Working Too Many Hours for Too Little Reward
If this headline describes how you feel then read on, as Liz Kirkham provides some solutions to this problem.
Many small accountancy firms have grown from their foundation by a hard working sole practitioner. When the business is young and struggling, accountants cannot always afford to be too choosy about the clients they are willing to accept.
Consequently, the client base develops without any planning or formal direction. Fees are often based on a fixed fee negotiated when the client was new and adjusted for inflation each year. When, in the early stages of establishing a practice, clients are allowed to bring in their books and records at a time that suits them it sets a precedent which is very difficult to break. As the number of clients increases the accountant is put under more and more pressure in the period running up to the 31 January tax deadline.
This is just one of the common problems that a quality assurance visit from ACCA will help you identify and solve by using recognised best practices that suit the size and nature of your business.
Finding a Solution
Most firms have collected a number of clients, especially in the early years of developing a practice, that are more trouble than they are worth in fee income. The first step a firm needs to take to improve its hours/fee ratio is to identify which clients it would like to keep and which clients it would be better off without.
Identify those clients who always want a reduction in fees and then still pay
late, those who always bring in their books on 15 January to meet the tax deadline
each year and those whose books are almost non-existent so the work takes far
more time than you can possibly recover in fees.
Having identified the firms best clients it is time to seriously consider shedding the poor clients and thereby improving the overall quality of the firms client base. Using recognised best practices promoted by ACCAs quality assurance programme will provide a good basis for improving efficiency and profitability.
Strategic Planning is Key
Strategic planning is as important in an accountancy business as it is in any other business. It is not enough to shed troublesome clients, the firm will also need to re-think its criteria for accepting new clients. A new client acceptance checklist can provide an invaluable aid to assess prospective clients before accepting them.
Planning the firms workload by organising the timing of work carried out for clients will help avoid those excessively busy periods, reduce sub-contract costs and help reduce the risk of errors which tend to occur more frequently when working under time pressure. Contacting clients at their year-end to ask them to have their books and records ready by a certain date can speed up the production of accounts and give the firm a chance to be more proactive in offering advice on tax and other business matters. This service may improve the firms standing with its quality clients.
Where work has been predominantly client driven in the past it may be more difficult to change established patterns. However, client preferences can also be taken into account when planning the firms workload. If an established and profitable client always has their books ready by a date which you consider reasonable, and which allows your firm to offer a good service to the client, there is no reason to change this routine.
Time - a Finite Resource
Because time is a finite resource within any practice, it should be spent wisely. It is not necessary to invest in an expensive computerised time recording system if clients are being billed on a fixed fee basis. However, the fixed fee should be based on the knowledge and expertise used to provide the service.
It is also good practice to set up a system to monitor the time spent on a clients affairs and to ensure that any fixed fees charged are reasonable for the service and expertise provided.
Implementing these procedures can improve a firms overall efficiency, provide a more pro-active service to its clients and improve profitability, alongside improving the morale and efficiency of its staff.
Liz Kirkham - Compliance Officer, ACCA