The most common mistakes accountants make in clients’ eyes

There are plenty of articles on the internet advising accountants on the most common and simple mistakes they should avoid. 

They all dispense good advice. 

Bill Tsotos writing for Accounting Today’s advice is particularly sage – failure to understand a client and their business and industry is a very bad mistake as is not differentiating yourself sufficiently from your competitors. 

Not billing what you’re worth is very prevalent in the industry at the moment but it’s understandable in a marketplace which has been defined by downward price pressure for nearly a decade. 

Of Bill’s reasons though, I’d like to focus on “not being proactive” because I have found that’s the biggest problem facing accountants in the UK today. 

For the purposes of this article, “proactive” means getting in touch with your clients with actionable and useful information as well as inviting feedback. Email is fine for contacting clients but people buy people first so it’s even better if you can be “proactive” face to face or over the phone. 

Lack of proactivity is the main reason behind the downward price pressure in the sector and it explains why a client turning over £1,000,000+ a year would gladly jump into the arms of a competitor to save £50 a year. 

What do 68% of accounting clients want? 

According to ClearBooks, 68% of clients want an accountant who: 

  • is in regular touch with them,  
  • they can get along with easily,  
  • is down the road from where they are, and 
  • has a bank of knowledge they can tap. 

For only 21% of clients, price was the most important aspect when choosing an accountant. 

If this is the case, why is there such pressure on accountants’ prices at the moment? 

It’s because there is a fundamental disconnect between what an accountant thinks a client wants and what clients actually want. 

Clients want far more from their accountant than accountants believe. 

The big picture from the perspective of an accounting client 

Your client has both short-term and long-term needs of you but you might be only pricing for the long-term needs at the moment. 

A client’s long-term needs generally are to have the reassurance that they won’t miss any HMRC or Companies House deadlines and that they won’t pay any more in personal or corporation tax than they need to. 

And the likelihood is that your practice is primarily structured and staffed to adequately meet those long-term needs. 

There is probably some additional slack within your practice to represent a client if someone has approached them to buy their business and they need you for the due diligence process but not much more. 

There is well-known expression that journalists write the first version of history and, much later on, a historian then summarises the events the journalist was writing about but from a much broader perspective. 

You, the accountant, are a client’s historian and you provide historical summaries of events and financial transactions which happened between 9 and 21 months ago in the form of HMRC and Companies House submissions. 

However, clients more than ever want reporters on the ground as well as historians to help them understand: 

  • how their business is doing today and  
  • how close they are to achieving their personal and professional financial goals within the timeframe they set for themselves. 

The pros and cons of bookkeeping packages 

In the past, clients were generally satisfied with working with a “historian” because there wasn’t really an alternative. 

Since then, the Internet and online accounting and bookkeeping programmes have appeared and they’ve fundamentally changed clients’ expectations. 

Whenever an accountant sells his or her practice’s services to a client, they now almost always come with a bundled online bookkeeping programme. 

And each existing and new client knows that, once they’ve given you permission to log into their platform, you have the ability to monitor how they’re doing at a time of your choosing. 

Nearly every client then convinces themselves that you will be some sort of benevolent, overseeing eye checking in multiple times a day just to make sure that everything is on track. 

What the client doesn’t realise though is that, along with their log-in details, you have the log-in details of hundreds of other clients. 

What they also don’t know is how long it takes to log in to account after account and how long it takes to run multiple reports to assess the health of each client’s business. 

Nor do they appreciate how so few clients using online bookkeeping packages update them regularly or correctly which cumulatively creates a tidal wave of additional work for you and your colleagues. 

Online bookkeeping programmes do save accountants time but not nearly enough and, together with accountants having more clients than ever before, there are not enough hours in the day to provide the type of constant oversight that a client wants. 

But what if there was? 

The importance of immediacy for accounting clients 

If there was a way to use online bookkeeping packages to… 

  • monitor clients’ ongoing financial performance, 
  • alert you and your staff to when there was a problem or an opportunity, and 
  • provide you with the guidance you needed on how to help your client make the most of the problem or the opportunity 

…you could then start to provide clients with their short-term needs, demonstrate your value to them, and charge them more. 

Time after time, it’s what clients tell accountants and pollsters what they want. 

According to ClearBooks, clients value communication over every other aspect when they’re deciding which accountant to use. One in five also want an accountant whose personality agrees with theirs. 

