The minute you start to become happy with the revenues in your accounting firm, you and, if applicable, your partners might as well refer to your business as a lifestyle, rather than a business intent on generating maximum profit.
The goal of any business should be to maximize revenues. Everything you do leading up to that point needs to be geared toward improving the bottom line – be it sales, customer service, administration, and so on. All tasks have the potential to help or harm revenues.
Here’s 5 ways you can start generating more profit in your accounting firm today:
1. Change to a profit-driven (increasing profits, decreasing expenses) corporate mindset
You don’t want to throw sage customer service mantras out the window. Customer service always needs to be paramount when client work is the bread and butter of the company. However, don’t let these ideals take over the idea that maximizing profits, and driving down expenses are the number one goal of the team.
Everyone should be encouraged to share any and all ideas about how to increase sales and save money. The company always needs to be looking for ways to incorporate more needed services into the existing service. The whole team needs to understand the company can’t thrive and survive without constantly hunting for new and bigger clients to help the firm be competitive in the market.
In fact, if you’re really smart, take a few minutes to consult a sales expert who specializes in helping you identify ways to increase sales specifically in accounting and tax firms. This, in addition to following staff and customer’s regular input will ensure your firm is always growing in revenue.
2. Alter how clients are billed for your services
There are a couple of things to be mindful of when it comes to client billing:
- How they’re billed: ie., by the hour or per project.
- When they’re expected to pay, and whether you can incentivize them paying sooner.
Per project billing:
If you aren’t already, your sales team, whomever they may be, needs to learn how to speak with the client, understand their needs and desired outcomes explicitly, then quote them a flat, per project fee.
It doesn’t matter if you do dozens of projects at once for a client. People pay their employees by the hour. You’re not an employee, you’re providing a service. Figure out what it’ll cost you in labor, supplies, fees, etc. Add a little “buffer” room for good measure, then increase those fees by 15% every year.
Rake in more revenue. Rinse, repeat, thrive.
Incentivizing early payments:
Offer as little as a 5% discount for paying by the end of the month rather than a Net – 45, 60, or 90 day payment deadline. Base your offering on how much the client does business with you, and your staff’s ability to come in under budget on each project.
It’s almost always better to get your money earlier, reinvest it in the company, and close the books on a project rather than waiting all that time wondering if they’ll pay.
3. Increase prices rather than trying to compete
This reality needs to be a given. If you’re offering a great service, have an excellent reputation, and know you can deliver a superior end result, there’s little reason to keep prices lower in order to attract those that are most frugal.
The only way to make more and grow faster is to set yourself apart on all levels, including price. If you’re offering bare-bottom rates, the reality is bigger clients aren’t even considering your services because they don’t feel you can talk to them and perform on the level they need – much like Conor McGregor isn’t likely going to be stopping by Harry’s Used Car Emporium to purchase his next Bentley!
4. Outsource administrative work to overseas
Too many accounting firms allow their CPAs and other highly educated and paid staff do administrative work like filing paperwork, sending follow up emails to clients, and even answering customer inquiries – among other things. It’s up to you to identify these profit-wasters and reduce their cost with cheaper alternatives.
These are major and avoidable expenses considering how cheaply you can hire an experienced overseas accountant from India or the Philippines, for example. They can handle even the most complex accounting and tax-related admin tasks just as easily, for much less money. It doesn’t make any sense to have a salaried accountant at your firm wasting time on this minutia when they could be taking care of a paying customer’s accounting needs.
Firms of the future will have a smaller client-facing team, with the majority of the work being done remotely, from behind the scenes, at vastly reduced cost to the company.
5. Offer more services and upsell to all clients who need those services
This tip is simple. Too many firms stick to what they know, never expanding their services beyond a certain comfort level. The thing is, your clients are more than likely giving you, your partners, and your employees plenty of idea-driven feedback and you’re still not doing anything about it.
Perhaps your business clients need someone to consult on a monthly or bi-monthly basis about compliance issues, or to have a small audit done on their revenue and expenses? This can save them money in the long run, while allowing you to bill them more money more regularly, and stay more up-to-date with that client’s situation – all things that can save the firm more money while increasing per-customer profits.
Offer more services and never miss an opportunity to sell them to clients who can benefit. This allows you to save them more money and aggravation, while strengthening client relationship and increasing referrals.
If your firm isn’t making money, doomsday is just around the corner. Follow the tips indicated above, consult with a pro like AndrewArgue.com (read Andrew Argue review first before you decide on anything!) and always be looking for ways to tweak operations and practices within the firm to stay competitive and grow to your maximum potential.