of what kit they came from.
Accounting is an industry built on similar standards. It’s something we’ve discussed in a previous article; accounting is built on Journal Entries. It’s what builds everything the accounting industry does. Tax returns, audits, advisory services – all find their origins in that journal entry.
Yet the accounting industry struggles with standardization because its demands are similar to Legos. It’s based on a standard but needs to be infinitely flexible to adhere to the client’s needs. But there are several ways that CPA firms can develop standards and effectively service their clients.
Standardization Methods for CPA Firms
- The Standard Service Approach: CPA firms are now taking the approach of offering more select sets of services, rather than customizing each approach to each client. This allows them to ultimately be more effective for that client. By taking the same approach to a tax engagement across every client you can ensure that every client at least adheres to a close to identical process, then you can be more adaptive to the clients needs. The CAS segment has taken this approach by storm, where most CAS practices offer one of three or four service packages that allow them to be more effective with each individual client.
- Client Specialization/Niching: I don’t believe that people often think of “Niching” as standardizing, but it may be one of the most effective ways that firms can standardize. By focusing your practice around a certain client type, like dental practices, or a common one now is cannabis, you can be intimately familiar with an industry and the issues that those business owners often face. So, firms are able to adapt more readily to their needs without having to pivot their approach too much.
- Product/Tech Suite: Additionally, many firms now require their clients to use a standard platform. Be it QBO, Xero, Accounting CS, or something else, firms are taking a more uniform approach that allows them to again have consistency in their works methodology, but adaptability towards a clients needs.
Theses standards are impactful ways CPA firms are simplifying their practices, creating standards, and effectively serving clients to scale and grow their businesses. However, in the growing need for automation it is Data Standardization that will become an integral part of of a growing firm. Fortunately, accounting data already has the standard format, it’s just discovering the right the tools and methods that help you leverage that.
Standardization & Automation:
To reiterate, the connection between journal entries and Lego bricks lies in the concept of standardization. In both cases, standardization simplifies processes and enhances effectiveness. This principle can be extended to CPA firms seeking to automate effectively. For CPA firms, automation can revolutionize various aspects of their jobs and services, such as data entry, report generation, and analysis.
However, to harness the full potential of automation, it is crucial to standardize the data so the automation can be effective. If you automate bad data, you’ve just created an unnecessary tool. By implementing standardized templates, data formats, and workflows, CPA firms can streamline their automation efforts. Standardization facilitates the smooth flow of data and information, allowing automation tools and software to operate effectively. For example, if all client data is consistently formatted and organized, automated data extraction and analysis processes become more accurate and efficient.
Moreover, standardized processes enable easier integration of different tools and technologies. When various systems and software within a CPA firm follow standardized protocols and formats, they can seamlessly communicate and share data, leading to increased efficiency and reduced errors.
For CPA firms, that’s where Once can be of great benefit. Once exists to be that standardization tool, gathering client accounting data from disparate systems into one normalized and centralized database, giving CPAs the tools to leverage the “legos” and provide more flexible solutions for their clients. Rigid standardization with infinite flexibility. So now, with Once, a firm can seamlessly tie advising and tax prep together because of our automation. A firm can be alerted to significant activity that creates an advisory opportunity, while making an adjustment or decision that will ultimately save time in the tax prep process. And this is simply scratching the surface.
And for many other automation tools that are cropping up in the industry they all start, in some form or fashion, by helping firms build a standard to automate from. So if you’re a firm looking to automate processes evaluate where standards may be lacking within your firm, and pursue tools like Once that help you create those standards.
In summary, the similarities between a journal entry and a Lego brick, both adhering to standard formats, highlight the significance of standardization in automating processes for CPA firms. By embracing standardization, CPA firms can optimize their automation efforts, achieve greater efficiency, and create capacity to more effectively serve their clients and grow their businesses.