Episode #019 The Ultimate Guide to Single Touch Payroll (STP) with Katrina Spinazzola and MC Switz
Single Touch Payroll Guide
Amy talks to Mary-Clare Switz & Katrina Spinazzola about joining forces together, the evolution of payroll, communication and investing in scalability.
The take-away from this podcast: “There are BIG changes coming to our industry with STP Single Touch Payroll, and being prepared doesn't have to be a nightmare.”
Host: Amy Hooke
Guest speaker: Mary-Clare Switz & Katrina Spinazzola
Topic: The Ultimate Guide to Single Touch Payroll (STP) with Katrina Spinazzola and MC Switz
Amy: Hey, good morning everyone. Thanks for joining me again this week, and I have two very exciting guests to speak to you today. I'm very, very excited about this actually because it's a very important topic in our industry, STP or single touch payroll. I've got Mary-Clare Switz from Biscuit Business Services and Katrina Spinazzola from KRS Consulting Group. These two ladies are bookkeepers, BAS agents and consultants. They're both running their own businesses separately, and they've come together for what I believe is a very important project, surrounding STP. Thanks for joining me, ladies.
MC: Good Morning.
Amy: Hello. Who wants to go first and just say a little bit about yourself.
Katrina: Let's go with MC.
Amy: MC go for it.
MC: I've been in the bookkeeping industry since I was about 16, so I've got a few grey hairs, that means I've been around for a little way. I've been involved in family businesses, and I kept getting drawn back into bookkeeping till I finally bit the bullet and thought, “Yes, this is a lifestyle choice.” To be a bookkeeper, which then, of course, turning to a best agents. I'm losing track of how many, well, I think I've been the BAS agencies, BAS agents were a thing. I work with a range of different industries, particularly hospitality, have a lot of payrolls. I do a lot of, HR consulting and payroll setups and management.
Amy: Great. Great. We're all Victorians here today as well. You're near each other, are you two near each other location wise?
MC: Yes. We're both in the suburbs of Geelong.
Amy: Geelong yeah. Great. Great. What about you Katrina? What's your background?
Katrina: Well, similar story I've been doing this for far too many years and got lots of clients in lots of industries. It's grown a lot long time coming, but it's grown to a BAS, and I've got staff and an office and really transitioned by being into a different practice. I'm loving that, that we're running practices and MC and I have collaborated over different things over the journey and bounced in and out around each other. It's a bit of our own board of directors and support group, that we feel, maybe bookkeeping practices don't always have. So, running staff, running lots of clients in different industries and all online, and really loving that, it's all progressive in our industry at the moment.
Amy: I love that. Are you online as well, Mary-Clare?
MC: Yeah. I'm solely online.
Amy: Solely online.
MC: I haven't touched any top products anymore. I haven't for years.
Amy: Isn't that incredible? I just think, just not that long ago we were all bound to locations, struggling with duplicate files, shared via Dropbox for MYB and that kind of thing. Today, we can be 100% online without having to do it.
Katrina: It's shaped our businesses, it really has. It really has shaped what, how the industry is going, and I think it's really helped us with this next step into offerings these are undervalued opportunity with single touch payroll because we love payroll.
Amy: I love it. Yeah, and I love it, MC you said, bookkeeping was a lifestyle choice for you, which is great. We had someone on the show the other week who was talking about … Her lifestyle is quite different in the sense, what she does is she travels around the world, and all over these different places and not as holidays but as part-time. She calls herself a part-time digital nomad. That was quite good watching her story about here. Different people, they set up their lifestyles in different ways, but I love the way you expressed that like that. It's very cool. You've grown quite quickly in the last little while, and you mentioned that you'd collaborated on other things in the past before that. What things were you doing there?
Katrina: MC and I were involved in raising the profile of BAS agent when the BAS agent things started happening. We were in the group, we've continued on, in a group of just bouncing in and out on specific challenges to the industry, real estate being one of them. But, we've also worked extensively on our workflows because we really are just process driven based. We just love workflow, we love technical stuff. We love getting down and dirty into bookkeeping and the whole client interactions. That's just how we roll.
MC: Making that the new shiny bright toys work for us. Gone are the days, we were running around town, like you said before, copying files. Seeing what's new available that we can actually leverage to improve our practice provision and make our practice more efficient but more importantly, make clients' businesses more efficient.
Amy: That's right. That's great. Katrina, you said something that I think you go on the inside a little bit, which was that you love payroll. I'm one of those bookkeepers who doesn't love payroll.
Katrina: I love bookkeepers who don't love payroll, keeps me in a job.
Amy: Yes, that's right. I was going to say there's a lot of bookkeepers that don't like payroll and especially because there's so many. I guess bookkeepers are scared of what their procedures or risks involved. I think there's, I don't know, in my experience, I've found there's been a lot of business owners that I'd encounter who did not want to do the right thing and didn't want to receive the information and that kind of thing. I've found that a real struggle. What is it about payroll that you love?
Katrina: It's because there's a lot of logic and a lot of rules. I think you're exactly right that it's a very specific technical skill and particularly coming into single touch payroll. How MC and I have attacked this has been, we need to firm up some of our processes because as much as we sound like we've got these great successful businesses on the inside, we asked on managing them, and we asked to trying to make sure in future proof that they are tied because you can't get it wrong in payroll you've got to really know your stuff. We really leverage off each other because MC has incredible deep payroll knowledge. Then, I have this broad level of clients across the lease industry.
Katrina: It's coming together and knowing, “Okay, we want something that translates generally, that we can use together in very different practices.” However, it's also something that's got this real commonality about it. Payroll is not for everybody, and some days I also question what I'm doing. I think, with single touch payroll, it's really complete to us. It's not going to go away and it's going to be something we're looked to having to do. That's where I approached MC and said, “Hey, I'll do this for my practice. Let's get together and let's work on it together.”
Amy: I love that. I love that. I actually did a podcast about bookkeepers working together and collaborating together, sharing knowledge because I believe that it raises the standard in our industry when bookkeepers are willing to work together rather than trying to be secretive or separate and things like that. I think that's great. How did you actually meet each other?
