How to Generate More Cash in Your Accountancy Firm
Posted on 3rd April 2017 in Advisory
Written by Freya Hughes
Your firm is your vehicle to financial success. While your staff are like the gears on a bike – keeping the journey propelling forwards – you need a confident rider in the saddle. Are you optimising the way your firm operates and leading the sprint finish? Or are you on a country ride with no set destination? In this blog, we look at the ways you can improve your profits without accidentally hitting the brakes.
There is more competition in this industry than ever before. In the days of paper files, it was unlikely that clients would change their accountant as it would have meant a lot of effort. These days, though, cloud accounting software has made it simple to change accountants with the click of a button. In just a second, you’ve lost a client. Retaining clients and winning new ones, all the while increasing the fees you can earn across the board with new services, is not only more achievable than you think, it’s essential.
Review each cog of your price structure
If you’re pricing out your services by the hour, do you know for sure you aren’t conning yourself out of cash? You assume you’re charging the right amount but there’s a lot of room for error. When was the last time you reviewed your pricing? Have you increased the price of a given service annually to keep up with inflation? When things are ticking over comfortably, you might become complacent with turning profit. There’s the old saying, ‘if it ain’t broke…’ but, waiting for it to break, could end in the demise of your firm. Take the time to understand the value of the services you provide. Don’t assume your clients will run for the hills – people are understanding of pricing increases if you are demonstrating the value they get.
If you’re charging clients after the work has been completed, you will have a deficit. Instead of taking the cash in at the first instance, your bill is likely just sitting in a pile gathering dust. Without charging before or during the completion of your service, you’re essentially working for free for the given period. We know you tell your clients not to be a bank for their customers but you need to listen (and action) your own advice here.
You must consider how much billable time is wasted sorting out admin work. Is there an office junior, or an external company you could send it out to instead? Zerobooks have an excellent outsourcing service, which can help you get started. If your higher-paid accountants are spending four hours per week alone on admin, is that four hours of work that could have been done for a fraction of the price?
Gear yourself towards existing and potential clients
People buy people, by which we mean you need to be selling yourself to make your firm attractive to clients. Future-focused entrepreneurs who are tech savvy and hungry for profit will not be attracted to dated branding and historic working methods. Making yourself approachable but smart will reflect on the firm, and updating to the cloud will give your firm the nudge it needs to stay relevant. Look at how you operate and make changes to reflect the clientele you want, you’ll soon be wearing the maillot jaune.
Lead the pack with an update to your business model
Intuit saw an increase of 41% subscribers for its cloud-based accounting software, QuickBooks Online, while Xero witnessed 51% growth in 2016.
So how can you evolve to meet your clients’ needs? You’ll notice that many firms are rolling out advisory services. There’s an awful lot of cash ready to be made through this – private businesses are the primary driver of personal wealth the world over. If you help business owners achieve their professional goals, they’ll pay for it. And they’ll see it as a worthy investment. With the aforementioned cloud takeover, you need to be adapting your services to provide what the cloud cannot do. Your knowledge is, to use a cliche, your power. While the cloud will continue to develop and automate the role of an accountant in the traditional sense, there’s a plethora of advice business owners need and want more. There’s a difference between business coaching and advisory. The former is essentially holding the business owner’s hand through everything. Advisory is more of a middle ground that gives strategy to clients – you won’t be coaching them through every detail, but helping them understand how to reach their goals.
Pedal more services to your clients
Upselling is key to driving your profits upwards. If you’re struggling to achieve this, consider if you’re actually offering the right thing for your clients. A given business owner might not even understand what the service is or does, or why it would be beneficial. It would be smart to then sit your client down and ask them exactly what their goals are. It seems simple but just taking a minute to really listen to their needs will go a long way.
Instant access to services is expected these days. Like online banking, business owners expect instant access to their cash. Frequent communication is essential – trust is built when clients can rely on you. Set up alerts and pick up the phone and tell them when they’re nearing their budget limits – they’ll feel supported and know their money is safe. It’ll also grow their business faster, making them more revenue, and also giving your firm more profit as advisors. Take the time to get to know your clients, not just as a business but as people. They might not know what they need to grow and this is your opportunity to increase your fees per client aka cash.