As firms grow, they need to move their sales pipeline from inside their head into a more formal process, says Sarah Dobek of Inovautus Consulting, to gather the right data and hold everyone involved accountable for growth.

Transcription:

Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.

Dan Hood (00:04):
Welcome to the Air with the accounting. Today I’m editor-in-chief Dan Hood. It can take dozens of contacts with a prospect before they become a full fledged client and it’s way too easy to lose track of them in that long process unless you have a well structured sales pipeline here to talk about what that is and why your firm should have one. And even if you do have one, how do make it better is Sarah Dobek. She’s the president and founder of Inovautus Consulting and a well-known consultant to accounting firms. Sarah, thanks for joining us.

Sarah Dobek (00:28):
Thanks Dan for having me.

Dan Hood (00:30):
Alright, I want to dive right into this. I know a lot of people on listening, we’ll probably know what a sales pipeline is, but let’s give everybody a basic understanding of what it’s all about.

Sarah Dobek (00:41):
So a sales pipeline really is a visual representation of the stages that potential clients will move through from initial contact to becoming a client, whether it’s a client or a prospective client to the firm. It really talks about their buying journey within the firm. And what it does is it helps facilitate this conversation around firms tracking progress, identifying bottlenecks, and quite honestly forecasting future revenue.

Dan Hood (01:12):
Do firms have them? Do a lot of firms have them? Do you find most of your clients have them, for instance? Or do you go in and find a lot of firms that are like, or, Hey, here’s the real question. Do a lot of firms say they have them and then you look at it and you’re like, well, no, no, no, no. That’s not all.

Sarah Dobek (01:26):
So do a lot of firms have sales pipelines? Yes. I would say that there are a lot of firms that do have sales pipelines. I think firms have them, whether they realize ’em or not, they don’t always document them, but every firm has a buying process, whether you are paying attention to who’s in that pipeline, whether you’re doing something with that information, that’s probably the better question is whether that’s happening. And to answer a question that’s part of evolution and growth. If you’re a sole proprietor, it’s all on your head. You don’t need typically an Excel spreadsheet. If you have reminders or to-dos or whatever, that’s fine. But the larger you become, the more important this becomes in being able to manage growth inside of your firm. Gotcha.

Dan Hood (02:09):
And obviously, I mean that’s assuming every firm wants to grow at least somewhat, at least to replace the attrition that happens every year. Is there more beyond the style? You said when you’re small, you can keep it in your head. Why do we need to have it out on a piece of paper as we get bigger on a system in a piece of software or whatever the case may be?

Sarah Dobek (02:30):
Yeah, I think one of the biggest mistakes we see of growth is just lack of execution. We forget because we’re all human, at the end of the day, we all have a million things vying for our attention. And so one of the things that we’ve found is it enhances accountability, a great deal towards growth, and it keeps the team focused and motivated around growth, especially if we’ve established growth goals in our firm, whether that be at a firm wide level, practice area level or individual level, it US stay really organized around that information. The other thing that it does is it enhances forecasting By tracking our prospects and existing expansion of client services, firms can more accurately forecast future revenue, whether we’re going to hit our growth goals for the year, they can help plan for capacity inside of the firm. If we know that we are on track to hit our goal or exceed our goal, well guess what?

(03:27):

Now we can go to the HR and the recruiting team and say, look, here’s what we need. This is what we’re planning. We need to start hiring now because this is a service-based people business. This isn’t that we turn up production, we have to have the people to turn up production in an accounting firm. And then the other thing it does is it increases our efficiency. So it brings a line of sight to our bottlenecks and places where we’re breaking down in our sales process where things aren’t converting the way that they’re supposed to or even protecting our bandwidth. What are we bringing in the door? Is it the right business for the firm? And so there’s a lot of things that our sales pipeline can really do to support our growth in the firm.

Dan Hood (04:09):
And you mentioned this, you described it as the journey of the client potential client. Are there ways of becoming a client whether they know they’re going to become a client or not? Maybe you talk about, and I realize this will vary very differently by firm size even by type of client, but are there a set of stages that the average client will pass through in a pipeline?

Sarah Dobek (04:29):
Yeah, I mean when we think about the buying process that usually the pipeline stages can be a little bit more granular, but there’s this idea of people having this idea that something’s wrong, there’s a problem that they need to solve in their business, and that can be triggered from a lot of different things depending on the surface. And so we generally align that with lead generation and qualification in the sales process. Lead generation is usually like we’re identifying and capturing a potential client through various marketing or networking activities. There’s been some indication of engagement with the firm. Qualification is when they’re giving some indication of being in a buying process and we have to further qualify whether they actually are, they’re sort of what we call just kicking the tires. They’re doing research but they’re not really ready to purchase. Once we’ve brought them through a qualification stage and we’ve actually had contact with them, then we go through this process of some sort of a needs analysis.

