Every business needs new enquiries for new clients. You can get new enquiries either:

1) Reactively or
2) Proactively

Most firms follow option 1 and wait for enquiries to come through by the way of referrals from existing clients. Other than being a very slow path to growth there is nothing wrong with it.

If you are proactive about it then you will adopt marketing techniques that encourage your target market to make an enquiry with you. Most Accountants I know do not want start-up businesses (due to the majority of them having the inability to pay) so that means that the client you want is already serviced by another Accounting firm.

A client will leave their current firm (or join another) because of 2 reasons only:

1) Service – not being proactive, sloppy customer service, limited communication/relationship
2) Services – perceived value for money, looking for more but not offered

For you to encourage new enquiries you have to offer multiple ‘experiences’ with you. Can the prospective client hear you speak at a conference, meet with you, read an article etc.

Some firms need more clients than others. As a rule of thumb you might be losing 10% annually (attrition or letting some go) so you should at least aim for a net 10% increase which means a 20% growth rate in new clients to cover the loss.

If you need 20% new clients and your conversion rate is 50% (not following our system) then you need approximately 3% of your current client count in quality enquiries – each month!

I have written an extensive report on Accounting firm performance. You can download the full report here.

Enjoy video # 8.

Why is it that a firm will engage a client, start working on the project, wait for the client to send in missing information, finally finish the project 60 days later then at the end of the month send an invoice and be paid 30-60 days after that? A 120+ day process!!

It just doesn’t make sense. You have to pay the labour, the insurances, the rent and everything else in that time yet due to your management processes your client treats you like an interest free bank!

Remember this… “Thee who makes the rules – wins the game”

Why do you operate under this model? Just because you always have is not a good enough reason.

If you ask for some money upfront (and make new rules) many of your clients will pay. If you ask for 100% upfront before starting many of your clients will pay. If you give your clients some choices (and not the pay in arrears choice) many of your clients will pay.

Your monthly receivables balance should be less than 6% of annual fees – or 20 days of annual revenue.

Stop being an interest free bank. Today!

I have written an extensive report on Accounting firm performance. You can download the full report here.

Enjoy video # 7.

Work in Progress (WIP) is your inventory. Like any good cash management program you would advise your clients to ‘turn their inventory over’ more frequently to improve cashflow.

There is no difference with an Accounting firm. Your inventory should be invoiced every single month. If you are pricing up front (and I hope you are) then why not ask for some payment up front as well. That’ll help your WIP balance!

If you have done the work then send a bill. If the client is being difficult or the project is taking a long time then send an interim bill.

Your WIP balance at the end of each month should be less than 3% of your annual revenue – or 10 days of revenue.

I have written an extensive report on Accounting firm performance. You can download the full report here.

Enjoy video # 6.

What waste it is to discount before billing. Often called write offs or write downs. It’s measured by the value of the time charged to work in progress (WIP) less a discount applied before billing. So if $2.3M was charged to WIP in the year yet only $2M was billed then the write down was 13%.

In some countries they record it in a more positive light by using a bigger number– “we had an 87% realization rate”. What a complete joke. Trying to put a positive spin on a negative number.

Face up to it – you discounted 13% or $300,000 in work last year! That’s an apartment or a house in some locations. You destroyed a small house. You would have had more fun if you burned the house to the ground and watched it burn whilst having a cold beverage.

Most firms have them and most firms justify them with blame and excuses like “we couldn’t charge the amount on the WIP” or “the client would never pay that much”. My question is HOW DO YOU KNOW?

Writing down work is at the heart of the self-esteem issue with partners of accounting firms. Why do it? You made a decision to write down – so make a decision to stop it.

If you price in arrears then your business model says whatever is on the clock you should charge – not a minute more. Writing up after pricing in arrears goes completely against your business model and is considered fraudulent behaviour. It’s ‘ripping people off’.

If you price up front, you have agreement from the client on price and scope of the project, and then you do the project in the most efficient means possible you’ll have an abundance of write ups. Much more of a positive result!

You should be aiming for a positive result with write ups – no negative numbers or numbers less than 100%.

I have written an extensive report on Accounting firm performance. You can download the full report here with all 12 KPI’s in it.

Tell me what you think of video # 5….

If you are like most firms you will have a range of charge rates in your firm. Normally charge rates range from $100 – $350 per person depending on salary & experience level. If this is the case then your Average hourly rate (AHR) or net firm billing rate for client hours will be around $150-$200.

It’s pretty pathetic to think that is all you believe you are worth! This is such a silly system for pricing.

I think you are worth much more but you have to believe it and you have to change the way you price projects.

