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!