(05:31):

We’re doing discovery calls with them. Sometimes that’s one call, sometimes that’s a half dozen calls to figure out what it is that they need. And part of that includes scoping of the services, right? For firms that might be looking at past tax returns or audited financial statements, it might be looking at their accounting system. If we’re talking about cas S, but getting to the point where we can accurately say, these are the services, we can price those services and put them into a proposal or a modified proposal some way to give them pricing around what we’re doing and what we’re going to be doing for them. And we often call that a proposal. And some firms use proposals, some don’t. Different markets sort of require different things here. Once that proposal’s delivered, then we’re typically waiting to get feedback from them. Sometimes we’re negotiating, what’s it going to be?

(06:21):

We’re like, you know what? I don’t know if we can quite afford that. What else can we do? What are some of the other options as how we can work with you? And then there’s the closing, it’s usually the verbal commitment to go forward. And then from there, the firms usually go through whatever client acceptance process. They may or may not have defined in their onboarding depending on what services they provide. So whether we’re doing conflict checks, we’re setting up engagement letters, we’re doing any other checks that we need to on the background to be able to actually onboard them as a client. And then we go through the onboarding procedures.

Dan Hood (06:54):
Got, and I’m just curious, is that sort of the end of it, right? Once we’ve got you onboarded, you’re no longer in the pipeline, now you’re somebody else’s. I mean obviously everyone cares deeply about the firm’s clients, but they’re fully out of the pipeline. Now you’re a client, we’re going to go back and look at some other people who’ve done business with.

Sarah Dobek (07:10):
They’re fully out of the pipeline until they start the process over. Existing clients can raise a hand and give an indication of additional services or consulting needs that they have. And the second that happens, they go right back into the pipeline. Because we look at the pipeline as not just new clients but new revenue and new revenue can come from existing clients or new clients to the firm. And so for every firm that we work with, we say the second they show an interest, if they call you and say, Hey Dan, I have a new entity that we need to complete tax work for, right? Guess what? They’re going back through the pipeline. Or Oh, guess what? We identified some gifting strategies we need to do before the end of the year. Guess what that’s going in the pipeline.

Dan Hood (07:50):
Got you. Because important, as you say, it’s a revenue tracker as much as it is an actual new client tracker. So keeping all of that in that place is going to be pretty crucial. We talked in an earlier podcast, we talked about KPIs for growth. And if you’re not catching that, I guess that would be something, a big thing that would be missing from your KPIs if you’re not getting what’s called the cross-selling revenue, the holy grail of so many pharmacy states is to sell a lot more services to the same set of clients. So they’ve got to go back into the pipeline, obviously for them it they’re not feeling like they’re back to the pipeline, hates boring, internally measured. That is very cool.

(08:30):

There’s so much more I would like to, we could talk about that, but as with all of our podcasts we’ve talked about there’s limited time and we do need to take a quick break. But when we come back, I want to talk about gathering the state and how it’s put together and how it’s reviewed and who looks at it and and all that sort of stuff. For now though, we’ll take a quick break. Alright. And we’re back with Sarah Dobek of Inovautus Consulting. We’ve been talking about what’s in a sales pipeline, what gets tracked in it, how when clients and prospective clients get into it and how they might end up going back into it. Because the important things to we sort of said, right, is that it gives you the ability to track future potential revenue so that you can make plans based around whether staffing broken capacity or which is all very cool stuff. But I want to talk a little bit more about the practicalities of it, practicalities of maintaining the pipeline and that sort of thing. Who should be in charge of this to the firm? Is there a natural place for this to live or is a collaboration between a bunch of different departments?

Sarah Dobek (09:29):
So often it’s sitting in the marketing and sales department of an accounting firm. And if we don’t have a large team, sometimes that could be living within a partner in charge of growth or managing partner. Oftentimes growth falls on the managing partner’s responsibility until they become a certain size. And we have a partner carved off and dedicated to overseeing that function. But usually it’s going to sit there and typically where you’re going to look to that person is to help support tracking of that information and overseeing the reporting around all of that. It takes a fair amount of corralling and administration to get the data that we’re looking for because we know all accountants listen the first time and are super good about falling process and procedures. So it doesn’t take any hurting of anything.

Dan Hood (10:24):
Hold on a second. I got to catch my breath there. That’s a bold and sweeping state better. Sorry.

