How to boost your firm's efficiency

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). 

Think strategically

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. 

Smarter payments 

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