MC: We met at an ICB, an Institute of Certified Bookkeepers network meeting years ago. With several other people, just one thing led to another, starting to converse, finding commonalities, finding like-minded people who are keen to improve their best practice in their practice. One thing leads to another, and I'm sure, the shared appreciation of red wine helps along the way.
Amy: Great, that's good. You met at an ICB meeting and then you just started to catch up and talk about your practices, and you just found a lot of common ground there. That's great. I love it. Obviously, you guys know a lot about payroll, and you know a lot about single touch payroll. We have all sorts of listeners join us on the podcast all the way from pre-start-up stage to start up stage people who have reached the full up. So there's the client, they've got full books with their clients, and then we've got what I call the move upstage, which can cover lots of different areas. I think, that will probably be the stage that you guys are in, which is, I guess, they're looking at optimizing what they already have as a business. As you put it in your words, future proofing the business, getting the workflows better done. These are people that have teens, and that kind of thing.
Amy: We've got the wind-up stage. That's actually people who are looking to come out of their business. Then, we also have the Fed-up stage, these are people who are like, “I don't even know if I want to do this anymore. So is this still for me or is it still what I want to do with my life?” We've got this kind of whole range of people there. So, just for maybe some of those people that are at the earliest stage, what actually is single touch payroll?
Katrina: Single touch payroll is being mandated by the ATO. First communication we're trying to have with clients is that it's not us deciding this is a magical thing we're going to make them comply with, it's driven by the ATO. Basically, I don't think the name when he explained what is, it's basically electronically, digitally talking to the tax office, every pay event. Every time there is a pay run, or payslip, or a payment to an employee that it's digitally interacted with the ATO, but it broadens into a lot of changes for our industry in that at the moment the bigger employers had to comply and out there in the marketplace, the clients are feeling it's not something they have to do, but from 1st July, all employers need to be in your system.
Katrina: We're seeing this shift of people who've done things perhaps a little bit backwards and manually and maybe even pay people in the bank and then come along and got the bookkeeper to process payroll. All those things are going to under mentally change, leading right up to the end of year payroll process, which is basically going to be reinvented. We won't be producing these payment summaries. One thing that struck out for me and then see about it was bookkeepers saying, “I'm going to lose revenue and I'm going to decrease my services.” It's because the message is going out there that this is single touch.
Amy: A single touch, it sounds easy.
Katrina: Yes, and it's easy, and it's going to be done by the employers, but really fundamentally what we do with all our end of year processes still has to be done. It's just how it's delivered is going to change. We started to think about not only bringing in people who have to comply to this but also talking about our current people and where they're at and if they're using compliance software. It had a lot of different facets to it that we sat down and broke it up, and then I leveraged off and stays technical knowledge to go right, how do we market to these people? Not only that, they're inevitably going to need our help, whether we like payroll or not. How are we going to deliver this? How are we going to systemize it so that it doesn't just all come flooding in the door and cause five seasons in one day?
Katrina: You start up new that full up wind up, fed up, I reckon I can go through all those stages in one day.
Amy: In a day?
Katrina: I seriously can.
Amy: That's right.
Katrina: MC would you agree, that's in a nutshell where we started and where we've ended?
MC: Yes. Also, one of my considerations is when you look at STP, and the intent that the ATO has with information flow, there's a definite shift in their perspective. Employees and employers will shift their expectations. Employers a year from now we'll expect to have real-time data on their wages and their super accruals. I know the ATO is actually working with the super companies already, to push the information about when super is paid. That means what we do with payroll needs to go to the next level, so that gone are the days where a payroll can just be reconciled at the end of the year. Here you go, here's your year to date information. That's the shift we are like with online services moving to real-time data and it's no longer just about the business feeding out to real-time data for staff members. Who will expect that they will want to see that information on a day to day, week to week basis.
Amy: This is great. It's actually great because I hadn't thought about it from the perspective of the real-time data, but that's something, obviously I made a bit of a joke before that I don't like payroll, but I think for me it's not the technical complexity side of it. For me, it was dealing with the employers who refuse to do the right thing even when they had the information. For me that was heartbreaking and because I've seen so many people in my personal life, so for example, I'm the oldest of seven kids, I've seen my siblings go through, not being paid correctly.
Amy: Now, I've always been aware of the law, when I was younger and in a job I was able to know where to look up, to find out if my employer was doing the right thing. Whereas with my youngest siblings, I had some of them working, they're pizza chain and stuff like that. Working as managers and having their superannuation not being paid and things like that. In this position where you feel a little bit helpless. I've been through a fair work commission thing with my husband. I'm having an employer doing the wrong thing there, and a bookkeeper covering up for it and that kind of thing. I've always thought to myself, I don't know, I know how hard it is as a business owner too. When you've got the demands of payroll, and you have to make sure that your cash flow is covering that. There is a lot of pressure for business owners. But for me, I think it was just the heartbreakingness, if that's a word, of working with these business owners where no matter what information you showed them, they're like, “No, why I don't care.” Then, it will come back on me.
Katrina: It sounds like really super interesting because we find that it's all about workflow and documentation and from affording it we're finding more and more employers. If we blog, if we write about things if we put ourselves out there, and this is the sales and marketing usually uncomfortable stuff. What happens is they turn to you and go, “Hey, I know I've mucked this up, could you help me?” I had a client yesterday in the construction industry, who I've been telling for a long time, and Victorians will associate with this. If they need calling this the long service, let's game. He kept saying, “Yeah, I'll get to it.”
Katrina: Yesterday, the phone call came in, and he said, “You're right.” I'm thinking, “Oh, I love being right.” What am I right about? He goes, “I've received the phone call, I have to comply to this.” I think it's an education piece. One thing MC said to me recently, which really struck home again was the touch points with the ATO are going to increase. No longer do you get touch point at best time. We've basically got every pay run as a touch point for the ATO to know the data. It's not scaring people, it's trying to front foot the problem. I think you're right, I see dodgy employers all the time, but I'm seeing this shift of, there's a no crap policy, they're not going to get away with it.
