Vendors and the 3 Questions

Turn2Smith Podcast

Welcome to the Turn to Smith Podcast. You’ll notice there is no intro
music. There is not going to be much editing during this show. The
reason for this is simple. I don’t have access to the Macbook Pro. My
wife is away for three weeks in New Jersey to do some training for her
new job. It’s exciting and terrifying. The kids are still alive. The
kids are doing well. And so am I. I have a four year old daughter
named Betty Lou and a six year old son named Hartley.

Betty Lou is named after my grandmother. And she really fits the name
model. Hartley is the maiden name for my wife’s mother. Her maiden
name was Hartley. My mom’s maiden name was Allen. So my son’s name is
Hartley Allen. So my two kids are fully dependent on me this week. So
what did I do? I came to see my mom. I came to see my sister. I
outsourced. I’m eating well. They are spoiled rotten. It’s been ok.

Well let’s get into the show. We are into the third part of the series
today. The first part of the series took a look at the Customer,
Vendor and Employee perspective. Last week, we asked a few questions,
within the customer perspective. Those questions were: 1) What is the
customer saying when they look at private schools as an education
option? 2) Why does the customer buy from you?

We are going to use the same questions in reverse. We are going to
look at them from our perspective and judge our vendors by what we
see. So the three main aspects of the customer perspective where as
follows:

-Listen, Really Listen, to the Customer
-Understand ALL the Customer s Needs
-Help the Customer Avoid Potential Pitfalls

There are three main vendors that I deal with and they are the three
we are going to talk about. First, we will talk about banking
relationships. Second, we will talk about curriculum vendors. Third,
we will talk about payroll vendors. These three vendors are a wealth
of information and they do so much for each of us. Let’s dig right in.
But first, have you heard about NBOA.net? The national business
officers association is a wonderful group of men and women looking out
for the business officers around the country. Just today, Jeffrey
Shields the Executive Director over there, sent out a blurb on the
LinkedIn group about New York and the mayoral race. One of the
candidates wants to give Non Public Schools a voice on the school
board. It will be interesting to follow, and Mr Shields and the guys
over at NBOA will always keep their eyes open for items like this that
are of great interest to many and value to all.

Our banking relationship is currently with BB&T. The company is based
out of Winston-Salem, and they are a large regional Bank. You may
remember John Allison, their former CEO. He wrote a letter to congress
during the mortgage meltdown offering a different solution to the
problem. A solution that helped consumers instead of supporting
bankers and wall street and politicians. It was great. Well, we
weren’t always with BB&T. We started with CCB based out of Charlotte.
Well, CCB was bought by Suntrust. And that is when things went south.

The branch was in the same location. The employees were all the same.
The only difference was that under their name on their name tag was
Suntrust instead of CCB. Well, I took the job as bookkeeper in 2009
and I walked into high activity. One of the issues was that the school
had paid payroll taxes, but they didn t file a 941 for the 2004 4th
quarter. So the penalties and fees were both $40,000 and the tax was
only $10,000. It was no joke. Well, CCB had acted as our intermediary
in 2004. We wrote checks to CCB, and they sent checks to the
Government. I called Suntrust to get them to get copies and it was a
joke. They kept saying that they weren t CCB, but then they bought
CCB. They kept saying I had reached the wrong bank. It was amazing.
The most amazing part of it was that the lady telling me all of this
was the same lady to open the account for Back Creek in 2001. It was
infuriating.

Basically, we deal with the bank in a few simple ways. We deposit
checks from customers into the bank. We pay vendors out of the account
with checks and ACH. And, we make payroll through an ACH draft. That s
as complicated as it really gets. It s not that tough. Most of my
issues concerning a bank involve not knowing how to do what I need to
do. It reminds me of a story about a restaurant that Dan Miller told
on his podcast the other week.

