How does a virtual back-office really work???

I got this question way too many times.

Virtual corporate services are something new, unique, so I always feel some mix of skepticism and curiosity in the air when people hear about it first time.

Generally speaking, most of the clients primarily need bookkeeping services. The software (usually QuickBooks) is running either on their office desktop, or online. We do our best not to change anything in our Client’s life – so if it is on an office desktop, we can access it by VPN. Accessing an online version is also easy – we just need access rights.

In some cases the Client has an accountant who has everything in his office. In this case we ask for an “accountant copy” of the records and upload it. Our goal is to have the books and records visible and available for both Client and accountant at all times.

Supporting documents (timesheets, bills, statement, etc.) are placed in a folder in the Cloud. If the client has new bills to process, checks, or statements we need to care for but have no direct access to, we ask the Client to fax, scan and email, mail, or place them into the folder in the Cloud. Yes, it is that easy.

When it is time to process payroll, we – again – do it your way. If you have a 3rd party provider (ADP, Paychex), we can process and book payroll for you thru them. If you want us to use QuickBooks (just to stay with this example), we can do that as well.

When it is time to pay taxes, we have access to all your financial information, so we can do it quickly. We can also take care of your personal tax return if required.

HR, WishTeam, Web, and other business services are offered on an “as needed” basis. If you are our Client already, let’s say we do the bookkeeping for you and in sudden need for assistance with your elderly parents while you are on the road; it takes only a call or email to our WishTeam. There is no need to look for someone to be contracted separately.

Each client has a designated professional, with a direct phone number and an email address. There is no 1-800 number to call, or going thru dial-by-number phone directory. We are all in the US, and proud to serve the solo and small-businesses of America.

As always, please let me know if there is any question to answer.

Time is Money - Get the Most Out of It

In one of my blogs I mentioned the savings to be realized when a business outsources its non-
core functions. Some Readers got back to me and asked to be a bit more explicit.

As I mentioned, when an entity decided to go virtual and give up all in-house non-care functions,
it results in significant savings and convenience. Cost savings on overhead costs can add up to
about 25-50%.

Decrease in your spending (direct or indirect costs) results in increase in net income. As net
income increases, taxes paid may also increase a bit. Businesses often fully or partially reinvest
the savings. The entity may be able to hire another professional, spend more on marketing, or
increase some salaries to match the market.

Going virtual also assists with increasing business mobility and data mobility. A new
subsidiary or a temporary workstation can be opened anywhere in the world without worrying
about staffing the back-office. Think about what happened with small businesses having all their
data in an “old-fashioned” server room after hurricane Sandy hit just a few weeks ago. Some had
to stop operation for days, weeks. Some might have lost their data for good. Productive time lost
means revenue lost.

In most cases, when non-core functions are outsourced, all records can be looked up using
smartphones or Ipads. Even in case of a natural disaster, like Hurricane Sandy, the entity may be
able to continue operation at least at a lower operational level, but with full back-office support.
Payroll can be processed, invoices can be sent out. Clients can feel you are there for them.

Flexibility to add “ad hoc” or short-term services, like assistance with development and
submission of an incurred cost agreement, costing a proposal, updating a web site, working on
an entity’s full profile (logo design, SEO, etc ). There is no need to advertise, ask around and
separately contract with a business consultant experienced in the field. It is just a phone call or
an email away. There is ultimately less time to complete the task since we know your business
anyways.

Finding a specialist for full-time hiring by advertising would cost only a very low hourly rate
(or be part of the monthly fixed fee). A well-versed HR professional can place the necessary job
posting on several search engines and do the prescreening of the incoming resumes as well. It is
part of the HR service offerings. If a very high level professional is to be found, a smaller fixed
fee may be involved.

A very important point is the significant reduction in the risk of financial fraud (i.e. check
tampering, just to mention one). The great majority of employee fraud cases are committed at
small businesses and non-profits. These are the businesses that also can’t afford such financial
and reputational loss – let alone the cost of a full scale investigation. A well-versed virtual
provider has some risk management and mitigation efforts built in the system. Also, since a lot
of things are automated, such as depositing checks and processing payments, without cutting a
single check, it is more difficult to “play” the system.

Flexibility in the structure of the virtual service agreement is also unique. Usually the Client
signs up for bookkeeping services as a regular service provided. However, most Clients want to
have the option to use HR and tax services as a needed addition at least. The contract can spell
out the hourly rate or the monthly fixed cost of such services. There is no obligation to use these,
but it is easy to do. Since the rate is already set, it is just a call or an email and any such services
are provided immediately, without separate addendum or modification to the active contract.

And last but not least, there is a way to reach someone during the weekend or late in the evening,
should there be a need. Since all records are placed in “virtual folders”, we can pull those and
discuss any business matters any time. Our business is open when our Clients are open.

I hope this blog posting was able to shed some light on the benefits of using a full-
scale virtual consulting company. As always, please email me if I can be of assistance
(spacher@myvirtualcorporate.com).

