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. 

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