When customers go out to eat at a restaurant, they don t want to do
the dishes. They don t want to cook the food. They want to be taken
care of. They want to relax, have the restaurant take care of
everything, and then they want to leave. Well, so many new businesses
invite the customer into the kitchen to do the dishes, cook the
food, and then to clean up after the dinner. So many companies just
get it wrong, and I think banks are that way. They have these huge
engines and bureaucracies and then when we call to get something done,
they start telling us that we need to fill out this form or that form
or do this or do that, pull the lever and push the button. That s all
fine and good, but I just want to deposit money from my customers I
don t care what deposit slip you need me to fill out. I need to get
money to a vendor so they don t cut off service tomorrow (yeah, I know
I m irresponsible, but it is an emergency now). I m happy to fill out
a check, but I just need help to get it started. Finally, I know there
is trouble with the ACH. NO I don t want anyone to steal money from my
account, and no I don t want to have to change my password every time
I log in. It s a hassle. It s tough. And more than that, if I m
battling the IRS over $40,000 I want you to go climb into the stacks
and pull out the archival, third party evidence that shows I did pay
my taxes, please.

So my judgment of most banks is that they just don t listen. The
reason for this is the community banking model. During the banking
crisis, banks got away from their bread and butter. Banks moved from
vertical customer integration and into some wacky products like
derivatives and collateralized debt instruments. Good things if you
are ready for them, but dangerous when they get out of control. In a
recent Fortune magazine the CEO of Bank of America talked about their
way forward. He wants the branches to return to what made them great.
A mortgage representative will be in every branch, a commercial lender
will be in every branch, an insurance rep will be in the branch, etc.
When the relationship banker is working with a customer and they
mention a mortgage need, the banker will walk him across the hall and
introduce the customer to the mortgage rep. It makes sense. It takes
advantage of their economy of scale. And, it really looks at banking
from the customers perspective. Bank of America is listening.

As independent private schools, we have special issues. Our biggest
challenge is that our employment contracts are annual. Our greatest
risk is that our customers leave midyear. Go back and check out
Episode 005 about The Big Funnel and The Little Funnel. You can find
it at http://www.turn2smith.com/2013/05/28/the-big-funnel-and-the-little-funnels/.
In that episode, I laid out the relationship and the challenges within
our relationships with our big funnel: tuition and fees. I also laid
out the relationship with our little funnels: afterschool, cafeteria,
summer camp, etc.

Most of my time is spent working with the bank to work with money to
run the business of the school. My other major time drain is payroll.
We have used Flex-Pay services and ADP. ADP came in promising the
world and they sure did deliver. There were some challenges though.
First, they took my $240 a month bill and charged me $500 a month. The
quote showed $300 for their concierge service. Not only did they
charge me more, but they wanted more business from me. Every day a new
stranger would call me from their company. He was selling this product
or that service. I tracked it. One week, I spent 10 of my 60 working
hours talking to ADP representatives trying to upsell me. Either the
package I had wasn t a good fit, or it wasn t a good enough fit until
I put this piece on or that part in place to compliment the whole
thing. It was awful. The sales people were terribly aggressive, and
they didn t listen. It was awful. So I moved back to Flex Pay after
one quarter with ADP. The company may work for some organizations, but
it didn t work for us. We didn t have someone working full time to
take their upsell calls, and to manage the complex relationship they
demanded from us. No H.R. director means that a company will struggle
with ADP. Even more than that, we have a 14 day hourly payroll accrual
at the end of every year. ADP charged for two payrolls in December. It
was awful and it was expensive to redo all of the W2 s and all the
other documents for the year end payroll.

Flex-Pay is cost effective, but I m in the kitchen cooking the food
all day. If there was a software I could use, I d replace them in a
heart beat. But,the service is helpful. They send 941 s, and they take
care of the end of year tax filings. We use their online timekeeping
option and I love this. They ve shown me a few times how to sync the
timekeeping clock with the payroll service, but I just don t get it.
It s bulky and hard, so I just key the hours. The move to the online
timekeeping helped us because I don t have to do math to figure out if
it is a quarter hour, half hour or three quarter hour for each clock
in and clock out. This saves me a full day of work. I love it. Then,
we just take the cumulative hours per employee and roll that into the
payroll service.