The Importance of the Internet and Laptop Battery Life

It is just Thanksgiving and I am thinking: I am most thankful for those I could assist (and learn from) during and after Hurricane Sandy.

I thought I truly understood what virtual consulting had to offer – but I was wrong. There are situations that I have never applied my understanding to, and belief in, going virtual in all or most of business administration functions. One of these “situations” was hurricane Sandy.

As a consulting firm providing all its services virtually (as well), our systems are running as long as we have internet and battery life in our laptops. As long as all the systems and records are in the Cloud, data or productivity would be intact during or after a hurricane.

Businesses storing data and software programs on servers and office desktop computers were severely hurt. Some businesses are completely flooded; some are just without electricity for weeks. The cost for loss of business is unspeakable for these entities.

Being able to run a business at the basic level during a national disaster is critical. Employees can take unscheduled paid-time-off for the time of the hurricane, but they can be without pay for weeks if payroll can’t be processed. They may need the money to temporarily relocate as well. Invoices must be sent out in a timely manner so the entity’s cash flow remains healthy. Bills have to be paid to be in good standing. A lot of small businesses suffered from being unable to do some or most of these basic tasks.

We assisted the ones we could – with service or with a free advice. I had some brainstorming sessions to find out how to offer more to cover “out-of-ordinary” situations. We came up with new services available to any of our clients (some of them are free), and we set up the WishGroup to assist solo and small businesses in an “out-of-ordinary” situation.

We all hope there is no more hurricane like Sandy coming our way again. But if so, I am confident that those businesses our team has the opportunity to support will be able to continue operation at least at the very basic administrative level – as long as we have internet and battery life in our laptops.

Happy Thanksgiving.

Your True Spending On Business Administration – Let’s Do the Math

Have you ever wondered how much money you truly spend on administrative tasks? Let’s do the math together: take your average hourly rate (let’s say $300 for a legal professional), multiply by the number of hours you spend  paying bills, preparing invoices, checking your credit card and bank statements, talking to your tax accountant, processing payroll, and running to the bank to make deposits. Please remember to add to this number your monthly costs for having a tax advisor and bookkeeper. Are you surprised at the result? Would it be a better use of your time to serve your clients – and make money -- but you feel you have no choice?

New technology has a lot of solutions to offer, and not only to big businesses; however, most sole proprietors and small businesses do not even consider using one of the most obvious choices:  going virtual for the majority of non-core business functions. Having all or most of the non-core business functions handled virtually can be the answer for most solo practitioners and small firms in meeting their clients’ pricing expectations and their own profit objectives. This article will spotlight how it works – in our practice (http://myvirtualcorporate.com).

There are not many virtual service providers offering full back-office support, but it makes perfect sense to pick the one that does. In a virtual corporate service environment, all work is done using the internet in a secure, protected environment. All ledgers and documents can be seen by both client and provider at all times. The virtual office can take care of day-to-day accounting and bookkeeping, taxes, payroll processing, and also can assist with every human resources (HR) matter from recruiting candidates to assisting the business in setting up a benefits package, and much more.

The virtual service provider’s accountants are picking up all of your bookkeeping and tax-related tasks. You just make sure you email, scan, or fax your bills to us or put your bills in your folder in the cloud. With your approval, these bills will all be paid electronically on your behalf, without cutting a single check. Client invoices will be sent out as well by either email or mail, and may even offer your clients the option of making an electronic payment. Payments that are made by check can be deposited to your bank account quicker than you could get to your car. Accountants can process your payroll, take care of your payroll taxes, prepare W-2s, 1099s, and prepare and file all your corporate taxes in a timely manner. At the end of the month (and at year-end) they could perform closing, including but not limited to bank reconciliations, credit card reconciliations, amortization schedule updates, review of certain reports, and other accounting functions as are needed by your business. Additionally, your financial position at month-end is personally discussed with you – as part of the service, included in our fees.

An HR professional can be used as needed. From posting a job and pre-screening resumes before sending you the ones that could qualify, to providing first day support, meeting with new employees, we can assist any small business. A benefit specialist can find you basic and supplemental benefit packages to meet your needs. Also, we can assist with preparing an Employee Handbook, or advice on other employee matters.

Business consultants can assist with proposal costing, indirect rate calculations and negotiations, grant and contract proposal submission, grant and contract management (cradle-to-grave), budgeting and forecasting, just to mention a few services. The consultants could fill in for positions at your organization when you need immediate coverage for a position that vacated suddenly (i.e. a temporary acting CFO).

One of the most unique services we provide is the “WishTeam”. This is a very diverse group of people to provide you with a sort of concierge service (we just do not like the word “concierge” since we are not in the hospitality industry). They handle any “out-of-the-ordinary” requests – the things you would like to do but have no time to. Such requests might be comparing au pair agencies because you are expecting a baby. Or you would like to organize a surprise birthday party for your partner’s 50^th birthday but you are too busy to make it happen. You may also have elderly parents who need assistance with day-to-day activities. The WishTeam can also make sure that the local grocery store delivers food to your family while you are on the road.  We can organize a business breakfast session in a local hotel, or your daughter’s wedding on a cruise ship. The group can make travel arrangements (both business and pleasure) or take care of the holiday cards (from ordering to mailing them out). You have the “wish” - the WishTeam makes it happen. 