Sarah Dobek (10:32):
There’s a little bit of passive aggressive underlying tone there. It’s just S in good joke, but in reality it does take that because we’re busy at the end of the day and we should have somebody corralling that function. We should have somebody helping to support those things in the accounting firm. But it is a big evolution for firms to be able to track this

Dan Hood (10:54):
Information. And we’ve talked at different times about the difficulty of gathering information from across the firm, whether it’s coming from practice management systems or CRM systems or from the email systems of individual partners. You said something that might get you into a sales pipeline is just saying to somebody at a firm, oh, I didn’t know you guys did that. I’d like to know more about that. Because doing so, we need help in that area. So there’s a lot of different areas where this information can be coming from A couple of ‘EM central ones obviously, but there’s also a lot of different other places where little bits and pieces of it. How do you gather all that information? How do you make sure you’re getting what you need to get? How do you know what’s out there? Maybe one way to start.

Sarah Dobek (11:35):
Yeah, so I think first having a centralized system to put it in is really important. A CRM system’s really critical to support this. It used to be years ago that we really supported starting with an Excel document to create behavior change. But to be honest, the technology is so advanced that just getting it into a technology system and there’s a lot of lower cost entry level CRM systems that can be a good place to gather that. I will say equally important to that is the process. The reason that this often breaks down, all joking aside, around following process and procedure is typically due to a lack of good process and clarity and reinforcement. One of the things that we work with in a lot of firms when we do the CRM implementation is the process adoption around this. And it can take a year plus to give the behavior change that we need out of all individuals because we may only touch it a couple times a month. It’s really hard to create a habit when we don’t touch it as frequently. If we’re a salesperson and we’re in there daily, we’ll have it knocked out in three to four weeks. We’ll be good, we’ll be comfortable with, but if you’re a partner and you’re only touching it a couple times a month, realistically it’s going to take a lot longer. You’re going to forget until you need it. And so being able to align that process is really important. But also having the supportive leadership is really important around that process too.

Dan Hood (13:02):
Assuming you’re getting all the information you need, right, at some point it’s not just about putting the information in, it’s about doing something with it. And one of the things you hear people talking about people who are really good with their sales pipeline is the regular reviewing them. It’s not just getting the information in there and hoping somebody looks at it. You want to proactively be keeping track of it. Sort of like you keep track of all kinds of other KPIs going on at your firm on a daily basis. How often should firms be looking at that at a pipeline? Is it a weekly thing? Is it daily and everything may change, change by role, obviously?

Sarah Dobek (13:33):
Yeah, so I would say that weekly is probably a touch much for accounting firms that the pace at which people buy isn’t that frequent. So you usually recommend pipeline meetings at some level. And what that looks like for each firm is a little bit different, but about once a month, sometimes we flex around extension season or busy season and things like that, which really quite honestly is when we should be paying attention to most of this. But once a month, I think that if you were managing the pipeline and the data inside of it as a professional, looking at it every couple of weeks at a minimum is probably where I’d be doing that. And then the larger analysis around what’s our stage conversion look like, really looking at that month over month or even a deep dive once a quarter to look at that.

(14:23):

Our conversion rates, what’s happening with the data, what is the data telling us is really important. We look at numbers for forecasting every month. We look at where we’re going, but we really analyze that on a quarterly basis to say, are we on track or are we not? Because there will be a pattern in that data that starts to emerge if we’re off track. And that will become very apparent after month two in that pattern. And if it’s off base at month three, I’m going, something’s wrong here. It’s not just a timing issue. And a lot of times that’s what it is, is it’s a timing issue in accounting firms. So our cash, our invoices didn’t go out last month. They’re going out this next month, so this one’s going to look different compared to last month and our year over year comparison. So I think that’s really important that at an individual level, looking at our sales to dos every week to two weeks to make sure we’re following up on our actions. And that’s really what the pipeline brings is some accountability to facilitate the conversations. If I can’t tell you how many times I’m in a meeting pulling up a pipeline and saying, how is this opportunity going? Oh shoot, I need to follow up with them. I haven’t heard from them in a few weeks. So that accountability piece, that’s where the magic happens because sales is all about execution and that simple prompting of an email is what could cause the deal to close.

Dan Hood (15:48):
Right, right. Well, and it’s fascinating though because in addition to doing that, being that sort of prompted nudge and reminder for the sales team or whoever’s looking at it, it could be a reminder for the partner to go out and say, oh yeah, I’m going to talk to ’em. But it’s also, those are all important because in the end, the data that coming out of that can also inform your revenue expectations, which has got to change your strategic thoughts at the very top of the firm. So I mean, whether you’re hitting your growth goals, they don’t have the time necessarily to look deeply into the pipeline, but they can look and say, yes, pipeline is saying revenue numbers are going to be in good shape or not.