Amy: When you were saying about the real-time data, I thought, “Wouldn't that be great?” Because I remember coming through my young brothers, payslips and summarizing it all in excel and trying to work out what had been paid and what was missing. Whereas, now when a young person can log straight into their myGov account and actually see what they've been paid and accrued today, then I think that gives them peace of mind as well. Because I think, especially with young people, they feel really powerless when they're in that position. Because if you speak up, then you could lose your job. I just think that's great, and to be able to have a system in place that brings transparency into this area. When you were saying that I thought, “Maybe I'll start to love payroll now.” Because there is this extra measure in place, I think it is good.
Amy: For me, I always think, when there's this thing that goes on the bookkeeping community, like can business owners or should business owners do their own bookkeeping? Is that a yay or nay? Is that cool to let your clients do their own bookkeeping? I always think it's not that a business owner can't do their own bookkeeping. Anyone who is smart enough can actually do the data entry and things like that. It's not that they can't do it or that they're stupid, but I think that bookkeeping is about … One of the things that bookkeeping is about is transparency and having that second set of eyes on the books. Because, when people know that someone is having a look at what they're doing, then they're more likely to just naturally do the right thing because they know that there's that second set of accountability there.
MC: I think, that businesses need to recognize that they're in business for a reason. Be it, they've lost their path, Pilates instructor, a guy who builds houses, a lady who runs a cafe, they're in business to do what they love and their passion. The bookkeeping allows them to do that. Often talk to businesses who convert from doing our own bookkeeping to crossing that line to outsourcing. They can't believe that it took them so long. Payroll is one of those bag of bears, I think people, in general, are scared of, bookkeepers, businesses, and employees.
MC: Single touch payroll I think is a way of trying to demystify what's there, the old system is still a minefield. I personally, take the approach with my clients, I'm taking one payroll at a time and if I can get one more employer to understand that it's important and beneficial for them to pay their staff correctly and on time-
Amy: That's right.
MC: This is going to win. It also proves I can turn around and say, I did the next client who says, “You can't afford to pay award wages.” Yes, you can. Before you have a bookkeeper and accountant on board to be able to show you the way through that minefield and make your business successful by being complaint.
Katrina: I think, generally looking at the bookkeeping and do it yourself stuff. I don't market it but resist because payroll brings them to you and there are days where I do hate payroll too, but I think it's an inevitable part of our business that we have to have enough of it going on that it will develop. A lot of clients have come from us, from certain sole traders and work their way through to being employees. It's like little babies growing up and seeing your kids flourishing. I'm the first to call on the experts. I'm the first to leverage all the great resources we've gotten payroll because there's stuff I just don't know, and there're things where I go, I know that's a problem. I can see that that's going to be an issue, but I just don't quite know enough technical stuff.
Katrina: We've got so many great tools available and I think eventually you can never find someone who wants to do their own bookkeeping because they're just going to do it themselves anyway. You do sit back and have a coffee and have a giggle at some of the Facebook stuff that goes on when people ask questions in forums of that. Inevitably, people like us reach out to him and go, “Hey, have you ever thought of talking to someone who does this for a living?” It really is an opportunity.
Amy: That's great. I love it. I had this question, it's been on my mind because I've seen it around quite a lot. I've seen a lot of bookkeepers posting this on mostly LinkedIn, that STP is the biggest thing since GST?
Amy: Is it?
MC: Well it does, it changes the whole, Katrina touched on this before. Currently, if you've got an average business that's got payroll and four quarterly basis and one income tax returning year. Forget tape pay just go with the bare bones basic. They've got four compliance dates for the year. If they're paying staff weekly, they have just automatically added 52 compliance dates to their year, and there will be funds instituted once this tape pay bets in.
Katrina: Look at the tape our system, because it taught them from 2012 to really start to send out those letters that go, “Hey, you haven't done tape pay since 1415 where are you?” I've got clients who can't get payment plans because they're not lodged their report on their contractors. Now, there's nothing to pay, it's just a lodgement, but they haven't done it, they can't get a payment plan. What we're saying with a single touch payroll stuff, and my view on the biggest change since GST is, we've got all these clients that don't have software, that are mums and dads companies. They can give exemptions all they like, they're eventually going to need to be compliant.
Katrina: I've got one or two who are using desktop software and changing the tax rate to the tax tables just can't happen and you know. That whole shift of him. We've got a whole workflow that we do at end of payroll year, pushing out the payment summaries. That's fundamentally going to change in my practice now because I need to be notifying employee ease to say, “Don't come looking for the payment summaries from us. You need to log into myGov, here are some links how to make that work.” Saying to the employers, “Hey, you're now using STP if you need to make changes in payroll, that's got to fundamentally change.” You're looking from the end use of the employee through to the ATO getting this data. Like, are they getting the correct numbers? To the employers going, I've just told the ATO what's going on, I'm behind in my slipper. They're actually going to know that I'm employing. I definitely agree that it is the biggest change to the tech systems since GST.
MC: Just to push more data flow with the ATO getting more instantaneous real-time data, the amount of data particularly you look at zero and that some of the metrics that they can quote out of when they look at old files and they pull different things to feedbacks to us, how many people are being paid? How much money is flowing through the system? That's just one software provider. With the ATO having a broader, more instantaneous picture of wages on a weekly or fortnightly basis. The metrics that the ATO can come out with will have an impact on our economy. It makes us an economy that's less, as my husband used to say with tax returns. You're always driving, looking in the rearview mirror. STP is changing that so that you're actually looking forward rather than always looking in the mirror.
Amy: I think, that's actually really interesting perspective because, so I've always seen, over the years I feel that we, I remember back, I started out working in an accounting practice and then they started in house bookkeeping firm. Then I started, I moved into that and then it ended up managing that. I remember back then thinking about, real-time accounts. What my boss used to always talk about it, he's selling point to selling the bookkeeping service was, real-time account. It was always about how we'll keep your accounts so up to date that whenever you call us we'll be able to give you a snapshot of your business. I thought, “Oh my goodness, we can't do that.”