There are 2 measures of Average Hourly Rate.

1) AHR – client hours. Take your revenue (let’s say $2M) and divide by client hours billed (let’s say 10,000). In this case it is $200.

2) AHR – hours worked entire team. Take your entire team (incl. partners, admin & professionals) and multiply by the working hours in a year to get total hours worked (say 12 people X 1750 hours each = 21,000 worked hours). Now divide revenue ($2M) by total hours worked (21,000). In this case it is $95.

It’s important to look at both of them. You can have a fantastic AHR for client hours (>$400) yet very poor on all hours worked (<$150) because of the productivity, people mix & administration process. The ultimate measure is to be focussed on AHR – hours worked entire team. It’s this one that will ultimately drive your profit before partner salaries.

If you are pricing projects up front then there are only 4 ways you can dramatically increase your AHR.

1) Charge more for the same project – straight price rise
2) Be more efficient and have less time on each project
3) Sell higher value projects based on value created
4) Change your administration mix and get more out what you have got

Your AHR should be improving every single month. If it is then that is a reflection on your pricing / sales prowess and your efficiency of throughput.

If it’s not improving (or going backwards) make sure you mention this to our coaching team when they do your Business Performance Review.

I have written an extensive report on Accounting firm performance. You can download the full report here with all 12 KPI’s in it.

Enjoy video # 4

It’s very easy to increase profits in an Accounting firm. Simply have the most senior people (partners) charge more time. The partners generally have the highest charge rates and theoretically the most experience.

Yes you will increase profits but for the short term only.

David Maister, author of many outstanding professional services firms’ books said it best:

“What you do with your billable time will determine your income.
What you do with your non-billable time will determine your future”

Assuming that the partners of the firm are partners for the right reasons (not a glorified / expensive senior Accountant with the title of Partner) then the partners should only be doing 3 things:

1)     High end advisory work for a small percentage of time <30% of time. 2)     Nurturing existing clients making sure each client has every service they need to satisfy their goals in life. 3)     Acting in a leadership position – driving performance, winning new clients & innovation. If Partners spend 2 hours analyzing phone bills and scrutinising the colour of the receptionists new chair - not a good use of partner time. If Partners spend 2 hours doing compliance work for $200 per hour. Hmmm - not a good use of time. If Partners can spend 2 hours in a client meeting and bring back a $10,000 project with a 75% margin then I would consider that a good use of partner time! Enjoy video no. 3

In today’s Australian Financial Review, Accounting journalist Agnes King puts forth an argument that (first line) “Accounting firms have no business being on social media”.

She continues “Honestly, what do social media campaigns actually offer the clients of accounting firms? They might be a cheap way to distribute monthly newsletters but that’s hardly revolutionary.”

C’mon Agnes – get with the times!

That is like saying that in the 80’s Accountants should not have a fax machine, in the 90’s they should have not had a computer on every desk and in the naughties every person in an Accounting firm need not have a website or individual email address!

We’re in the social & community re-building age – every firm needs a social media strategy and every firm needs to embrace it.

The esteemed (and very one sided in this matter) journalist continues:

“Most accounting firms profess an increased investment in social media. When pressed, however, they’re just as likely to admit they don’t understand it. But they also know they can’t ignore it. Admitting this seems to be a horrifying sign of weakness. The sooner they get over this notion, the better for all concerned as they can start focusing on the value again. Don’t ignore social media but consider it a research and development exercise until it proves itself to be something more”.

Research and Development – is that it? It will be something more if firms want to make it something more.

I thought journalists were not supposed to have an opinion. Weren’t  they supposed to give a balanced view of the subject at hand?

Her argument is fundamentally flawed because she does not understand how these new communication tools can enhance the relationship between Accountant and business client.

If the Accountants of this world are supposed to be the ‘trusted adviser’ and their clients look up to them for leading business advice then surely this medium is a way to distribute information and enhance the experience of dealing with the firm.

Surely a sign of ‘being modern’ and ‘keeping up with the times’ is that leading firms MUST have a social media presence & active and ever evolving presence.

The social presence must add value to clients otherwise it will be like the first ‘static’ websites of old where it was an online brochure with 10 year old pictures of the partners!

The beauty of a social presence is it is alive, interactive and very easy to use.

Here’s an example (and a cracking idea if I do say so myself):

Just imagine if a Proactive firm (one of my members perhaps!) started a ‘closed’ or ‘private’ group on LinkedIn or Facebook. They invited all of their clients to participate. Their employees participated as well and the Accounting firm lead discussions about topics. They started a ‘forum’ just for their firm where they brought their clients together. They stimulated clients thinking by offering case studies, testimonials, wins, content, discussion and tools. They updated everything through the closed group. The firm’s clients could do business with each other and interact with the people in the firm more. They could even offer ‘concierge’ service – connecting people to other people.

