Workflow:

  • WIP / Debtors. The objective is to have the minimal amount of work in progress and debtors (receivables) at all times. With profit, low WIP and debtors will guarantee great cashflow. Ideally WIP and Debtor days combined (lock up) should be well below 40 days of revenue.
  • Productivity / Average hourly rate. Traditional firms focus on productivity (charged time into available time) and this it WRONG to focus soley on this. It typically means the more productivity you have the slower you are going. Average hourly rate should be increasing every month. It is a function of how much you charge and how efficient (not productive) you are. If you have productivity at around 75% per Accountant you’ll be doing well. AHR should be over $400 per hour – but not based on charge rates.
  • Write on’s. Traditional firms who price in arrears will have write offs. It is discounting before billing. What advise would you give a client about this? STOP IT. It is complete waste. Price the job upfront, put an hours budget on each job and drive the time down – you’ll achieve write ons every time.
  • Systems / Technology. You should not have paper files. Every system you run should in the cloud. The technology is here today where you can run your firm from a mobile device. How good are your systems? How cumbersome is your current system of doing work? Spend the money and get the results.
  • Pricing up front. You know how much the job is worth. So price it upfront and tell the client. It’s common courtesy. Send them an email, a letter or have them sign a form that indicates the scope of the work and the price. If the scope changes you can always go back. Once you have priced the job then (as well as being great client service) you are now directly incentivised to be super efficient. Every project, no matter how big or small – MUST be priced up front.
  • Policy / Processes. As the owner of the firm it’s your business – not your teams or your clients. It’s your name on the building, lease, mortgage, loan, credit card or insurance papers. You are taking the risk. As such you should set the rules. If you want to be paid upfront then go for it. If you want to fly first class and your team in coach – then do it. If you chose not to start a job until all the information is in – then set the rule. The one who makes the rules wins the game.
  • Efficiency model. Most Accountants over engineer jobs. Do you really need the report and the extensive preparation at the start? Do you need to fill in a 20 page checklist. If you are focused on charging time and productivity then logic says to pad the job out and do more than needed. However, not a good look for the client. They pay more! Price the job upfront and then get rid of time wasting activities and “bin” excessive tasks.

Roadmap 1

 
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