They offer to sync with quickbooks, but they need our General Ledger
to do this. I think they mean Chart of Accounts, but they keep asking
for GL. I m not going to give them my general ledger. So we are stuck
at a stand still. I just key the summary entries and then adjust out
to departments for payroll salaries and wages expense by department.

I like Flex-Pay. They are cheap and when I need them I can get them.
But, the major draw backs are that they really want me to be an expert
in their software. The problem is that I want to focus on other
things not learning a payroll software system. I ve had some exciting
experiences, though, with the courier service. Our campus is spread
out. On the same campus as the school, there is a church office, a
preschool office, and about five buildings. My office is in the family
life center an annex of the gym. It s hard to find me. I admit it.
Well, there have been three memorable deliveries to my office. One was
when the delivery guy didn t want to wait around, so he gave it to a
lady walking on the sidewalk near the school. She happened to be a
parent for one of our students and a good friend of mine. It was a
mess. Second, I was on the phone one day with my door locked. It was
important and I was trying hard to focus. The delivery guy knocked.
So, by the time I got off of the phone, went to the door, and opened
it, he had given it to a church employee in the neighboring office.
And, finally, the courier service delivered my payroll to Wells Fargo
bank, and Wells Fargo opened it. Then, when I called to figure out was
going on, the courier had taken the delivery back to Fed Ex and told
me that since no one was at my location when they delivered it, that I
would now have to drive 45 minutes to get it. The problem was it was
Thanksgiving and I was way out of town. What a mess. The courier
service is awful, but the cost is more than reasonable for what we
use compared to ADP.

Finally, I love software. I play with software, and I really study
software and databases. I love it. When we go onto a software package,
I m usually the quickest to learn how to use it, and I try to devote a
day to just pushing buttons and watching what the program does. Well,
one of the challenges of most software packages is that I have to take
the whole suite or nothing works right. If there are five major
components of the software, then each component is dependent on the
others to be successful. That isn t what I want. I want my friends to
play well together. They don t always do that.

We had a software program once that just forgot financial
transactions. I called the company and they sent the owner of the
company. When he got there, he made sure I could overhear a
conversation with him and the corporate office about how we should
feel honored that someone as important as he was would come see our
school. You may be wondering how I knew he wanted me to hear the
conversation. Well, the conversation happened over his in car speakers
while I was in the car and we were on the way to lunch together. I
heard the whole conversation. It was embarrassing. It was offensive.
It was the reason we left that vendor.

I m not sure how I would want these services to do the following:

-Listen, Really Listen, to the Customer
-Understand ALL the Customer s Needs
-Help the Customer Avoid Potential Pitfalls

But, I m going to try to imagine a few ways.

First, the bank does listen. Unfortunately, they don t know how hard
it is for outsiders to work with their organization. The forms are
confusing. The processes are esoteric, known only to insiders and
employees. They don t really look out for my pitfalls, but they are a
great resource when I m starting to look for new insurance vendors,
facilities contractors, and others, the bank is a great place to start
the conversation process. Payroll services are even worse at
listening. They feel like a call center. I ve learned most about the
wonderful software on my own. Finally, software vendors do listen, but
their products are always in development. Let s get the product
working right before we roll any copies out to the public.

Second, I wonder do the vendors, Understand ALL the Customer s
Needs? Banks certainly don t. We needed a line of credit. Our
red-tape is a bit cumbersome so I do the documents and explain it to
them, but Banks just seem disconnected. Or, they are hyper actively
selling a whole suite of products that they barely know, by
introducing me to people that I don t trust. On some, I m willing to
give the benefit of the doubt, but then you run thewhole host of
questionable activity.

Finally, banks do help the school avoid pitfalls. One was setting up
our ability to pay via wire and ACH to a vendor in California. It got
to be a mess, but in the end it worked out. The payroll service is
there to give me one more layer of protection from Flex-Pay as far at
risk goes. Also, software vendors exist because of their ability to
fix the income issues, expense issues, or reporting issues.

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Keep up the good work. Now let s get out there and do something today.
Really do something today.

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