What do they want from this communication? 

They want your help in formulating future strategy for their business (32%) and on budgeting (23%). Only 4% want assistance on tax. 

So while an accountant sees their core job as helping clients save money on tax, what clients actually want from you is for you to be a general sounding board and a trouble-shooter – they want to be able to access your experience in helping them make more money or save money. 

Welcome to Hindsight 

Hindsight is a plug-in app for Xero designed to allow you to offer the services clients actually want and are willing to pay a premium for. 

Hindsight logs into each of your client’s Xero accountants every day and monitors each one to provide you and your colleagues with instant information on how well each client’s business is doing and how well they’re using Xero. 

As well as providing you and your colleagues with generic flags (signifying a threat or an opportunity) on each client, you can also program in client-specific flags covering 12 distinct areas of financial performance and Xero usage. 

Better still, accompanying each flag are instructions for your staff (which you can customise) on how to solve the problem, what it means in both financial and business terms to the client, and what to say to the client to deliver extra value. 

So Hindsight constantly monitors clients’ performances, it attributes responsibility for dealing with certain issues and clients to the colleagues you choose, and it trains staff on the consequences of each red flag and how to explain them to your clients. 

Hindsight offers on the ground reporting as well as the information you need to file clients’ accounts and submissions to HMRC and Companies House. 

To find out more, please schedule a call using the panel below or email us by clicking here

Why small is often much better than big for accounting clients

Until you own a business, you don’t quite realise how personal it is and how competitive it makes you. 

For owners of small accounting firms looking at their bigger local rivals with five times or more clients than they have, it’s OK to occasionally think that “it must be nice to be in their shoes”. 

But before you feel tempted to punish yourself because they might be a better businessperson or a better accountant than you, you need to look a little closer, with respect. 

Headache or hangover from hell? 

Having 200 clients gives you and your team an occasional headache especially as year ends, period ends, and Self Assessments loom closely on the horizon. 

As the owner of your company, the responsibility rests on your shoulders to make sure that you and your team get through the workload in time saving your clients as much money as possible. 

Management of other staff is difficult at the best of times. And in the worst of times when the pressure is really on, management of staff under stress prone to occasionally emotionality because of that stress would challenge even the most patient and wise of us. 

The owners of larger local rivals with significantly higher client headcounts than your firm go through what you go through to a much greater degree. 

If having 200 clients is an occasional headache then having 1,000 clients is the worst and most persistent hangover imaginable. 

“Ah”, you might say, “but the guy/girl running the practice with 1,000 clients has five times the number of staff I have so they’ll be able to cope”. 

This is a fair point but you must also remember that the management stresses you feel at pinch points during the year will be greatly magnified for them.  

In addition, it’s a truism that the more number of people you employ, the less influence and control you have over each of them individually. 

So, for owners of large accounting firms looking at their small local rivals with a fifth of the number of clients to deal with than they have, it’s OK for them to occasionally think “why the hell did I let it get to this size?” 

Your size is your greatest strength 

It’s the greatest strength for you because, although you feel the pressure, it’s not always overwhelming. 

For your staff, there are probably less clients to deal with per head than at your larger local rivals. They don’t realise that they’ve actually got it pretty good in comparison and, later on in this article, I’m going to suggest a way to make their lives and your life a little easier. 

Your customers also benefit from dealing with you personally. Your practice, as it is now, will face many of the same issues and challenges as your clients’ businesses. 

This gives you something in common with clients – this is important because people buy from people they like and they buy from people like them. In other words, to them, you’re just like them. 

This gives you a competitive advantage over your bigger local rivals where client accounts are much more likely to be handled by someone without the experience of running a business or working for a smaller business. 

Now how do you take advantage of this so that you, your staff, and your clients benefit? 

Turnover is vanity, profit is sanity 

Your bigger local rivals’ turnover figures will look meaty and impressive but the people who own these practices will pay a heavy physical and emotional price for this measure of “success”. 

If you’ve ever helped a client sell their business and you’re helping them through the due diligence process, you know, the buyer knows, and the buyer’s accountant knows that turnover is important but not in the way that the seller of a business thinks it is. 

For a buyer, the turnover of a company they wish to purchase gives them an indication of how much extra profit and value they can squeeze out of a business after they’ve bought it and re-organised it. 

