… is expansion cutting into profits?
by 卡塔尔世界杯常规比赛时间 research
client rosters, revenue and profits all seem to be rising, according to the 卡塔尔世界杯常规比赛时间 busy season barometer – and rising more than expected.
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most impressive, and curious, is the radical rise in numbers of clients. for 22 percent of respondents, clientele has expanded by more than 10 percent. another 43 percent have seen increases of 5 to 10 percent. only 13 percent have seen any significant decrease.
what do these numbers mean? the big numbers on the increase side don’t balance out with those of the decrease side. what we’re seeing isn’t a migration among accounting firms. it’s either an increase in the total number of clients or a decrease in the number of accountants.
total revenues are running pretty much parallel with the increases in clientele, with 26 percent reporting significantly higher (over 10 percent) revenues.
net profits, revenue per client and profit per client are all up, too, but, significantly, not as much as revenues. while 79 percent report higher revenues,
- 63 percent report higher net profit,
- 76 percent have higher revenue per client and
- 64 percent have higher profit per client.
more clients, more work, more cost
in the face of higher revenues, the lower numbers for net profit and profit per client may be explained by a general trend toward expanded staff. firms are getting more work done for more clients, but personnel costs are up.
the numbers for those showing more modest expansions of clientele – the 5- to 10- percent increases – are showing more impressive revenues and profits, all of which have higher percentages than the percentage increase in clientele. though 43 percent are seeing a modest increase in clientele,
- 53 percent have somewhat higher total revenue,
- 44 percent have somewhat higher net profit,
- 61 percent have somewhat higher revenue per client and
- 49 percent have somewhat higher profit per client.
we’re just guessing, but it seems that the covid-19 years may have given firms a chance to reorganize and fine-tune their operations. they’re doing things a bit differently – a bit more efficiently – this year.
one anonymous respondent reports a smaller client list but increases in most areas of revenue and profit, explaining, “we increased fees 20 percent, eliminated clients that were difficult or low-profit, outsourcing for the first time ever, and added technology to gain efficiencies.”
tim gehring, of gehring & farrwood, with significant increases in clientele and revenue but more modest results elsewhere, has a similar comment: “we changed tax software, hired two new employees, improved review process.”
david crumbaugh, a partner at rick c. reed & company, has taken on new staff and now sees modest increases across the board, writing, “we hired one new staff; trying to deliver more returns to clients electronically.”
getting serious
some firms are getting ahead by getting more serious.
“early cutoff date for clients to provide 100 percent of their source documents to avoid being on extension,” says someone with a texas firm. “standard 10 percent price increase related to inflation.”
“providing cutoff date to provide document to avoid extension,” says a virginia practitioner.
one respondent, whose relatively small client base is spread across various countries, has found a way to achieve significant increases in all categories. she tells us, “i raised my fees quite a bit, have been taking on more clients due to a somewhat improved staffing picture and look to be done everything this year and won’t need any extensions (i hope).”
other comments:
- “we disengaged bottom 10 percent of clients.”
- “asked for info sooner (3/1),” says another.
- “raised prices more than previously,” says another.
- “i have been reducing my client base to manage the remaining with more services and less staff.”
one response to “clientele and revenues rising, but …”
frank stitely
we turned down far more prospective clients that we accepted and didn’t even think about discounting on proposals. we also fired a record number of clients and have more to fire after tax season to make room for better clients. we increased prices on every return. next year, anyone not using our client center is gone. no more separate workflows for individual clients.