Amy: The time the clients sent the information, we are always at least a month behind. Then, what happened was I left bookkeeping in 2010, I absolutely had enough of it. I was like, “I'm never want to see another, I don't know…reconciliation. I left and I went traveling and I did a couple of things thinking I was never going to come back. Then, when I got back from my overseas adventures, I decided to change my own software from MYOB to Xero. Because I wanted to get a Mac and I didn't like the MYOB program on the Mac software, I wonder if I can get a Mac and I'll try out Xero, and I absolutely loved it.
Amy: It was like something just sparked in me. I thought, “Wow, bookkeeping has changed.” Anyway, so that's how I got back into bookkeeping. Then from there, I remember, I've always reflected on these real-time accounts thing. I feel that, as the software improves, we actually get closer and closer to that being a reality. Now, we've got a 24-hour wait for a bank feed or we've got maybe a 12-hour wait for a receipt to come through receipt bank or something like that. I feel like that gap is getting smaller and smaller. I don't know how small it will actually ever get, but I think in a sense that, I don't know. In a way, it's been like the bookkeeper's drained to.
Amy: For me anyway to have those real-time accounts because I think, it always feels like in bookkeeping it's always about trying to get everything up to date. But, I always think what's beyond that? Once everything is up to date, what do you do? Well, we just start again getting everything up to date for the next month, but isn't it great when you can actually get to that point where you're up to date and then you can sit with a client and you can talk to them about, what happened and you can plan for the next quarter or the next month.
Katrina: I think, it brings in a really big conversation where I see clients who've never done payroll, who are going now with Xero and Kvo and all these other online programs. They're slightly higher, put aside my super, put aside my tax because there it is on the report that I see on the screen when I press post payroll. They're starting to manage their business how they always should have, that we've been telling them for a long time. It's starting to front footed and I think for us with this tape pay, even though with bookkeeping practices that have been around a long time.
Katrina: We always felt there was a continuous improvement in our processes, and when we sat down and we looked at our existing ways of onboarding payroll, we really had to rethink that, they would guess that we just bounced off each other and went, “Okay, what if that happens?” This form doesn't cut the mustard. It really is inevitably going to stem the flow of these instant referrals of business that I'm going to get anyway. These accountants are going to push this work my way cause they don't want to do payroll. I'm going to get overwhelmed with this work coming in where it's a business card pushed across tables. MC and I, it was about designing a workflow that got that into the practice, negotiate for us, but didn't cause chaos.
MC: Being efficient and being able to rinse and repeat that efficiency. Existing clients, moving them into this process, seeking new revenue streams but also future proofing to use that word again. Future clients are walking in the door. We need to, our engagement with our existing and future clients’ needs to be seamless, consistent and repetitive and efficient. When Kat and I were working through our paperwork and she said we found the gaps, we were actually really surprised at what gaps we have. “Okay, what's going on.” Just for our sake as two growing businesses in the region, we could do better. We had to lift our own bar and do better.
Amy: Just to give the listeners a bit of a perspective. What size of payrolls are you doing? Obviously, you would do small ones with maybe a single employee, but what's the largest payroll that you would work on?
Katrina: MC has the largest one. MC what's your largest?
MC: I've got one large one with, now 10 locations with around 120 on board. There should be another location added on to that of that I attained staff this year with another one next year. Currently about 120 and lots of tracking in that. Of course, they're already single touch payroll enabled because I have been at 20 or over and it doesn't stop. That business has been going for over 10 years, I think it's 13 years. The best practice of how that works, moving Tom shaped software, looking at changing the payroll software that we're using, what's the best fit, the magic mix that will make it smooth to run that business with the best feedback back.
MC: Yeah, 120 staff that can be interesting, particularly in that it's a hospitality industry. Whilst they don't hire a lot of under 18s you have a lot of young crew between the 18 and 25 mark. A lot of them have never had slipper, they don't know what slipper is which falls them.
Katrina: I come in from lot of smaller payrolls. I've got a couple of large ones in the construction so that gets really tricky with ABIs or your co-invest and all that sort of aspect, which I really love that it can be. I would rather do that than hospitality, MC is really good at the hospitality they're a couple.
Amy: I was having palpitations. When you said 120 I was like, “Oh my gosh.” Then, you said hospitality and I'm like, “I can't,” For me, I don't even take on cafes or hospitality and just bookkeeping clients.
MC: Wise choice.
Katrina: Wise choice and they're their own base. I think, for us, it was trying to develop something that we could use the multi-industry's and like I can push across the table to a mum and dad company and go, “No matter what ATO has mandated this, we have to comply.” I could get it to an accounting practice and say, you've got some of these clients that we need to comply to payroll now. We've got lots of different solutions available. Obviously, that's developing all the software companies are still releasing all their products.
Katrina: We need to start to have a conversation and we need to start to gather together these pieces of paperwork and year-end group certificates because that's just not going to be a thing. Like I said, I've just got everybody not understanding its group certificates in some ways and now it's going to become income statements.
Amy: I still call them group certificates when I'm talking to bookkeepers, but I talk to the polite.
Katrina: I still put it in brackets and it makes no sense cause it's not called group tax anymore. From the payroll perspective, taking it winding and all the way back with your love payroll, you hate it or you even get involved in it technically. You can still consult from the outside around getting people, there's a whole facet of the business about onboarding anything can happen. Then you just get the payroll mechanism and go as a business owner you run that stuff. I just need to get you set up. I'm in the short sharp delivery, I like to get in, get dirty, get out sometimes. That's where we're looking at it going, leverage the technical knowledge that's out there off each other and have these industry bodies and let's just do this really well and just lift our industry as MC said.
