The Future of Accounting: Strategy, AI & Profit | Dan Pascone with Rachel Phillips | Ep #12

Rachel Phillips is the CEO of Fully Accountable, an outsourced accounting firm. She is a lawyer by trade and found a niche in the finance and corporate space, including some merger and acquisition work, before landing at the company.

Her path started in law school. The company's majority owner, who had attended the same school, was looking for the top student in the business class to be a law clerk at what was then a multi-unit web hosting company. Rachel interviewed, joined about 2 weeks later, and says she was given real work from the start. She worked alongside him for 13 years, has been with the company since day 1 (technically employee 1), and bought out the majority shareholder. She and her business partner now own 100% of the company.

Rachel describes the typical client as a business generating $1 million or more in annual revenue, with some clients above $100 million. The goal is to get the owner out of the accounting software and back to what they do best, which she says is usually sales and marketing.

A common engagement looks like an outsourced controller. Daily, weekly and monthly, that means keeping the books current, paying bills, sending receivables, running payroll, maintaining a budget and building a 13-week rolling cash flow. Because the work happens in real time, Rachel says the month-end close can take 5–8 days instead of the 30–45 days she sees at many firms. Her point is that faster numbers let owners fix red flags before they become a “financial bleed.”

She also pushes back on the idea that accounting is just an expense. Done well, she says, it can work like a profit center through cost savings and financial strategy with the operations team, though it will never out-earn a sales or marketing team. Her view is that the accounting function should be forward-thinking, not just closing the books after the period has ended.

Rachel's firm started in e-commerce, digital brands and marketing agencies, so the biggest challenges she sees are advertising and inventory costs. In a season of expensive advertising, it can be hard for a client to stay profitable on a product. Tariffs add another layer: how do you weave in the added expense without draining margin, and without pricing the product out of reach for customers?

Her team's answers include negotiating better vendor contracts and payment terms, and building dashboards that show which marketing is most and least profitable. She says that when marketing is blended into 1 number, an owner can miss that 1 or 2 campaigns are deep in the red while 2 or 3 are profitable. In her view, cutting the weakest and reinvesting in the stronger ones can improve results, though outcomes vary by business.

If you want context on how trade policy can reach the investment side of your finances, we've written about it in Tariffs, Trade Wars & Your Portfolio: What You Need to Know.

Rachel says accounting is now being touched by AI, so the question for any firm is how to provide something above what software can do at its price point. Her firm leans on guidance, advice and human relationships, meaning someone who is actually reading the numbers. She sees software and AI as powerful tools that accountants should use to be more efficient, reduce errors and serve clients better, rather than as a threat.

Looking 5–10 years out, she expects the work humans do today, such as building the P&L or balance sheet, to be mostly or entirely reduced by software and AI. She doubts bookkeepers will still be categorizing transactions in 5-plus years, and expects accountants to become reviewers and strategists rather than “doers inside of the books.” [VERIFY: industry prediction is Rachel's opinion, attributed to her.]

If you're curious how AI tools can fit into your own finances, we cover it in Smarter Prompts, Smarter Money: How ChatGPT and AI Can Assist Your Finances.

Rachel describes her leadership style as collaborative. She says she is an expert in what she knows, hires experts in the areas they are best at, and wants people who bring ideas, with little hierarchy or bureaucracy. Her goal is to weave technology into the firm's systems so the team can spend more time on guidance and strategy.

She points to the fractional CFO as the place where clients get the most value right now. In her words, a CFO who stays on top of research and timelines can remove the stress of the unknowns and work alongside the operator on decisions that fit the business, instead of guesses. She shared a common scenario: an owner says, “I have more money in the bank this month than last month, so I must be doing pretty good,” and then discovers they haven't paid their bills in 90 days. More cash is not the same as doing better.

Her view is that this matters even more when shoppers are cautious, refunds are up and discounts are being searched for, because protecting margin is how a company keeps growing and scaling.

Fully Accountable was operating a hybrid model well before COVID. The company originally had a corporate office in Akron, Ohio, and its first hires were local. Rachel says she quickly realized 2 things: there is strong talent across the country, and the firm's clients are also spread across the country. Hiring in a place like Sioux Falls, South Dakota made sense when many clients were on West Coast time, and it kept clients from always working on Eastern time and her team from working at 9:00 p.m.

She also saw an opportunity to reach talented people, including parents in rural areas, who could not take a corporate role that sat 1.5 hours outside the city. Rachel calls the firm's job posting its best-performing marketing funnel, and says it now has controllers in about 18 states. Dan noted that the approach likely helps the business scale more efficiently.