The seller will not get the price they want or believe they deserve for two reasons: 

  1. in the mind of the buyer, the seller has run it poorly and 
  1. the buyer has to spend his or her own time and money on putting it right. 

Likewise, an accounting practice with 1,000 clients making the equivalent of £250 a year net profit from each client is intrinsically worth less than an accounting practice with 200 clients making the equivalent of £1,250 a year net profit from each client. 

Despite both companies making the same net profit, the buyer of the smaller practice is taking over a much better run, well-organised money generating machine whose processes are probably much more automated and efficient and which requires less management time or post-purchase investment. 

The smaller business is much more likely to have chased profit than chased turnover during its development. 

Not only is that the type of accounting practice someone would want to buy but it’s also the type of accounting practice which is much more pleasant and enjoyable to run. 

So how do you turn your current accounting practice into one which is much more profitable, much more pleasant to run, where the staff are happier, and where you can sell add-on services to appreciative clients? 

Accounting is a process so make the process as simple as possible 

Because the general operating rules of accounting are so well-established and because, when working on clients’ accounts, we’re also following clear rules set down by HMRC and Companies House, our day to day work, although mentally challenging, is not particularly innovative. 

If all of the entries in a client’s financial record are properly recorded and attributed, we can’t save our clients any more in the tax they pay than our local rivals, whether they are large or small. 

To prepare a client’s accounts and the year ends/period ends, you and your colleagues need to perform hundreds or sometimes thousands of relatively simple tasks over a given period of time. 

In many accounting practices, this process of undertaking these hundreds or thousands of relatively simple tasks takes place in the two to three months coming up to year end, period end, or Self Assessment. By taking this approach, the eight to twelve weeks prior to the 31st of January is hell for many small accountancy practice owners and their colleagues. 

But what if those tasks were much more evenly spread over the course of 12 months using the financial information recorded on Xero? 

If you and your colleagues logged into each account once a month to check on how each client’s business was faring and how well they were keeping their financial records, you’d be able to spot many of the issues which cause such stress when submission dates are approaching. 

If there was a particular issue – too many unreconciled transactions, low cash balances, clients’ customers taking too long to pay them – you or your colleagues could alert your client. 

Not only will that mean that there’s a better chance that your clients’ bookkeeping will actually be usable but also your client is more than likely unaware that there is a problem. 

One of clients’ major issues with their accountants is a lack of contact.  

A monthly mini-audit gives your practice a reason to get in touch with your clients to let them know how they’re doing. Take each of these opportunities to learn something new about the client and their personal & professional financial ambitions. 

If, following multiple contacts from you or your staff, the client does not mend their ways regarding the standard and/or frequency of their financial recordkeeping, let them know that, to continue with your services, they have to allow your bookkeeper in once a month or once a fortnight (for an additional fee) or that you will be unable to service them. 

It’s unfair on you, your staff, and your other clients if one particular client takes up a great deal more time than is necessary and your practice is not being compensated fairly for it. 

This is your business – it’s your practice. You decide which clients you take on, you decide the terms and conditions of trade, and you decide what is acceptable behaviour from clients and what isn’t. 

The Hindsight app is built for just this 

I realise that, with the way in which many smaller accounting practices organise their days, the idea of a monthly short audit of each client’s account will seem almost impossible to fit into your existing schedule let alone the support call you make after. 

However, when clients know what is expected of them and you share with them the reason why things need to be done in the way you prescribe, the workload for you and your staff actually decreases rapidly because clients now have the confidence to do what you’re asking them and they can see the value in it. 

The Hindsight plug-in for Xero is something which my team and I have been working on for 18 months. 

It’s the tool I wish I had when I ran a small accounting practice. Every morning, it automatically logs into each client’s Xero account and runs a series of insights. You can either choose to go with the generic insights for a client or customise in your own (we’re on hand to help you do that if you need us to). 

When you and your staff open up, it presents these annotated insights to you and your colleagues – you can assign insights to team members by task, by client, or both. Along with the insights, Hindsight will provide guidance on what to say to each client in each situation. 

You’ll find that, within weeks, the workload on you and your colleagues will be smooth rather than lumpy at particular periods of the year. 

Your staff will enjoy work with much of the pressure off and, for junior accountants, the ability to assign certain tasks to them is the equivalent of learning on the job and this exposure to different responsibilities will make them and your more senior members of staff more agile in times of extreme pressure. 