Amy: I agree. Do you know what I love about you two? I think, that your … so you've obviously got lots of similarities but then you've got this polar opposite in, so for example, MC is going these mega big payrolls and Katrina is going broad with lots of little ones. I think, that's actually great because, I think that brings a lot of value to the next part that we're going to talk about, which is something that you've put together to improve these workflows. You're talking about because for our listeners, we're going to have all different size payrolls. We're going to have people who haven't ever taken on a payroll yet and we'll have people with large ones and small ones.
Amy: I was thinking, because you're talking a lot about processes and workflows and just really betting that down. One of my questions was going to be how does that apply to someone who has a much smaller payroll versus a large one? But, you've already answered that question. I think that's great. The way that you've got, MC has got this date knowledge, Katrina has got the broad knowledge. I think it's a really great partnership that you have.
Katrina: I think, it's hard to find Yin and Yang. I think, whenever you sit down to look at a process, you should also have someone else who's good at, because they will tease out and find differences. I think, MC hit on it before, it's got to be something that's universal. It's got to work internally. When I sat down, and I almost had an internal vomit, I looked at my existing common clients, and I went, “I've got to take them kicking and screaming to STP.” At the moment I've rolled out the project, and I've got as a percentage because MC and I was talking percentages because if she says how many BAS that she's completed, and I'll say, I start to feel an unwell about it. Or we can talk percentages, it's all relative, whether you're a small practice or a big practice.
Katrina: From the percentage perspective I've been running with clients before where it's trying to get them to opt into STP. Existing clients using compliance software, and I'm at 20% it's taken four weeks, and I've got 20% to actually follow the bouncy ball. It takes time because they resist, they go, I'll do it later. I've got to run the ATO. They create barriers in their mind. For me, I've got to roll out something that works internally, but now externally, I'm starting to get the phone calls and the emails and the accounts are contemplating going, “You're just going to manage this whole process for us, aren't you?” That's where I'm saying, I went, “Okay, let's print for this right now.”
MC: When we looked at on at a similar institution at the moment, 20%, and you get the people who, “Can't you do that for me? What do I have to do this?” I think Katrina had someone who messaged back and said, “That sounds like a lovely idea.” Yes. And it will be more on July 1, so follow the bouncing ball. I can't say that the ATO hasn't tried to get the message across. It's our job to get that message across about what it is and how to do it. My scary thought was the new clients that walk in the door and say, “I'd like to start employing staff now, what do I do?”
MC: That's where we've really looked at that whole process. Brand new person walks in the door, you start pushing the pipe is across the desk or the virtual documents across through the virtual sphere. This is what you do, and it had to be a complete step thing. Not with someone coming back. “Okay, what's the next step?” It had to be a complete start to finish so that we can go bang in, drop you into a Xero file, get your staff on boarded, get payroll happening, pull it all together so that it's smooth and again, rinse and repeat. It has to be, it had to be able to be replicated.
Katrina: My favorite word, my favorite word in the world, scalable.
Katrina: Everything I do, everything I touch has to work with my staff and has to be scalable because there's no point doing a process once. I think we've looked at a few things around and when we both use carbon HQ for our internal workflow, but not everybody does that. There are people that are on Excel and Word and Trello and I didn't want anything that was a barrier to them getting started. I sat there and went, you might, why reinvent the wheel? I really wish I could just go out and start at level 10 because I don't have time to start at level zero, but you just sit there and go generic universal, something that we can all just start, and I feel comfortable now that it's rolling in the background.
Katrina: My clients getting reminders to do this, to comply to this, and I'm not going to get to June, July and basically want to just walk out the door and keep walking because things will just happen. My receptionist can push out forms to clients who ring up and say, “Hey, I need to get on board with this STP thing.” Because the client is still sleeping. They're still deep I denial.
Amy: I was about to … I'd written this down on my notes and put it in bold to ask you. Do you think business owners are burying their head in the sand? Because what I did was, because I wanted to put something on my website about single touch payroll, I do a special page about it. I'm big into SEO, so I do a lot of, Keyword research and that kind of thing. I help bookkeepers with their marketing and lead generation. What I did was, I actually typed in a lot of different types of Keywords. I'm giving away a little bit of my IP here to the listeners who are probably going to jump on this a few times I've mentioned Keywords, and I've seen some of the bookkeepers in my community go straight to their websites and update this, but I actually searched for single touch payroll, 1900 searches per month is what single touch payroll is getting.
Amy: Then I looked up the search term, single touch payroll bookkeeper? Zero. That means there's less than 10 monthly searches happening. A lot of people are searching for single touch payroll maybe to see what it is or maybe that's bookkeeper's actually for it. I don't know. But, I thought that was really interesting, it shocked me because when you look up the keyword payroll bookkeeper or bookkeeping and payroll, you get quite a lot of searches. From Melbourne, you'll be getting maybe 170 searches a month or something like that. I found that really interesting. Maybe people haven't quite joined the dots yet, but I was like, “What's going on?”
Katrina: There will be a post. What I'm terming now, I'm looking to the future, there's going to be a post STP apocalypse. There will be a June, July apocalypse mama words now like I love being right, but we've just get old manner just like, we're old manner bookkeepers. We're going to get all manner of client.
Amy: I love it.
Katrina: Some that you're going to be great work, then others that we're going to be the whole we don't do. This is when, I can't even imagine our world if I don't have a plan. We are just documenters, we're planners, we're workflow experts. We love one plus one because that equals two. This just makes so much sense to just get started.
Amy: I love it.
MC: We found the employers to all the small business where you'd suggested maybe they've got their head in the sand. I think the wafer the back in the lifespan of STP, than head in the sand. They haven't even-
Amy: Hasn't yeah. Not even on the radar.
MC: No. It's the same with the word rates, when rates change. God knows how many of my hospitality clients every year asked me about the public holidays in Victoria over Easter. I have to say, “Yes, it is four days.” That has not changed in the last few years. But, it doesn't come into the little wheels until it starts slapping them around.
