Do your timesheet procedures reduce new fees?

Over the years I’ve noted that accountants typically devote more time to networking with contacts and strangers (effectively) than they spend helping existing clients.

We’ve all heard the marketing gurus explain that it’s easier to generate additional fees from existing clients than it is to secure new fees from new clients – people with whom we have no prior working relationship. And this makes sense doesn’t it?

All other things being equal, a client who already knows us, likes us and trusts us is more likely to agree to pay for additional services if we take time to find out their needs and problems, than is a stranger.

So why do so many accountants spend so little time ‘networking’ with existing clients? Instead they spend time at marketing meetings and networking with contacts and prospective clients.  Much of this happens outside of the recorded timesheet day of course.

In my experience this happens because of an edict (or simply a perception) that:

  • all time spent with client must be recorded on the timesheet; and
  • all time charged to clients on timesheets should be recovered.

Quite rightly accountants don’t want to be pressured into billing clients for ‘marketing and networking’ time. Equally the accountant wants to avoid having to justify write-offs or unbillable client time.

Such attitudes are ingrained in the way that many firms of accountants are structured. As a result existing clients feel that no one cares about them, that the clock is always ticking and that they might as well talk to someone else about new issues, problems and challenges.  In effect the accountant misses out on additional fees as he or she misses opportunities to find new ways to help their clients. And the accountant literally wastes time networking with strangers because this is more acceptable within the partnership than spending prospecting time with existing clients (without putting time on the clock).

I suspect this is less of an issue in the case of sole practitioners – unless their timesheet habits have simply been carried over from when they used to work in a larger firm.

Incidentally – when you spend time with clients – it’s best to focus on finding out from them what’s troubling them at the moment rather than trying to sell to them. Find ways in which you could help them and whether they would like that.

What else could you do to reduce the downsides of your timesheet procedures?


The future of compliance services for accountants

Many commentators seem almost contemptuous when talking about accountants who focus on the provision of compliance services.

We’re told that fees are being forced down and that firms that focus only on compliance services face an uncertain future. I’m not sure I agree. If you have an established practice and know your clients well, you are not suddenly going to lose a swathe of clients who all decide to rush off at once.

About the only thing that could cause a speedy dissipation of your client base would be widespread publicity of your incompetence or negligence. Any other changes to your client base will be sufficiently gradual for you to take steps to stem the flow as and when it becomes necessary to do so.

Of course the better prepared and ready you are for such changes, the faster you will be able to adapt and evolve. I do think it will be evolution rather than revolution in this regard.

What will change first and fastest in my view is your ability to win and retain new clients if you and they are focused on compliance services. That means tax returns, bookkeeping and accounts preparation.

The issue will be the alternative ways in which these needs can be satisfied and the time and cost considerations of each option. Are you even aware of the alternatives to a traditional accountant? Again, many accountancy strategists have been predicting this development for years.

I do understand those views and I respect most of the commentators who encourage accountants to plan for the future. Indeed, I agree that’s a wise move, especially for larger firms where there is an inbuilt resistance to dramatic change. However, for most firms of accountants there needs to be something equivalent to a burning platform before there will be a consensus for fundamental changes. At the moment, few partners accept and believe that forthcoming developments will have such a big impact.

What do you think? Please add your comments to this blog post.

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Networking strategies for accountants

Many accountants attend numerous formal networking events on a regular basis.  This can be very time consuming and it will be a waste of time if you set out with the intention of winning new clients and securing new leads from every event that you attend.

Effective networking involves developing profitable relationships and that takes time.

Do you have a networking strategy?

One approach is to find ways that can help speed up the process whereby new acquaintances move up the tree from simply knowing you, to liking you and trusting you.

And one way to do this is to focus on securing just a small piece of one-off work whereby you can prove yourself before seeking to establish a longer term relationship built around recurring compliance work.

What’s your networking strategy?

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The future of auditing and assurance services

At a recent ICAEW conference on the future of auditing I realised how what was once a traditional service provided by most accountants, is almost extinct. It won’t die out completely but it’s certainly becoming more specialised as the number of companies requiring audits has fallen dramatically in recent years. And that trend is set to continue.

Not only is the audit landscape shrinking but the principles are changing. I won’t pretend to fully understand the new “Clarity ISAs” (International Standards on Auditing) but I understand that the UK will be an early adopter within the next two years. Audit firms will need to invest in new training and systems to comply – but there won’t be any additional fees so this is simply an additional cost to be covered.

I’d also mention that earlier this year the Treasury Select committee asked the FRC to review the level of non-audit work that auditors should be permitted to undertake for audit clients.

And the outlook on the financial reporting side is also changing. A recent EU proposal would exempt micro-companies from the financial reporting obligations in the 4th and 7th directives. The current UK Government sees this as deregulatory; Just think about the implications for your practice if smaller companies were no longer required to produce formal annual accounts other than for the taxman.

How will these developments impact your firm? Have you yet undertaken any form of strategic review, perhaps comparing your current structure with that which you will need in 2 or 3 years time? And how will you evolve over that period? Will your firm be one of those that offers alternative assurance products – such as The Assurance Report? Will you be competing with other firms that do offer this service? Whilst you may think you know what your current clients want in this regard, what about prospective clients?

Please share your views and comments below.


Engagement letters for accountants

It’s almost a year since the professional bodies published their updated guidance on engagement letters for tax work. This was the culmination of a thorough review by a working party that I was proud to chair on behalf of the contributing bodies: ICAEW, ICAS, ACCA, CIOT, ATT, IIT, CIMA.

I wrote a number of articles on the subject for the professional press and online forums. eg: AccountingWeb and Tax Adviser (March 2008). I also explained our approach in a posting on the TaxBuzz blog.

And most of the bodies published the updated guidance on their websites for members. More recently this has been updated to reflect one last schedule that we added for those who want to advise on tax credits. (Incidentally I’ve explained elsewhere on this blog why I think it’s important to at least cover the basics on the subject of tax credits).

The reason for this post now is that for whatever reason I have started to receive more requests for links to the online guidance. And some people are asking for guidance as regards non tax related issues too.

Rather than keep cutting and pasting content I though it would help to put all of the links in one place.

I have also included  a link here back to a recent piece I wrote about disengagement letters as this may also prove useful.