And for you, the accounting practice owner, you have the benefit of retaining many more of your existing clients through enhanced communications and the ability through your deeper relationships with them and the extra time you have during the working well to sell on additional services. 

Please click here to arrange a phone call with our team or, alternatively, please click here to email us. 

How much do accountants charge?

Most visitors landing on this page are potential clients seeking information on how much accountants charge. If that’s you, I’m sorry but this page is not for you. 

We’ve written this article for accountants who want to benefit from an alternative view of charging clients more for their services. 

Why is this? It’s because there has been significant competition in recent years within the sector leading to constant downward price pressure. 

If you run a small accounting practice and the previous enjoyment and satisfaction you may have derived from being your own boss is rapidly dwindling because you feel you’re working too hard for too little reward, welcome (and I’m sorry you’re feeling this way). 

We’re Hindsight and we’ve spent the last 18 months building a Xero plug-in specifically designed to give you and your staff much more time and space to do what you do better and charge a fair price for it. 

The perception of value 

To understand what you should be charging your clients, you need to be able to understand what value is in the mind of your clients. 

Without potential clients perceiving value in your services, you’re just one accountant among thousands of others and you’ll end up competing solely on price. 

Your current clients – the companies paying you a direct debit every month – will be more likely to leave you if they can’t perceive any added value in your services compared to your competitors’ services. 

But what do clients want to read on your website and hear from you in person or over the phone when they’re choosing an accountant? 

How the accounting market has changed 

The clients of today are different from the clients of 10 years ago. 

In the last decade, there has been the following two significant changes: 

  1. the move to make payment to accountants by monthly direct debit and 
  1. the widespread take-up of online bookkeeping and accounting platforms like Xero. 

Although they may seem like two distinctly separate things, they’re actually very closely related. 

Prior to online bookkeeping and accounting platforms, it’s fair to say that most accountants had a strong bookkeeping element to their service. 

That bookkeeping element would be charged in one of two ways depending on the clients behaviour. You would either: 

  1. make a charge per hour on top of your normal accounting fees because the client sent in their invoices and receipts once or twice a year by post for you and your team to sort out or 
  1. you would charge them a fixed amount per month for a bookkeeper to visit your client’s premises, input and classify all the invoices and receipts onto a spreadsheet making sure that what was on the spreadsheet reconciled with what was in the bank account. 

Many accountants decided to drop bookkeeping support entirely or significantly as they were encouraged by the online accounting packages to sell their software to clients. 

It made sense even though, in a way, it severed a major part of the connection they previously had with their clients through being involved in the ongoing updating of financial records.  

These new online packages were designed to shift the burden of regularly bookkeeping from you and your staff to the client. 

This removal of workload from your practice might free up 20-40 hours’ worth of work per client every year – time you could instead spend expanding the number of clients you had on your books. 

And that’s what many accountants did. They believed that they could replace the 20-40 hours’ worth of work they were going to save per client thanks to online bookkeeping platforms by signing up one or two more clients. 

When accountants were selling their services to clients, they promised faithfully and honestly that theirs was not only an accounting firm but a consulting and advice firm too. 

They weren’t there to just do the books – they were going to be a partner on their client’s journey until the time they achieved what they considered personal and professional financial success thanks to the regular supply of information they got from Xero, Quickbooks, and the like. 

The penny began to drop 

As existing and future clients were transitioned to online bookkeeping platforms, a number of problems began to emerge. 

First, clients weren’t actually very good in the main at using the platforms. 

They didn’t appreciate the importance of allocating every invoice they received and paid correctly – but why should they? It had never been their responsibility before and, if push came to shove, the accountant would just do it anyway as part of their monthly fee. 

If a client took in payments via debit or credit card, it was difficult for them to figure out which invoices had been transferred into their account via the daily settlement from their merchant provider and mark them as such on their online accounting platform. 

Bank reconciliation is difficult for accountants but, for many clients, the process was baffling. 

A combination of these factors and others meant that the software was not used correctly or often enough. 

Clients began to struggle to see the value in their online bookkeeping packages as well as wondering why you recommended to them in the first place. 

Second, accountants became frustrated with the software because they were more designed for small business owners and not accountants. 

Because many took the opportunity to increase the number of clients they served, they didn’t have the time required, particularly at certain points during the year, to make sure that their clients were using the software properly. 