Amy: That's right. Also, because I mean the name, because I said to my husband, I'm doing this project working on single touch payroll, which has this new thing that's coming in for all businesses on the 1st of July and it's already been for 20 plus or whatever. I explained it to him, and he said, “Oh, yeah.” Then he starts talking about simple touch payroll, that's what he heard me say simple touch payroll. Anyway, I laughed a little bit because I thought maybe the name to people they say single touch payroll and they go, “Okay cool, payroll is going to get a lot easier so I don't need to think about it right now.” I think, maybe even bookkeepers are doing the same thing because I haven't seen a lot of bookkeepers really.
Katrina: MC and I, we were having a chat about this. I think, there's so many talks about you need to comply to this, and you need to do this with your clients, but knows segmenting of the internal versus the external versus the opportunity. There's going to be bookkeepers out there that don't want the opportunity. I don't want to grow, I don't want the opportunity, but I just need to manage what I've already got. I said whenever I listened to those talks, I sit there, and I sit with the anticipation so that I can be told how to do it, how do I do it? I don't get the how. I get a, this is a massive opportunity. You should really look at doing this. Then, I sit back and I go, “How do I start?”
Amy: What are the steps? What are the steps?
Katrina: That's right. I think, looking at what you do and with bookkeepers is you provide steps.
Amy: Steps, lots, and lots and lots of steps.
Katrina: You also probably tailor that to where they're at. Because like I said, you can be five seasons in one day, and we'll have to find it all. Not all of us want to be, and this is something that was discovered. It doesn't matter how many clients you have or this size. It's common.
MC: Single touch payroll, the terminology actually came from the first iteration that ATO suggested. It was intended to, you would press a button, your staff would be paid, PAYG would be paid to the ATO. Super would be paid into the Superfunds and all of that information would be reported.
Amy: I'm thinking like instead of single touch payroll, maybe the real name for these 52 touch payroll.
Katrina: I have a couple of names for it, to come off STP, but none of which I can tell you on air.
Amy: No? Okay. You can tell me later. For all of our listeners, I came across what MC and Katrina had been doing in their business and that the fact that they actually want to share their processes with other bookkeepers. Firstly, I chatted with Katrina and I guess the message that I got really clearly from Katrina is the reason that she's doing this is, because she really does care about the overall wellbeing of the industry, it's not just isolated to making your practice great and more efficient, but you said the benefit of that translating across through the industry. It was, I don't know, maybe it was about a month ago now that I first started chatting with Katrina and then, starting to explore a way that potentially we could introduce the processes that Katrina and MC of developed into the Savvy community into the bookkeeping project. Do you want to talk a little bit about the actual process itself? Because, I've got it here in front of me, I've opened it up or open together ultimate card.
Katrina: It's a hard to say it's ultimate because it's going to evolve and a part of it into payroll, new process is still being not at all by the software companies, that's to come. But, I think where we started was trying to work out how it affects what we have to push out to clients in communication through internal, external documents that need to be filled out, scenarios that could be painted, packages that could be provided. Then MC is the queen of documentaries. I have all these fantastic, great ideas and scribbled notes, and then she helps me make sense of that too and puts it in this beautiful flow. Then when we just thought we had it beautiful, we printed it, we looked through it and we found, but what if then that if this happens, what happens there? And working through something that people can then bring into their practices. Pretty much each is something that's not a training course, and I think MC had some ideas around explaining, you're not going to attend a seminar or training courses, just not well what would work.
MC: We weren't wanting to teach people how to do payroll, the package, and the workflow was about hit the ground running. You have some guidance to be out, to go out to source new revenue. You've got guidance of other workflow to deal with your existing clients. You're building in the workflow for that next client that walks in the door next week, next month, next year. It's not about teaching people about compliance, it's about having that paperwork. I think, there are a lot of courses out there that talk about you should be doing consulting. You should be working with your clients to improve their business, but they don't give you the how. We went back the other end.
MC: It really did start, it was about us from a very selfish point of view. We were trying to nail down our processes and then we looked at and went, “Oh my God, other people could do this.” Particularly, looking at accounting practices with clients that they need to get across the line in STP, what would we physically do? It was about what we would physically do using paper and the virtual world to actually make that happen.
Katrina: We put a flavour to it, you have to put a little bit of a flavour of instructions, but it is quite software agnostic. I think the barriers, like I said, we use carbon HQ, but you don't have to be using carbon HQ. You could pick this up, and one of their reviewers that we got to look through it said, “I could grab your stuff, printed a few things through rocky logos around, and I could walk into an account and coffee meeting, and I could nail it.” I went, “That's what I want. That's what I doubt myself to do.” I walked in and I sat down with an accountant who had a list, that's all he had. We had a list and he thought, he thought this through and he gave me his list and we sat there together and I applied how MC and I organized we should deliver this.
Katrina: He just saw the started stuttering and mumbling and rocking back and forth in the corner and then push the list of cost and said, “Okay, could you just execute that now I'll pay you to do it. I will get my admin to do all the legwork and there's 10 conversions.” I just sat back and went, “Okay.” Then, I walked out and had a little bit of a big dead side of breath as I got in my car and went, “Oh my God, what have I unleashed? Unleashed the cracking.” I think, for us it's dovetailing into what you do at Savvy where, yeah, we can teach the technical stuff, but this is more about managing the process.
MC: The practicality. The practicality of Katrina was able to walk out of that meeting. She knew exactly what was going to happen next. She knew exactly what communication she needed to push to the accountant or client. She knew what paperwork she needed to push out to get the information back in to implement it. That was the important, that was the gap that we had before we started. It was all about practicalities.
Amy: It's great. It's just great. Because, I feel like you guys with just a bit of a missing piece of the puzzle for me because what I do is I teach pricing to bookkeepers. I help bookkeepers who want to move from an alley right into packages. I fell into that because I started off doing websites and then when I'd started doing websites, I realized a lot of bookkeepers didn't know what kind of clients they wanted to target with their websites. We started working on who they want to work with and who they want to target. Then, we started to discover that they didn't have any business plans that never documented the direction they wanted to take in their business.
