Most Accounting firms are on a quest for efficiency. They are focused on systems, process, people and equipment to get more efficient.How can we do the job more efficiently is the management mantra.
Accountants have been pretty good at getting efficient over the years. But at what cost?
If an Accountant ‘prices in arrears’ where the price is determined after the work is done (based on the time taken and a charge rate) then if the Accountant is more efficient then the time goes down and so does the price. Or worse you end up doing more work for the same amount of money. Some Accountants attempt to ‘write up’ the job to a more acceptable price. This is unethical as the business model said ‘time taken X charge rate = price’.
Unless you want to be penalized by being efficient the only right way is to scope the job out in advance. Then price the job, communicate in writing the price and scope of the job to the client and then be as efficient as you possibly can. Don’t go outside of the scope and if you see another project within the same job then communicate that to the client with a new project scope and price.
Pricing in arrears has got issues written all over it. And don’t get me started on driving utilization, productive time or billable hours – that’s the worst of them all. In another blog post perhaps!
It’s November and I have already ‘scheduled out’ 2015. I have added to my calendar all regular events:
- Date nights
- Bike riding
- Blog writing
- Kids drop off
- School holidays
- Rob & Nat Holidays
- Unavailable time
- Golf – practice & play
- Meetings – team, board, forum
- Conferences to attend
Anything that is known or regular is in the diary. So far 12 International trips for 2015. I then do any business around what it left. In my experience, if it’s not in the diary it won’t get done.
We released our annual benchmark report last week. Hundreds of firms sent in their financial data, we analysed it and then produced a 23 page report on our findings.
Already thousands have downloaded it (if you haven’t got it yet the entire report is available here for free) and no doubt it will be the topic of conversation at many partners meetings coming up.
I noticed this year that profit per partner was about the same as last year (A$344k in Australia and A$259K in New Zealand) and many of the other metrics are very similar.
Does that mean that there has been limited improvement? Probably. I often wonder why that is. I think it comes down to being comfortable.
Think about it. The Accounting profession is a pretty solid business with the majority (in the small to medium sector of firms) of work in annual compliance. Every year you have to ‘do the books’ of your clients (whether they like it or not) and every year there is some form of legislative change that you need to implement. You have the status of ‘trusted advisor’ so when other business opportunities occur you’re often the first to be called upon. Put into the mix that you have ‘financial intimacy’ with your clients (you know things that no one else does – or you’re the first to find out) which means they stick with you for a long time as well.
In my view all this ‘comfort’ breeds apathy and lack of innovation.
There are many changes afoot and massive disruption on the way (make sure you read my dossier and open letter to the profession in the first few pages of the report) which will hopefully (as they happen) break the cycle of apathy, reactiveness and limited innovation.
My company offers performance coaching & training for Accounting firms. We build really cool software solutions to help accounting firms succeed. My biggest competitor is apathy. There needs to be a healthy discontent for the present to break a cycle.
If the profession was more ambitious and was REALLY interested in the success of their clients then it wouldn’t be so apathetic.
That’s my rant for the day!
The tables below are a summary of the Australian and New Zealand samples. Full report available here.
There are many forces outside of your control that are affecting the profession. You can’t stop them so you might as well embrace them. There is no time stamp (like Y2K all those years ago) when you need to be ready for the changes. They’re just happening around you.
You are only going to change if you’re motivated to change. If you break the word ‘motivation’ down and modify it slightly you get ‘motive-action’. What is your motive for action?
I believe in 5 things with the Accounting profession:
- I believe that Accountants are the natural and trusted financial advisers.
- I believe that Accountants that add value do not earn enough for how smart they are.
- I believe that Accountants can make a massive difference to their clients’ financial condition.
- I believe that ‘cloud’ technology is not a fad and it will fundamentally change the way you operate.
- I believe that clients want a Real Time Accountant not a Redundant Data Accountant.
Maybe there is something in my 5 beliefs that inspires you to make some changes. Maybe in my 5 you can find your motive for action.
The vast majority of Accountants I meet are offering ‘Redundant Data’ services. Clients don’t want services that are late. They want ‘Real Time’ services that are on time, relevant and pre-emptive.
Where is the value offering advice that is late? Picture the scene. You are doing your clients annual Accounting and you spot some anomalies or issues in the previous year. You finish off the work and then write a letter to the client explaining what they should do to fix it!
What they should do! Seriously, it’s typically too late.
I know you have a duty of care to tell the client the issue – and you did that. Well done. But it’s still late.
With today’s accounting technology (on the internet) you can know what is going on all the time. You don’t need to know all the detail just enough to spot issues and opportunities. Your clients are not Accountants and you have an uncanny knack of seeing financial data and making it make sense to them.
You can even have the data consolidated into single ‘dashboards’ so you can get a summary of all your clients affairs on one page. Then the technology can alert you to the good and the bad issues only. With this sort of technology you can pre-empt issues and advise the clients accordingly. Now that’s adding value.
It’s all about becoming a Real Time Accountant not a Redundant Data Accountant. It’s all about being Proactive and not reactive. Real Time Accountants’ behave differently and they are much much more client focused. It’s your choice to become a Real Time Accountant or remain a Redundant Data Accountant. The future of the profession is Real Time!