Sarah Dobek (16:25):
Absolutely. Yeah. I mean a regular cadence is probably most important. And when firms start this journey, that cadence can look a little bit different. I would also say that as firms grow, how they review the data, where that review sits looks a lot different, right? When we have practice groups that have really evolved, we review a very narrow view of what that is, a practice group level. We have managing partners that as they meet with their partner group, pull up their progress against their own individual business development goals, we empower our partners through CRM system to have dashboards of their own goals. They should all know exactly where they’re at at any given point in time and be able to pull that information up. And that’s part of the power of having it in a CRM system is the ability to be able to do those things.

(17:14):

And when we see that is when we see the most successful adoption of CRM is when we’re actually using the information because the partners are then understand how this is helping them and it doesn’t become what we hear is an administrative burden and it’s reframed as this is something that’s going to help us. This is critical to our growth. So the adoption of this is all joking aside to what I said earlier, this isn’t something we’re having to pull and drag out of them to get updated. It’s just adopted and it’s used and there’s not an issue with them putting the data into the system because they understand it and they see the value in it.

Dan Hood (17:52):
Well, that’s the thing, right? Once they start to see the value, then they understand the necessity for original, it is a little bit of a burden, but you start to understand the value of why you want to do it. It’s fascinating stuff. And as you say, every firm has one. It’s just a question of many cases of getting it out of somebody’s head and getting it down on some kind of system where you can share it, where people can follow through on it and really make sure that it’s a useful tool as opposed to just something you keep in the back of your head and remember if you number of point. Very cool stuff. Any final thoughts? Anything as people look to take their sales pipeline and take it to the next level? Any final thoughts for them?

Sarah Dobek (18:34):
The only final thoughts I would have is process is really important. And I think sometimes we get stuck on what it should be. And there’s tons of great examples in the profession of how firms have different processes and what works inside of our culture. And so knowing your firm, knowing what’s going to work and what will be successful, that’s how we get the right adoption. That’s how we get to the end result. And the outcome that we’re looking for to be able to do some of these things is understanding that I sat through a great conversation yesterday with a firm that had less ideal process than what you might typically describe, but it worked really well for them. And so I want to encourage firms that are listening to this to figure out what that process is going to be and what that might look like for your firm. And lean into that and don’t get stuck on what we think success looks like with CRM and sales pipelines, which is like everybody has to enter their own data and it all has to look exactly like this. There’s some best practices for sure, but you can find success in creating a process that works for your firm.

Dan Hood (19:45):
Yeah, actually that’s awesome because all the best implementations of whatever it is. Start by saying what works here and what do we need here? And making sure that we’re not just leveling everything. You’re getting rid of baby with the bath water style, getting rid of everything just to put in this new system. It takes account for the things that work already. So very cool. Great advice. Alright, Sarah Dobek with Inovautus consulting. Thank you so much.

Sarah Dobek (20:09):
Alright, thanks Dan for having me.

Dan Hood (20:11):
Thank you all for listening. This episode of On the Air was produced by Accounting Today with audio production by Wen-Wyst Jeanmary. Review us on your favorite podcast platform and see rest of our content on accountingtoday.com. Thanks again to our guest and thank you for listening.

Enjoy complimentary access to top ideas and insights — selected by our editors.

The latest wave of changes out of the Internal Revenue Service includes a host of relief measures, from disaster assistance in the wake of Hurricane Milton to halting the practice of immediate penalties for late reports of foreign gifts and inheritance. But with the results of the presidential election, much is uncertain about the IRS’s path forward.

Throughout his campaign, Donald Trump made repeated pledges to institute tax breaks for caregivers, domestic car purchases and U.S. citizens living overseas, with further considerations towards excusing police officers, firefighters, and both current and retired military members from paying taxes.

Following Trump’s Nov.5 win, cementing his return to the White House in 2025, many across the accounting profession are now in a “wait and see” period to see which pledges, if any, he makes good on.”The Republicans’ control of the Senate makes it much more likely that Republicans will be able to implement many of Trump’s proposed tax policies, such as making parts of the expiring 2017 [Tax Cuts and Jobs Act] provisions permanent,” said John Gimigliano, principal in charge of the federal legislative & regulatory services group within KPMG’s Washington National Tax practice, in a statement.

Read more: Trump’s victory: What it means for taxes

Funding for the IRS has been a particular point of contention for the Republican party, as seen with reductions in backing from the Inflation Reduction Act of 2022.

“IRS funding is at significant risk right now,” including both “the annual appropriation funding as well as the remaining IRA funding,” said Rochelle Hodes, principal at Top 25 Firm Crowe LLP’s Washington National Tax Office.

