Overcome Accounting Firm Capacity Challenges To Increase Revenue
Picture this. Twenty new clients come up to you. They want you to be their accountant. Do you have the capacity to take them onboard? If you do, then you’re managing your accounting business right. If you can’t take on more new clients, don’t worry because you’re not alone. Majority of accounting firms do not have the capacity to do this. Fact is most cannot do more projects for existing clients. But to achieve sustainable revenue growth, you need to increase capacity. To do this, you have to overcome a whole host of challenges.
What Are Common Capacity Challenges?
Lack of capacity is a real problem for a lot of accounting firms. Owners and partners want to do something about it but run into a whole host of challenges. Right out of the box, when no one is guiding you, it is hard to find methods that are applicable specifically to accounting businesses. You can go online and read up on how-to’s but effective implementation takes practice. To do it, you need time and that is something that is in short supply.
Tied in with the time aspect is the unpredictability of jobs and client activities. So trying to squeeze in planning right in the middle of tax season, for example, is next to impossible. What many accounting firms do in this case is settle for strategies that don’t actually work for their needs. Of course, the results are far from what is expected or even worse off when they first started. Obviously, the shortage of the right people capable of helping carry the load is another glaring issue. You cannot do more work when there’s no one left to do it.
How To Overcome Capacity Challenges
Two key things you need to focus on is time and manpower. When you get these two nailed down, everything will fall into place. It is a fact that accountants spend at least 1.5 hours each day doing tasks they shouldn’t be doing. Administrative tasks related to accounting work like collecting client data and preparing paperwork should be delegated to an administrative team member. Experienced admin team members can do these jobs more efficiently anyway. As a result, accountants have the capacity to do more work each day. This is what we meant above by having the “right people” to carry the load.
When you have the right people doing the right jobs, you can focus on workflow. Streamlining workflow systems and processes increases efficiency. Here’s where cloud technology can cut the hours down through automation. You can manage data in real time so you can reduce the time accountants need to do the work. But you need to have all clients up in the cloud. Do this and you get another 1.5 hours per accountant per day. On the people side of the workflow, you can also reduce time on any job. Create documented systems and processes for your teams with self-imposed deadlines and corresponding KPIs. This will increase workflow efficiency and help you gain at least 1 hour per accountant per day.
With proper implementation of the strategies above, you can gain at least 4 hours per accountant per day. For example, you have a team of three accountants. Now you have 60 hours of extra capacity per week. That’s 3000+ more hours in one year. If each accountant has an average hourly rate of $200, that is a massive $600,000 increase in revenue per year! Now you see how effective capacity planning will do wonders for your firm’s bottom line.
You have to remember that you need to hire the right people for the right roles, use the right technology, and implement the right processes. When you have all of these in place, you will have all the capacity you need to achieve sustainable revenue growth. So when those 20 new clients come up to you and ask you to be their accountant, you can say, “When do I start?”
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