All this can be done for free right now.

It’s about building a community. Standard communities are deteriorating around the world due to media hyping up the next killing/abduction/robbery or car crash. The media has driven fear into the local community of old with their sensationalism, insinuation (it’s not safe to go outside kids) and negative driven news service. Just watch the news at 6pm tonight, or read tomorrows paper and count the negative to positive ratio of stories!

Social media used properly can re-build communities. They’re just different communities – a place where people feel like they belong.

On a final note. No one deals with a business, we all deal with people. It’s not business to business – it’s people to people. I do not deal with the Accounting firm because of their offices, pretty logo or brochure. I deal with the people in the Accounting firm – just as they deal with the people in my business.

Social media platforms are about bringing people together. To share, debate, exchange, inspire & communicate. Period.

I am humbled to be selected as the Queensland Entrepreneurs Organisation “Entrepreneur of the year”. It is an absolute honour.

The award is in honour of a past EO member, Darren Mullins, who was a founding member of EO in 1996/97 of the Brisbane chapter. Darren was in his mid 30’s with a wife and children and the world at his feet. One afternoon he felt a pain in his arm, had a massive heart attack and died at St Andrews Hospital here in Brisbane. In honour of his memory the Entrepreneur of the year award was started. The award is to recognize an individual who has best represented the values of EO throughout the year and endeavoured to promote EO Brisbane, just as Darren did many years ago when launching our fledgling chapter.

Thank you Darren – your legacy lives on. And thank you to everyone who voted for me. It’s the first thing I have won since I won a gold medal as Australian junior Archery Champion! In 1987!!!!

You can see by the first photo I was unable to accept in person at the gala function last weekend. So I got the official photo with the QLD chapter president – Jason Rechenberg.

EO award winner - not there

EO award winner

The relationship between profitably and ‘productivity’ (or ‘utilization’) in the old revenue model has always been about ‘billable hours’. How many can be charged to the client/project. As mentioned previously driving billable hours is a ludicrous business model.

Many partners of firms want to drive billable hours and they are quite proud of the fact that they, a team or team member has more than someone else. WARNING! Excessive focus on this metric promotes the wrong behaviour. Team members ‘hog’ work, they ‘pad out’ time sheets and are generally inefficient.

If you want to be as efficient as possible then price the project up front, have an hours budget on the project and then drive the time down – thus running out of work and creating capacity.

The measure is simple – charged time into available time. So if there were 40 hours in a (working) week available to charge and your team member ‘charged’ 30 of them then that would equate to 75%.

If there is plenty of work to do and you have sufficient team members then a healthy mix of ‘productive time’ is expected –around 75% of a normal working week. But not much more.

Enjoy video no. 2

This year I am embarking on my 20th year working ‘on’ the Accounting profession. In that time I have influenced Accountants in 38 countries, had over 85,000 Accountants attend seminars / webinars and personally coached over 500 firms to success.

Although not an Accountant, for nearly 20 years of my professional life has been about Accountants and their success. I started working with Accountants when I was 24 (yes, I know I look younger than that!) and have loved every minute of it.

Some people like science or making things. I like Accountants. In fact I love Accountants!

Accountants can offer so much value to their client base and therefore their community. They are an integral part of the success of business. They are the natural business leader and the true trusted advisor.

They offer an immense amount of value to their clients and they are seriously smart. Yet, they don’t make much money!

If profit per partner is one measure of success then only 2.5% of the profession is earning more than $1M per partner. Most partners of accounting firms make around $350,000 per year. I think it’s a paltry sum for the contribution they make.

The problem is their self-esteem and the business model that they operate under. My business is the Proactive Accountants Network and through our membership and coaching program we help Accountants to:

 Maximise their cashflow
 Run a more efficient business
 Increase profitability
 Utilize their team better
 Delight clients with value added work
 Work less hours
 Grow their revenue & wealth
 Live a better lifestyle

This video series is a ‘secrets revealed’ report focusing on how to revolutionise the financial performance of an Accounting firm. It’s based entirely on what our ultra-high performing firms are doing to achieve success and revolutionary financial performance. As you’ll discover, I do not pull any punches – I just tell it the way it is.

Enjoy getting focused on revolutionising your revenue, profit and cash!

Check back here often for each installment or sign up for RSS feed so you are notified immediately.

Here is video # 1 – enjoy.