Rachel says the firm uses both inbound and outbound. The biggest source of new clients is people opting into its free resources, such as templates for owners who want to do the work themselves and then decide they would rather hand it to an expert. The team also attends events and reaches out to companies that are looking to hire accountants, since an outsourced team can fill that role.

The typical journey is to connect, learn about the business, customize the solution until it fits, and then onboard and staff it. She says onboarding lasts about 30–60 days.

The most common referral partners are people who work with clients who need to know their numbers: marketing agencies, private equity firms and brokers helping owners sell their businesses. The firm also works with payroll and inventory service providers, since helping those clients run more cleanly is a win on both sides.

• Coffee or tea, cats or dogs: Coffee and dogs.
• Can't-live-without tech: Her Kindle.
• Favorite quote: Ruth Bader Ginsburg's “Lead in a way in which you want other people to follow you.” [VERIFY: quote attribution.]
• Favorite business book: Revenue Harvest, which helped her frame sales through financial forecasting from a revenue perspective. Dan said it was new to him and added it to his list. [VERIFY: title and author before any link.]
• Personal hack: Her calendar. Everything is on it, even an afternoon walk with her son, and she lives by it.
• Bucket list item already done: Buying Fully Accountable.
• Financial milestone still ahead: Paying off the dream home she built about 18 months before the recording.
• Advice to her younger self: Don't stress the future so much. She says she worked hard, sometimes unnecessarily, and that there's a line between working hard and enjoying time you won't get back.

Most owners treat accounting as a rear-view mirror. The books close, a report arrives 30–45 days later, and decisions get made on old information. The distinction Rachel draws is between recording what happened and using the numbers to decide what to do next.

A second blind spot is cash versus profit. Her example of an owner with a growing bank balance and 90 days of unpaid bills shows how a healthy-looking balance can hide a problem. Blended reporting does something similar with marketing: 1 average number can hide the campaigns that are losing money.

We'd add a third point from the personal side. For many executives and owners, the business is the largest and least liquid asset on the household balance sheet. Decisions like how much to take out of the company, when to invest outside it and how to plan for taxes all depend on knowing true profit and true obligations, not just the bank balance.

This example is hypothetical, uses assumed figures and is not a prediction of results. Suppose a business owner runs an e-commerce company with $5,000,000 in annual revenue and spends $60,000 a month on ads across 5 campaigns. Here is the monthly contribution after ad costs for each campaign:

• Campaign A: $20,000 spend, +$8,000.
• Campaign B: $15,000 spend, +$6,000.
• Campaign C: $10,000 spend, +$3,000.
• Campaign D: $8,000 spend, –$4,000.
• Campaign E: $7,000 spend, –$3,000.

In a blended report, the owner sees about +$10,000 a month and has little reason to dig deeper. Broken out by campaign, Campaigns D and E lost a combined $7,000 a month. If the owner paused both without reinvesting and nothing else changed, monthly contribution would be $17,000, or $7,000 higher. That is $84,000 a year. In real life, results would shift, so treat this as an illustration of why detail matters.

The planning question then becomes what to do with a possible extra $84,000 a year of pre-tax cash flow. Options might include building a cash reserve, funding a retirement plan, paying down debt or reinvesting in the business. Tax treatment depends on the business structure and your situation, so owners should work with their CPA.

Rachel works on the business side of an owner's finances. We work on the personal side, and the 2 connect. We use Life-Driven Planning, our 6-phase process (Cash Flow, Retirement & Hybrid Retirement, Risk, Expense & Goal, Tax and Legacy), to build a plan around how you want to live. A Hybrid Retirement is a phased approach where full-time work gives way to flexible, optional work rather than an abrupt stop. For owners, the Cash Flow phase starts with knowing what the business reliably produces and what you can responsibly take out.

Our Life Driven Investing (LDI) approach builds the portfolio backward from your life, using the Four Liquidity Bands: money you'll need in 0–2 years, 3–5 years, 6–10 years and 10+ years. A business is typically illiquid, so the bands help show how much of your wealth is available, and when, outside the company. We revisit it through our Quarterly Strategy Rhythm, a regular check-in each quarter where we review the plan against what has changed.

We are a fee-only fiduciary firm, and we do not provide accounting, legal or tax advice. We work alongside your CPA and accounting team, not in place of them.

This conversation is for executives and business owners in their 40s–50s with household income of $500,000 or more and a financial picture that goes beyond a paycheck: an ownership stake, a side business, equity compensation or a future exit. If you want faster, clearer numbers from your business and want to connect them to your own retirement, tax and liquidity planning, this episode is for you.

If you run a business, or lead one, and want to see how it fits into your own retirement, tax and equity picture, we're happy to talk it through. The Free Wealth Strategy Call is a low-pressure conversation about your situation. Book a Free Wealth Strategy Call.