{"id":121671,"date":"2024-01-18t15:00:50","date_gmt":"2024-01-18t20:00:50","guid":{"rendered":"\/\/www.g005e.com\/?p=121671"},"modified":"2024-08-29t23:54:03","modified_gmt":"2024-08-30t03:54:03","slug":"five-ways-to-separate-accounting-winners-from-losers","status":"publish","type":"post","link":"\/\/www.g005e.com\/2024\/01\/18\/five-ways-to-separate-accounting-winners-from-losers\/","title":{"rendered":"five ways to separate accounting winners from losers"},"content":{"rendered":"

\"two<\/strong><\/p>\n

how many of these are you expert in?<\/strong><\/p>\n

by marc rosenberg<\/i>
\nthe rosenberg practice management library<\/i><\/a><\/p>\n

if cpa firms did everything \u201cright,\u201d they could easily double or triple their income. doing things right includes effectively bringing in clients, charging high billing rates, maintaining strong realization, high leverage of staff to partners and keeping expenses down. it\u2019s the rare firm that does well in all of these categories.<\/p>\n

more: <\/b><\/strong>two factors determine firm profitability<\/a> | don\u2019t make firm profitability a goal<\/a> | top 20 tough choices for the partner comp committee<\/a> |tell potentials what partnership takes<\/a> | disturb the present to improve the future<\/a>
\n\"goprocpa.com\"exclusively for pro members. <\/span><\/strong>log in here<\/a> or 2022世界杯足球排名 today<\/a>.<\/span><\/p><\/blockquote>\n

the path to profitability is different for every firm. but the truly profitable firms are successful at achieving one or more of the following:
\n
\n1. high billing rates.<\/strong><\/p>\n

a friend of mine owns a construction company. i asked him who his cpa firm was and whether or not he was satisfied with the firm. his response was, \u201che\u2019s expensive, but he\u2019s good.\u201d that\u2019s how all firms should want their clients to think of them.<\/p>\n

on the surface, it might seem overly simplistic to suggest that raising billing rates will increase profitability. of course it will. but the issue of billing rates runs deeper. high billing rates are a barometer of four important attributes of the way firms conduct their business.<\/p>\n

first, billing rates are an indication of how well you convey value to your client. cpas are quick to point out how competitive the market is. they claim that if their rates are too high, their clients will leave and go to a cheaper firm. indeed, clients may often tell their former cpas that fees were the reason for the change. but that\u2019s just an easy out for the client: studies consistently show that fees are way down on the list of what causes clients to change cpas or become dissatisfied with their firms. issues related to quality of service \u2013 for example, lack of timeliness, tardy return of phone calls, functioning like numbers crunchers instead of business advisors, lack of contact, etc. \u2013 always rise to the top of the list of factors causing dissatisfaction.<\/p>\n

second, billing rates are an indication of how well you differentiate your firm in the market. cpas have a tendency to view themselves as one of several fine firms in their market. but there are ways to achieve noticeable differentiation: niche marketing, specialty consulting services, stability, longevity, size, growth rate, activity in the community, and an exemplary reputation with key referral sources such as banks and law firms are just a few techniques.<\/p>\n

remember: differentiated service of an undifferentiated product can command a premium.<\/p>\n

third, billing rates reflect the value provided to clients. cpas have a strong tendency to undervalue themselves. they think that because they are doing work that the client needs but doesn\u2019t always want (compliance work), the client will not pay \u201chigh\u201d rates. the client may, in fact, balk at paying high rates, but this probably is a reflection of the cpa\u2019s failure to convey value to his\/her client rather than the client\u2019s predisposition to be cheap. for example, if you view the audit as a routine, rubber stamp activity and mail the report to the client, you may very well experience heavy fee resistance. but if you use the audit as an opportunity to understand your client\u2019s business, routinely provide your client with fresh, innovative ideas, and deliver the report instead of mailing it, you have conveyed value. firms that know they are good, work hard for their clients, and meet the clients\u2019 needs should be able to charge high rates because they are worth it. firms with higher billing rates experience the highest levels of profitability.<\/p>\n

fourth, to some extent billing rates need to be commensurate with the level of work performed. for example, partners may experience a difficult time commanding a high billing rate if they do the work of a third-year staff person. partners need to leverage themselves by pushing down work, not doing staff-level work.<\/p>\n

2. high staff billable hours.<\/strong><\/p>\n

i am always skeptical of map surveys for two reasons. first, i have found that these surveys tend to attract more underperforming firms than overperforming firms. second, the surveys tend to perpetuate a sense that average is acceptable. here\u2019s an example: frequently, when i begin working with a new client on a project, they throw questions at me. i encourage this.<\/p>\n

one common question is, \u201cwhat is the national norm for billable hours for professional staff?\u201d lately, my response has been in the mid 1,500s. the next sound i hear is a sigh of relief from the partners, followed by the comment: \u201cthat\u2019s good to hear. our firm is at 1,575, so we\u2019re ok.\u201d i respond: \u201ccongratulations, you can all feel good that your firm is a nice average firm.\u201d<\/p>\n

the reasons why firms experience annual staff hours below 1,500 include one or more of the following:<\/p>\n