“The only question for me on funding is, will any portion of the funding remain available for taxpayer service-related improvements at the IRS?” Hodes said.

Hodes went on to highlight the Tax Cuts and Jobs Act of 2017 as the first major priority for the incoming Trump administration, followed close behind by determining “how will the cost of that endeavor be determined,” she said.

“If the view that is held by several Senate Republicans wins the day, then the cost of extending the expiring provisions will not be counted under those particular budget rules that are created dealing with extending current policy. … If, however, that view is not adopted, then there is a high cost just to TCJA, and so any other provisions with cost will sort of stretch the boundaries of what many in Congress would be comfortable with,” Hodes said.

Read more: Trump win may threaten IRS funding

Below is a compilation of noteworthy items out of the IRS last month.

IRS is cutting late filers of foreign gift forms a break

Article by Michael Cohn

IRS executives announced last month that the agency will halt the automatic penalty process against taxpayers who delinquently file forms reporting foreign gifts and inheritance, following outcry from the American Institute of CPAs and National Taxpayer Advocate Erin Collins.

“By the end of the year the IRS will begin reviewing any reasonable cause statements taxpayers attach to late-filed Forms 3520 and 3520-A for the trust portion of the form before assessing any Internal Revenue Code § 6677 penalty,” Collins wrote in a blog post last month. 

The IRS followed up the change by emphasizing that it will begin reviewing the reasonable cause statements provided by taxpayers who late filed Forms 3520, Part IV, prior to assessing any penalties.”This favorable change will reduce unwarranted assessments and relieve burden on taxpayers by giving them the opportunity to explain their situation before the IRS assesses a penalty,” Collins said.

Read more: IRS offers penalty relief for late-filed foreign gift forms

IRS issues new benchmark for Sustainable Aviation Fuel Credit

Article by Jeff Stimpson

Guidance released by the IRS last month established the Sustainable Aviation Fuel Credit at $1.25 to $1.75 for each gallon of sustainable aviation fuel in a qualified mixture.

Qualified mixtures are required under the credit, which was created by the Inflation Reduction Act, to have a reduction of at least 50% in life cycle greenhouse gas emissions in order to be eligible.

This change is the most recent entry in the saga of the SAF credit, with other notable entries like Notice 2024-37 allowing fuel producers to employ the 40BSAF-GREET 2024 model when calculating their greenhouse gas emissions reduction percentage for the credits.

Read more: New rules for Sustainable Aviation Fuel Credit

Tax-exempt groups avoid filing requirement for 2023 corporate AMT form

Article by Michael Cohn

The IRS and the Treasury Department granted a joint filing exception on Oct. 23 for tax-exempt organizations, excusing them from submitting a Form 4626, “Alternative Minimum Tax – Corporations,” for tax year 2023.

Both agencies said tax-exempt organizations, while not required to file, should still maintain a Form 4626 in their records as documented proof of whether or not they are indeed an applicable corporation for purposes of the AMT and if so, for determining any corporate AMT liability. Liable entities will need to pay the tax and record the amount paid on Part II, Line 5 of Form 990-T, “Exempt Organization Business Income Tax Return.”

Read more: Tax-exempt groups don’t need to file corporate AMT form for 2023

The return of PTIN season

Article by Jeff Stimpson

Bloomberg via Getty Images

The expiration date for tax professionals’ Preparer Tax Identification Numbers is close at hand.

Both tax professionals and Enrolled Agents have until Dec. 31 to renew or obtain their PTIN for 2025 at $19.75 for the service. Those who currently have a PTIN will be notified by the IRS’s Return Preparer Office of the deadline in the coming weeks.

Read more: PTIN renewal season kicks off

IRS releases annual inflation adjustments for 2025

Article by Michael Cohn

The IRS issued its annual inflation adjustments on Oct. 22 for the 2025 tax year, featuring increases in standard deductions, tax credits, fringe benefits and more due to inflation.

These modifications are applicable to income tax returns filed in the 2026 tax season for the prior year with the agency’s Revenue Procedure 2024-40 outlining all of the changes to more than 60 tax provisions.

Featured dollar-amount changes that are of express importance to filers include standard deductions. 

For single taxpayers and married individuals filing separately for tax year 2025, the standard deduction climbs to $15,000 for 2025, an increase of $400 from 2024. For married couples filing jointly, the standard deduction rises to $30,000, an increase of $800 from tax year 2024. For heads of households, the standard deduction will be $22,500 for tax year 2024, an increase of $600 from the amount for tax year 2024.

Read more: IRS adjusts tax amounts for inflation for 2025