Amy: For me it's been a journey of exploring with bookkeepers, what are the things that you struggle with and the more that you need to? We've just been flowing with them and digging into, what do you guys need and how can we serve you the best? Where we found ourselves was that a lot of our clients wanting … we started off sitting up lodgement documents and engagement letters, so all authority documents and that kind of thing. I had a favorite tool that I love, which was PandaDoc. It seems like it's just a document signing software. For a couple of years I was creating an engagement letter BAS lodgement, so they could send out the bastards for signing with the detailed reports, and the BAS authority document, and just those onboarding documents.
Amy: Basically, that could engage a new client and started launching their BAS. That was the thing there. I'd set it up for all these bookkeepers in PandaDoc and then what happened was, I had no idea, but one day I discovered that in PandaDoc you can create pricing packages, and I thought, “This is gold.” I started developing my own stuff and then I realized, I started offering it to my clients, and I thought, “This is great.” I accidentally, I was always against people that teach fixed pricing to bookkeepers and stuff like that. I thought, “We had book keepers, we know how to figure out our pricing, we don't need help.” But then, what I started to realize there was so many people that wanted help with this.
Amy: I started using that one software, using that to build out these packages. Then as a natural flow on results, as I'm in the middle of building these packages, then the ATO announces the STP is going to be for smaller payroll's a lot of our clients that would have smaller payrolls. Then, the next thing I'm mean the middle of these PandaDoc's setups for clients, and then my existing clients were coming to me saying, “Can you update all of this stuff? I'm going to need to incorporate STP in it.” I'm like, “Yes.” I'd already started doing a little bit on the side. As the client asked for a guide to develop something. It was funny when I looked at your package for the first time, the one thing you don't include is the engagement letter.
Amy: I spent a lot of time going through and customizing an engagement letter for two things. Obviously, I had to add in the STP staff, but I also had to make sure that that engagement letter really covers scope changes because the biggest issue when you go to packages is to make sure that you're covered for scope changes. I developed this engagement letter and then I had people asking about STP, then they'd say to me, “Do you have this for STP and do you have that for STP?” I had the enduring or authority, I created one of them and that was where I got, that's as far as I got. From there, I had people asking for stuff and I thought, “Well this is not going to be my area. You will have to get it from, wherever.” That's right. Then I saw that Katrina had been working on something like this. Then as I said, it went once-
Katrina: Grows organically, doesn't it? It dovetails.
Amy: I went in there, and I was like, “This is everything that's missing.”
Katrina: This is a step out because I think the thing is, a lot of the industry talk, and the industry body stuff is around the enduring the authority. It's so much broader than that because of the rubbish that comes across your desk when it comes to payroll, and the people that are noncompliant generally have rubbish information. You are getting scrappy bits of paper, and they are often cash based businesses. It just creates this whole conversation. One thing we've found with packages is we needed something that, we're in Geelong, Geelong bookkeepers will charge different to Melbourne bookkeepers. I mean you; you'd have to be able to promise your market and they have different compliance’s. Detailing something out where you can go, this is how I classify the clients.
Katrina: Some of the software companies started to do this, they created playbooks and this is where we grabbed all their playbooks and we looked and we went, it just sort of stops. It stops at this point, and you make it what to do next? The engagement letter for us was a deliberate choice to leave that, to mention that someone needed to do that, but to go, everybody is already probably working with an existing engagement with us. Everybody has got their own flavour; everybody has got their own industry body. We will give you the resources around, but that is a task that needs to be undertaken. But, that's not what this is. This is not a set of forms that is just a sign here. This is a process and why I'm gathering the information?
Amy: That's great. That was something, there's no way I could have invested any more time in putting all that together. It's been great that I've had the opportunity to be able to offer what you've put together to our clients. Just to give everyone just a real quick summary, so the ultimate guide, the ultimate STP guide is broken into three sections. You've got a section that focuses on existing clients, then you've got a section that focuses on new clients, and then you've got the final section, which focuses on potential clients.
Amy: I guess, the whole purpose of the packages is the first part's about identifying clients, creating workflow and gathering documents. Then part two is about being prepared for new clients who walk in the door. Because I guess maybe we're thinking, “1st of July is going hit, and we're going to have to get all that existing clients on there.” There's always going to be new businesses starting up that need to be onboarded into the STP system, that section covers that obviously. Then you've got the last bit, which is pretty cool. This was one of the things you mentioned to me on our first call, Katrina, about additional revenue streams for bookkeepers. There's a whole section on potential clients, which is about marketing your STP service to external practices.
Katrina: I think, we kind of left a little open to, it's very generic to put your own logo. We want people to own this. We want, when I start talking to bookkeepers, a lot of what we do in our industries, you go, “Oh yeah, I've got that. Oh yeah, I do that.” I've heard that over and over and I thought, “Do you? Do you really do it level?” It's fine for us all to admit we don't and to go, “Hey, let's get a leg in and let's get … hey, I wish I had an Amy in my back pocket when I started with my bookkeeping business.” Because, I reckon I've made every conceivable mistake and misstep and marked everything up I could possibly do. May be this will just be the next challenge.
Katrina: I think, MC and I were trying to just bullet proof, future proof documents and go, “Hey, if someone can take what we've done and just even take it to another level. I just think that's fantastic. That's just good for everybody.”
MC: Getting back to that comment that STP is the biggest change since GST. When GST happened, back in the day, the biggest move was onto electronic software. Mild quick books of the day, now reckon, where people had to lift their game and improve their processes. Even just as a business owner, not even talking about the bookkeepers. That created a whole bunch of revenue for bookkeepers who specialized in dealing with GST and bookkeeping. The BAS agent and hence why I'm Katrina and I are sitting here today with nice little tidy businesses that are growing.