When it comes to pricing, you can often choose between fixed priced packages and the traditional hourly rate structure. Since we offer services on an “a la carte” basis you can pick and choose what is needed, and the price is set accordingly. As the business grows and its needs change, so can the services that are provided. It is easy to add, change and modify service needs tailored to the precise requirements of the business.  We encourage you to use your credit card to pay us – it gives you another 30 days to pay off your balance.

In summary, we all need to do the math and see what our time is worth – in terms of dollars and cents. Time is money but it is also our most important commodity. One way or another, we all sell our time. That said, only you, the working professional can decide where your time is best used and where it will yield the highest profit.

Staying Competitive and Profitable

Every start up, small business, for-profit or nonprofit, faces the challenge of staying competitive in the marketplace and turning a profit.  Businesses must sell products and services at prices high enough to exceed direct and administrative indirect costs.  At the same time, customers and clients continually seek more cost-effective ways to buy products and services.  In the nonprofit sector, donors are demanding greater efficiency from the charitable organizations they fund.  So how can supply and demand unite to create a win-win situation?

Businesses must be creative to meet market and profit objectives. New technology has a lot to offer, and not only to big businesses; however, most of start-ups and small businesses do not use one of the most “obvious” choices:  going virtual on the majority of non-core functions – by outsourcing.  Exceptional consulting services are often considered to be pricy, and unavailable for the smallest businesses. A two-person small business does not have a highly trained accountant, tax person, HR specialist and general counsel available at all times. As needs arise, such small businesses try to find “someone” to do the work on a contract basis.

Virtual corporate service providers are a newer breed of consulting services. These consulting firms can perform a business’ entire back-office functions: accounting, finance, project management, government contract management, human resources, payroll, and taxes.  Some may even offer legal services. Utilizing these services allows the business to save on space, wages, taxes, furniture, equipment, and supplies.   It also saves time – there is no need to advertise, interview, or look for a part time person to do the smaller tasks, nor is there the need to have to deal with work hours and schedules, vacation or sick day coverage or temporarily replacing a departed employee. 

Some virtual service providers offer their services as a fixed price “package”. The business client may not need all the services in the package, but the package is structured and priced in a predetermined way.  It may result in choosing a higher priced package just to make sure that all needs are met, even if it also means that there are services in the package the business would not fully utilize.

Some consulting companies offer services on an “a-la-carte” basis. The business client can pick and choose what is needed, and the price is set accordingly.  Still, the price offered could be a fixed price or as an hourly rate – either way, the cost is much lower than it would be in traditional consulting settings, when the consulting professional is visiting the business in person.

In a virtual corporate service environment, all work is done using the internet in a secure, protected environment. All ledgers and documents can be seen by both client and provider at all times. The virtual office can take care of day-to-day accounting and bookkeeping, payroll processing, bank reconciliations, and also can assist with every HR matter, from looking for candidates to assisting the business to set up a benefits package.

As the business grows and its needs change, so can the services provided. This flexibility is probably easier to achieve in an “a-la-carte” type of service offering, it is easier to add, change and modify service needs tied to the precise requirements rather than trying to fit a growing business into an already set package. 

The result of taking advantage of these services is multi-fold:

(1) significant savings on overhead costs, up to about 25%-50%

(2) higher net income,

(3) increased business mobility (e.g. a new subsidiary can be opened anywhere in the world without worrying about staffing the back-office),

(4) flexibility to add “ad hoc” or short-term services, like assistance with development and submission of an incurred cost agreement, or costing a proposal,

 (5) no additional costs incurred to find a specialist

(6) significant reduction in the risk of financial fraud (i.e. check tampering,  just to mention one),  

(7) flexibility in the structure of the service agreement, (e.g., it is often an option to switch or mix virtual and traditional consulting services),

(8) increased access to consultants; there is a way to reach someone during the weekend or late in the evening to talk in person, should there be a need.

Still, the great majority of start-ups, small businesses, sole proprietors, private schools, and non-profits do not know that such complex virtually available services are out there.  Some assume that these services are too expensive for a very small business, or that they are too small for a virtual service to be interested in helping them. Some company leaders also want to “see” their consultant every day to ensure “accessibility”.

As client expectations for pricing is changing, all have to find a way to do more with less – while at the same time, trying to stay competitive and profitable. Businesses are looking for new solutions and want to find less traditional, more innovative ways to take care of business. Getting all or most of the non-core functions handled virtually will be the answer for most start-ups and small businesses in meeting their market and profit objectives.

About the Author: Ms. Pacher is a Managing Director at Corvinus Consulting Group LLC. She is managing Virtual Corporate Services offering back-office support to start-ups, small businesses, non-profits, schools, sole proprietors virtually. For more details on the services, please click http://myvirtualcorporate.com.