Within a few months and on a seeming continuing basis since, accountants found that, as they prepared clients’ year ends and period ends, the volume of work was daunting because of the remedial repairs which had to be made to each client’s bookkeeping records. 

While that remedial work was less than the remedial work needed by the type of client who brought their invoices and receipts in once or twice a year in plastic bags, they had two to three times the number of customers to deal with than before. 

Small accounting practices soon entered a constant survival mode which came at great cost to: 

  • clients who were oversold the level of service and insight they could expect, 
  • members of staff whose workloads were so high that, when they came into the office each morning, they felt crushed by the pressure, and 
  • owners whose dreams of providing the service they wanted to clients were unrealistic given the workload. 

Clients, particularly those who had been in business 10 or more years, complain about the quality of their accountants much more than they did a decade or more ago – they’ve noticed the change and it’s not been for the better. 

70% of SME owners would not recommend their accountant to other business owners – 39% of millennials are unhappy and this is the next generation of fee-paying clients. 

Over a quarter said they are likely to switch accountants, according to research by Xero. 

No-one is winning in this situation. 

I know – I sold my old accountancy practice because I hit many of the same brick walls as you might have done. 

But I still have a love and affection for the industry so I spent the following 18 months creating a plug-in to Xero with the features I would have really wanted as a small accountancy practice owner. 

Discovering your true price point 

Let’s start this discussion from a base point. 

When I was running my own small accountancy practice, I became slightly obsessed by the number of clients I served as I considered it a mark of the success of what I was doing. 

I was wrong. 

If you don’t have the internal infrastructure and working procedures to cope, 100 clients is a challenge and 500 clients is a nightmare. 

Every new client you add does pay money into your bank account but they also represent an incremental magnification of the problems you and your staff are already going through. 

If I had my time over, I’d concentrate on providing the best possible service and adding the most value to 100 customers for £500 a month rather than providing a poor service and adding very little value to 500 customers for £100 a month. 

So how do you get from one point to the other? 

First, only take on the customers you want to take on. Do you get on with the other person? In 6 months’ time, would you and your staff enjoy speaking to them on the phone? 

Second, charge your services out per transaction and not by anticipated time taken or turnover.  

One business turning over £1,000,000 a year might issue 100 invoices at an average order value of £10,000 whereas another turning over the same amount might make 10,000 sales at £100 a time. 

Set a base price per transaction that you’re not willing to go under and stick to it. If they want a Rolls Royce for the price of a Lada, send them respectfully elsewhere. 

Third, view your clients’ online bookkeeping systems as an early warning system and not an enemy. 

One aspect we’ve built into Hindsight is the functionality to log into every clients’ Xero account each morning. 

We have introduced generic warning flags as well as the ability to create individual warning flags on the plug-in to let you know if a client’s bank account balance is too low, their debt too high, it’s taking too long for their customers to pay them, and more. 

Four, share your knowledge and spread out responsibilities among your staff. 

This will vary their working day and it’ll provide you with an opportunity for short daily one-to-one training sessions as you explain the business significance behind the numbers on the screen. 

With degrees costing £50,000 or more, the barrier to entry to becoming an accountant has never been higher so channel your junior staff’s desire to learn and to justify their investment in themselves by giving them a grounding in dealing with clients. 

Better still, by logging into clients’ accounts regularly either via Hindsight or manually, colleagues will be able to tell who is struggling to use the system and they then have the chance to talk them through what they need to be doing.  

If the client still doesn’t follow through, there’s an opportunity to earn extra fees for your practice by selling your bookkeeping service. 

By making sure clients’ records are up to date, this will greatly reduce pressure points at year end, period end, and at Self Assessment time. 

Five, try to really sell your colleagues’ expertise and experience to your clients so that they don’t feel as if you’re too important or busy to talk to them when there’s an issue. 

Other than calling clients to teach them how to use their online bookkeeping better, you and your colleagues should find some reason to get in touch at least once a quarter – good by email but even better by phone. 

Every interaction makes your service and your input more vital to the client as well as creating a clearer picture in your mind and your colleagues’ mind what would make each individual client happier. 

Building a team and exploiting the information provided to you by clients during conversations and via their online bookkeeping platforms gives you the opportunity to create added value

You and your team will be seen as a partner and a consigliere to your clients – the burden of responsibility will no longer solely be borne by you as principal. 

