How to boost your firm's efficiency
Increasing eﬃciency is a perennial challenge for accounting ﬁrms. Technology can make any improvements less of a chore. Nick Huber reports.
Would your accounting ﬁrm be interested in becoming 20% more eﬃcient?
Of course it would. However, no matter how detailed your plans are to increase eﬃciency – the good use of time and energy – it’s easy to get side-tracked with the chasing of late invoices, pitching for new business and onboarding new clients.
Fortunately, technologies such as automation, customer relationship management (CRM) and forecasting software have made it easier than ever for small and medium-sized accounting practices to become more eﬃcient. Small accounting ﬁrms are “streets ahead” of large accounting ﬁrms in their use of automation technology, says Della Hudson, a consultant to accounting ﬁrms and author.
“Small firms are more agile. In a big ﬁrm [making changes to technology and business practices is] like turning [an] oil tanker.”
Experts say that small accounting ﬁrms are often better than larger ﬁrms at improving eﬃciency because they can make decisions quicker, install new software quicker − and have fewer staﬀ to train in new ways of working.
Financial Accountant has asked accountants and business advisers to accountants for their tips on increasing eﬃciency.
Automate and improve your workflow
Practice management software, such as AccountancyManager and Senta, can help accounting ﬁrms track their client work, allocate tasks to staﬀ and automatically email reminders to clients about accounts information they need to provide, or forms to sign.
Further time can be saved through “optical character recognition” (OCR) technology, which lets customers use their mobile phone to take a picture of receipts, invoices and bills.
Software products such as ReceiptBank and Hubdoc convert the images into documents, which can be sent to the customer’s accounting software.
New cloud accounting software often includes technical support. “[It’s] software as a service. You don’t need to run your own server, which is a huge saving,” Hudson says.
Five is the magic number
For most small accounting ﬁrms, ﬁve software apps should be enough, says Martin Bissett, founder of the Upward Spiral Partnership, a consultancy to accounting ﬁrms.
According to Bissett, the ﬁve types of app are: cloud accounting software (popular products include Xero, Intuit’s QuickBooks and Sage); OCR software; a tax app; payroll (if your ﬁrm provides payroll services); and cashﬂow forecasts (calculating how scenarios such as an increase in sales would aﬀect a client’s ﬁnancial performance, or the amount saved by buying all products from one supplier).
After your ﬁrm has covered the basics, it can try technologies, such as management reporting and ﬁnancial analysis. Suppliers include Futurli and Fathom. These technologies can help you provide business advice services that typically have higher proﬁt margins than traditional accounting tasks, such as tax returns.
Colin Abercrombie, who advises accounting firms on marketing and growth, and who used to run an accounting firm, says he can do a 90-day cashflow forecast for a client in less than one hour, using this type of software.
“It’s a very powerful tool for ﬁrms to access quickly,” he says.
Put all your client data in one place
CRM software can help organise your client data. HubSpot’s CRM software is free.
Using a central hub for all client communication (emails, tax returns and other documents) can avoid your staﬀ wasting hours of time searching for client data stored in diﬀerent IT systems, Abercrombie says.
“For me, it is a no-brainer if you’re a small ﬁrm as it simpliﬁes your whole life.”
When Abercrombie had his own accounting ﬁrm, it used CRM software from a company called Act!, which reduced the ﬁrm’s “staﬀ downtime”, he says.
Technology isn’t the only way to improve eﬃciency, though. Mark Lee, an accountant and speaker, who mentors other accountants, says accountants should consider joining a networking group of other accountants to help grow their practice. (Lee runs his own group, called The Inner Circle.)
He also advises accountants to minimise the amount of time they are distracted by videos, social media and emails “that could have waited”; and delegate, outsource or recruit for work you’re over-qualiﬁed for.
Late invoice payments were a problem for Paul Whitehouse, owner of Chariot Accountants.
The Portsmouth-based accounting firm had 75 invoices that were overdue by more than 90 days at the end of the tax year. Most of its customers paid it by cash, cheque or standing order.
Whitehouse says he spent hours each week, manually checking payments against invoices. In 2016, it began to look for payment technology to save time and improve its cashflow. After switching to GoCardless − software that sets up direct debits for regular payments and automatically collects invoice payments when they’re due – Chariot reduced the number of invoices that were overdue by 90 days or more by 63%.
The GoCardless software worked with Chariot’s accounting software by QuickBooks.
Since moving to GoCardless, Chariot has been able to off er monthly payments to customers.
Before using GoCardless Chariot’s clients, many of whom were taxi drivers, were saving the cash before they brought work to Chariot. “All our work was coming in between November and January, before the tax return deadline,” says its owner, Paul Whitehouse.
Now, Chariot’s work is spread more evenly throughout the year, Whitehouse says.
Another benefit of GoCardless has been to help automate many of the firm’s payment processes − enabling it to get to know its clients better and give more valuable advice, Whitehouse says.
The firm offers direct debit as a payment option to all new and existing clients. A quarter of clients now pay through GoCardless – a figure Whitehouse expects will increase.
Nick Huber is a freelance journalist