MC: STP is going to force people to have to change their behaviour, of course around payroll, but it'll be that, that trigger point where people just go, “Oh my God, I just can't keep doing the way I'm doing it anymore.” This will force people into taking that next step. Again, moving into electronic software, there will be a lot of businesses who I get, I see some of them and you see them on the Facebook groups. I use a spreadsheet, it's worked for me for years. Common STP, that will no longer work for you. We will get revenue and I agree with Katrina in probably it'll be after July 1, that I'm going to get more hit. Timing might be great because we'll be in best season again. That is when I think people will be faced with. “I just can't do it my old fashioned way in a more, I have leave my game.”
Katrina: I think it leads to a little bit of a challenge with accounting practices because they don't generally, a lot of them that I speak to don't want to do payroll. They recognize, its own BAS and they are starting to say, “Hey, I need to nominate an STP chair to define practice.” But now, they don't know what to do. Katrina, could you help them? I'm getting these, I'll pay you to come to my practice and help somebody in my team leverage this or deal with this or push out to our clients so they stop ringing our receptionist going, “Oh, you'll just take care of that.” I mean, that's a common thing I'm getting, they can't, we'll just take care of that money. I'm like, interesting. Have you asked that question? Interesting.
MC: A lot of accountants too they're specialists in income tax. A lot of accountants do BASes. We're still talking about large blocks of time of where they're focusing on data that's a large blocks. There's a lot of accounting practices out there who won't know how to behave and how to manage weekly or fortnightly data movement with payroll. I think, there's going to be a bit of backlash from the accountants who say this is unworkable, we need deferments. We bookkeepers are just going to have a hand on it because that's what we specialize in.
Katrina: We're short and we're sharp and we were nimble. I think, that's what I enjoy about this industry. I've had lots of people over the gym go one at EOD techs and I'm like, “It's just not the interest to me.” I think, that being able to no matter what, if those stages that you mentioned in your app. Recognize what the opportunity or what the problem is for yourself. I think for us, we're going to keep developing this. We've got the end of payroll year, part of this project to go. We've also probably got a couple of other bullet proofing areas of the business that we've gone, “Hey, we need to just get a standard happening.” I think, it's a really exciting time.
Amy: It is very exciting. When I first opened the package, I was very excited and I've been going through and as you said, adding some value into that as well. I've added my engagement letter into that package. Basically, anyone who is listening there's really going to be two options. There's going to be a DIY option. For those who are more toward the start up, into the scale or maybe even those who have staff who can implement it for them, you'll be able to access this entire workflow that MC and Katrina have put together. With the added value of my engagement letter put into that package, you'll be able to access that to DIY. I'll put some links in the transcript, in the helpful links section you'll be able to have a look at that and purchase a copy of it.
Amy: The other option we're doing is because a lot of the clients that I work with doing their setups, a lot of those clients are really, “I'm too busy to DIY. I don't have the capacity within myself or the team to do it.” A lot of the clients that I'm working with at the moment, these are the people who are asking me once this package is ready, can you please set it all up for me? Me and my team, we step into bookkeeping businesses as a temporary sales and onboarding and marketing team in a way. We step in and we set everything up for you and then step out. Basically, that option will be available that like a done for your option, that will be available as well. You'd be able to have a look at that and find out the price for the DIY package.
Amy: The setup package is going to be, that'll be by quotation, depending on the needs of the individual businesses. You can pick and choose, which parts are relevant to your business. Maybe you've already done some of it. I'll put a link in there. You can jump and have a consultation, to talk about setting all of that up. MC and Katrina, I think at some point we'll do a webinar with the DIY.
Katrina: I think it's important. It's important when you open it, there's lots of people at different levels of their overwhelmed, I call it whelming under, over all over the place. I often open these things and go, “Yeah, I could do this, but I'm going to choose not to.” Or actually I'll just need to understand it. We obviously, innately know what we'll put together and we've executed it a few times to see how it all fits together. I think, it's really important to start somewhere.
Katrina: For us, we will do a Webinar that is recording of, you've opened it, this is what this is, this is what's that is, this is why you've got this piece of paper, that piece of paper, talks to this piece of paper. You should execute this if then that stepped through it. But, most people who work in systems and processes are going to open it and go, “Okay, I've got a starting point. I can drop in some logos and just go or I could tweak.” The plan is to record that Webinar and make it available and then make further of updates available down the track when we get to the of payroll year.
Amy: That's great.
MC: Also, I was just going to say with the Webinar yes, it is a bit of handholding, but I think it's also an opportunity that we can actually pull out of our heads the some of the why. We did some of the process and the documents, so that people might not have actually thought about that. They can put away that why and have a bit of, think and massage it to suit their practices. Rather than one thing, just to read a document and a package and go, “Okay, I think I get it.” The Webinars, it's more than hand holding. It's a bit of trying to get out of our heads what we were aiming to do and the potentials that you can take this in different directions.
Katrina: The next thing that then come of that as being the multiples of conversions from old software. We're starting to document that process in a very similar vein of that work is flowing into the practice. That'll be an extension product.
Amy: Perfect. Perfect. That sounds great. We'll definitely keep everyone posted. Make sure that you're on our email list because that will be announced to the email list and also in the Facebook group or for those of you the best place to get in is for the bookkeeping projects, they can go to the savvybookkeeper.com.au/community to get into the free version of the bookkeeping project. That's where we'll announce any changes that have happened, in this product, and also when the webinars are available we'll also announce that in there. For now, you'll be able to check for the links in the bottom of the email and start to have a look at that. Thank you too for coming to chat to everybody today.
Katrina: You're welcome.
MC: Thank you for giving us the opportunity.
Amy: I'm so excited.
Katrina: Yes. We just want people to get started. You've just got to start somewhere.
Amy: I can't wait. I can't wait. Okay, great. Well, thank you for joining me and thank you to all our listeners. I hope you've enjoyed this episode. If you have any questions at all, please post in the Facebook group or send us a message on the website any way you want to get in contact. We'd love to hear back from you, your feedback is always valuable. Also, if you listen to us on any of your favorite podcasts apps, could you please leave us a review? That would be fantastic. Thank you so much, and we'll see you next week.
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