The level of dissatisfaction with most accountants right now is at a peak level and there is an opportunity to win higher value clients, share responsibility with newly-motivated and engaged staff, and remove some of the pressure from yourself and your team. 

Selling additional services 

The inverse law of sales is true in every profession. 

It roughly states that the lower the order value, the more likely the client is to be an arse if things go wrong. 

That’s because their money is a lot tighter in general and they need to see the value in your services much more than higher-spending clients. 

By serving a smaller range of clients better and faster, you’ll be able to use the trust they’ve acquired in you to sell higher-value ad hoc services like business plan preparation, IHT planning, R&D tax credits, patent box credits, and more. 

And you’ll have a much better idea of which clients need what because of the constant communication you and your staff have with them. 

Find out more 

I’d really appreciate the opportunity to speak with you to find out more about your practice, the types of client you serve, and what you want for your practice and for yourself in the coming 3-5 years. 

My team and I have created Hindsight with the sole purpose of providing the infrastructure a practice needs to operate at its most efficient and to better utilise the time and talents of you and your staff. 

To find out more, please click here to book an appointment time or email us here

Does your practice have a people problem, a systems problem, or both?

An accountant’s practice is, like every other business, dependent on the people and systems it has in place to deliver the desired result to the client. 

Since the widespread adoption of accounting packages though, there is an additional factor to consider within your practice’s modus operandi – client input. 

Under encouragement and reward from online accounting software providers, we have transferred much of the bookkeeping responsibility we used to charge for to our clients. 

Most of our clients were not trained as bookkeepers.  

When confronted by their online accounting platform to reconcile their bank account, at first they’re impressed by the way in which it can connect to their bank account. 

The feeling of being impressed quickly subsides when, after two weeks of not reconciling, they are faced with potentially dozens of transactions they need to pair when they revisit their online accounting platform. 

Matching up bank transactions to invoices and receipts is difficult enough for many of them. 

This is further complicated particularly when payment is received from a third party like a merchant service provider which bundles multiple transactions up into one daily settlement transfer. 

They’re unsure how to reconcile this figure because, after fees, the total doesn’t add up to the invoices issued if they can even identify the invoices. 

Added to that, they’re unsure how to handle payment fees in an accounting sense from those merchant services providers. 

With the greatest respect to clients, it’s rubbish in and rubbish out. 

Your clients are the first part of your system problem 

If you sell an online bookkeeping package to a client and just expect them to use it, you will get a lot of rubbish coming your way and your staff’s way. 

It’s not the fault of your client. 

It’s like going to a garage only to be given a Hayes Manual by the mechanic and told to do the donkey work yourself. 

Inevitably, the person visiting the garage will make dozens of mistakes when they’re trying to repair their own car because they lack the knowledge and experience required. 

They will inevitably fail and the work they have tried to do to it may even have exacerbated the original problems. 

By subcontracting the initial responsibility to the customer to fix their own car, the workload of the mechanic may actually increase.  

If the customer needs the car back by a particular time and it’s had to go back to the mechanic to fix, the mechanic is also operating under a time pressure which they would never have exposed themselves to if they’d just done the job in the first place. 

Accountants expecting to subcontract all or most of their clients’ financial recordkeeping to their clients are setting themselves, their staff, and their clients up for a fall. 

You can’t just hand powerful accounting software to someone who doesn’t know their liabilities from their assets. 

Relying on clients to do the work you used to do is creating extreme workload pressure points 

Does this situation sound familiar? 

Two or so months away from a client’s year end, period end, or Self Assessment, you and your colleagues come to the realisation that you’ve not heard from them for months. 

Tentatively and with some hope, one of you logs into your client’s Xero account hoping to find an orderly set of financial records requiring little attention. 

As you go past the log in screen, the page seems to be taking longer than you’d expect to load and, when it does finally present itself, it’s a car crash of unreconciled transactions, massively overdue invoices, low cash balances, and more. 

As you survey your entire estate of clients, you find that there is a significant amount of work to do to bring order to chaos. 

If it had just been this client, that would have been a pain but it would have been manageable. It’s not – there are dozens of accounts just like it.  

Dozens of accounts which each may require a few hours, a couple of days, or even a week to put right. During the time it takes to correct, you and your staff know that you’ll have to contact your clients multiple times for more information in the full knowledge that each additional contact will irritate your client more. 

Why? Because, in your clients minds, you should have been on top of this. Why is your client transferring money to your account via direct debit every month if this is the best possible way you can organise your practice? 

