Industry Insights—A Conversation with Marcus Wagner

It has been a few weeks since our last Intacct Industry Insights post. Our conversation this time is with Marcus Wagner, CPA, the founder and CEO of AcctTwo Shared Services, LLC, a business process outsourcing (BPO) firm for small and midsize companies, based in Houston. Marcus has nearly 20 years of experience working with companies in the areas of financial accounting and auditing, process and internal controls consulting, and management advisory services. He began his career at PricewaterhouseCoopers, in the financial audit and risk advisory practices and was a co-founding partner of accounting firm Calvetti, Ferguson & Wagner.

Our conversation with Marcus focused on business process outsourcing and how this can help SMBs. Here are the highlights…

INTACCT: Why did you move into business process outsourcing by starting your own firm?

MARCUS WAGNER: In my career, I've had a lot of exposure to the Fortune 500, ERP software, and outsourcing. When I was working at PwC, I had one big oil and gas client that outsourced its entire accounting department to IBM. I saw that the company was getting a much higher quality of processes and more timely reporting as a result, and that the economics were better for them, too. When I left the company and started the CPA firm, I saw many of our customers working with QuickBooks and struggling because they couldn't hire accounting staff. Sometimes even the receptionist was handling the accounting duties. It dawned on me that if a $65 billion oil and gas company that already has plenty of internal resources could get benefits from outsourcing, then surely SMB companies could benefit even more. There is a huge untapped opportunity in the marketplace of which we've really only begun to scratch the surface.

INTACCT: What is the role of technology in your new firm?

MW: All of the big outsourcers in the 1990s were using ERP systems, SAP primarily, so when we created AcctTwo in 2010, I knew that technology was going to be very important. One of the first things that we did was go out and select an accounting package, and that ended up being Intacct. This technology has really been core to the success of our company, due to the sophistication it brings to companies at a lower cost, and the scalability. You can grow to be a multi-location and multi-currency company, and you won’t miss a beat with Intacct. As well, because it’s in the cloud, so it allows us to work virtually. That means we can help our clients anytime, from many different locations, and we are all working from the same platform.

INTACCT: What are your clients’ needs and how do you help them?

MW: We often see a common set of needs from our prospects. They are outgrowing QuickBooks and need a more sophisticated solution. When you talk to managers and executives, they are frustrated because they are not able to get the financial statements or reports they need and the data they do get is too old. If they have an auditor or bank that needs quarterly information, it is really painful because pulling all the data together is a manual and often brute force exercise. And then, turnover in the back office is often high. These might be part-time people, maybe someone who’s partially retired or a young person who is looking for their next stepping stone, and it’s hard to keep people in these jobs.

INTACCT: How do you provide the services?

MW: We operate in a shared-service environment. We set up our accounting and back office functions as one big department that serves all of our clients. So we have a team for AP, billing, cash management, GL, and banking. To be successful in this business, you have to be real-time all the time. If you look at how this work is often done, it’s by CPAs who come in at the end of some period of time and trim up the books for transactions that have already happened. But that’s why executives are not getting the information they need in a timely manner, because the work is done in a batch mode. Meanwhile, customers are writing checks and billing their customers every day. So what we do is reconcile their accounts and process bills and invoices daily. This makes us more efficient because we can spread out the workload, and it gives clients as real-time a set of information as possible.

INTACCT: The concept of business process outsourcing isn't new. So what has changed, generally speaking?

MW: There are two things converging together. The first one is the maturity of cloud technology. To do what we do for all the clients we have, we couldn't be using QuickBooks and enterprise-class systems like SAP are too expensive. Previously, the logistics of giving external access to systems wasn’t really possible or was too costly, using remote workstation technologies such as Citrix. So the economics and the technology have come a long way and it is creating considerable change in the CPA industry. Public accounting firms have realized they have a huge opportunity to offer outsourcing services to clients. However, the SMB market is still learning that this is a viable solution, so we focus on educating them. Our firm wants to begin offering additional services for clients beyond the transactional work, into strategic areas like financial planning and budgeting and analysis. The result of that would be helping clients run their business on a very dynamic basis by integrating all this data that we have been collecting and providing useful intelligence.

INTACCT: Now, how about a couple questions just for fun…

You are based in Houston, what is the best kept secret about the city?

MW: Most people don't realize that Houston is one of the most ethnically diverse, international cities in the U.S. All ethnic groups are currently a minority today; there is no majority. Because we are the "Energy Capital of the World" and are a major port, we have people from all over the world visiting and living in Houston. You can walk through the Galleria shopping district and hear foreign languages being spoken all around you.

If you want a gourmet dinner, where’s your favorite spot in town?

MW: I love La Dolce Vita on Montrose in Houston. It's a casual Italian restaurant that says it specializes in pizza, but I love the appetizers. They have so many different and interesting starters that are like "Italian tapas”... you can order a bunch of them to share with friends and try different flavors.

What is your favorite way to unwind?

MW: I enjoy playing golf, traveling or just sitting on the back deck watching my kids play.

To stay connected with Marcus, you can follow him on Twitter (@wagnermarcus). You can also follow Intacct on all our social media channels, including Facebook, Twitter, and LinkedIn. To network with other people interested in cloud financial applications, be sure to join the Intacct Cloud Accounting group and the CFOInsights group on LinkedIn.

Do you have an idea for someone you think has interesting industry insights we should interview? Send us your suggestions for consideration.