And do you know what? They have a good point. 

The time leading up to January 31st is always a major pinch point but, at every practice, there are multiple pinch points throughout the entire year with period ends.  

If your practice manages 200 limited company accounts, that’s an average of just under 20 period ends you’re dealing with a month. 

It never stops and there’s an inner part of you as the accountancy practice owner which might apportion some of the blame to your members of staff.  

That’s understandable but unfair. 

We’ve identified two major errors in the processes governing the way your practice is run: 

  1. rubbish in, rubbish out from clients who don’t know any better and should be expected to know any better – they’re businesspeople, not accountants, and 
  1. you and your colleagues may not be monitoring how often and how well clients are using their online bookkeeping platforms enough. This lack of attention eventually creates mountains of complicated, fiddly, frustrating, and boring administrative work across the practice to be completed within very tight timescales every month across dozens of accounts. 

On the second point, you dictate to your staff what they do every day – not the other way around. 

So what should you do to get rid of the mountains of last minute work every month? 

There are two ways to sort this out 

First, you could sell the services of one of your bookkeepers to your clients.  

That way, you’ll know for certain that, at the end of a company’s financial year or on April 6th, your clients’ financial records will be in such good order that your accounting team will be able to handle the work with relative ease. 

Second, you could perform monthly mini-audits of each client’s Xero account. 

Once a month, you and your colleagues log into each client’s Xero accounts to check how often they’re using it and how well they’re using it.  

Run a series of reports into the financial performance of their businesses as well as how frequently they’re using Xero and whether their recordkeeping is to the required standard. 

This will identify problems early on and give you and your colleagues a chance to rectify the situation with the client. 

A monthly mini-audit will also allow you and your colleagues to tidy up clients’ online bookkeeping accounts on a regular basis shifting work which would normally have been done under pressure from a slew of looming deadlines to the present. 

It will also give you and your colleagues the opportunity to be in regular touch with your clients and survey after survey has found that, more than any other service feature, clients want their accountants to be in regular touch with them. 

And because you’re in regular touch with them, you get to know them better and, with the time saved by regular account maintenance, you and your colleagues will have the opportunity to sell them more profitable bespoke ad hoc services. 

So far, all I’ve mentioned are system problems 

The performance of any business, including an accountancy practice, is governed by: 

  • the specific tasks you place on the people who work for you, 
  • the quantity of tasks you expect staff to complete within a given timeframe, 
  • whether you have provided the training to your staff required to complete the work efficiency and correctly, and 
  • whether your staff feel motivated to complete the work given to them efficiently and correctly within the time scale given. 

Deming’s “95% rule” teaches us that “the performance of an organization is attributable to the system (processes, technology, work design, regulations, etc.) and [only] 5% is attributable to the individual.” 

Imagine a test between two equally experienced, knowledgeable, and skilled accountants preparing the year ends for the limited company. 

Accountant 1 has well-kept and regularly updated financial records to work from. 

Accountant 2 was presented with a bundle of invoices, receipts, and bank statements instead. 

All things being equal, Accountant 1 will complete their task more quickly and accurately than Accountant 2. 

Accountant 1 will have enjoyed the task much more than Accountant 2.  

Accountant 1 will have more time to devote to other work their practice requires as well as partaking in continuous professional development. 

Accountant 1 is far more likely to stay with their practice than Accountant 2 whose working days are, more often than not, frankly miserable. 

Ultimately, the person most responsible for the creation and management of systems others rely on to do the work they’re tasked with is also the person responsible for the performance of those staff and of the practice as a whole. 

The systems you put in place for your practice determine: 

  • how much you enjoy running your own practice, 
  • the level of care and attention your staff put into the work they do, 
  • the productivity of each member of staff, 
  • the amount of tax you’re able to save your clients, and 
  • the likelihood of your clients continuing to subscribe to your services. 

Physician, heal thyself 

I made many of these mistakes running my own practice for a number of years – so much so that I resolved to sell up. 

I love accounting and I love accountants but not so much that I was willing to carry on barely getting by every day personally and professionally. 

I did sell up and I’ve spent the last 18 months creating Hindsight, a plug-in for Xero designed to address all of the issues above and more. 

I’d really welcome the opportunity to speak with you about it. 

Please click here to arrange a phone call with me and the team. Alternatively, please click here to email us.