Most accountants have heard the phrase “Watch the time” at some point during their careers. This term of art is actually code for, “We have a tight budget on this client, so don’t charge a lot of time.” What this really means is, “Eat the time,” inferring that the accountant should work without getting paid, or charge the time to admin.
Unfortunately, the time & billing paradigm in public accounting has not gone away. Most firms use the standard “hourly rate x hours worked” to bill clients. The problem is that hourly rates typically go up every year. Most times the man hours to do the work remain the same. Yet, for some reason, clients expect their bill to stay the same each year!
The above scenario puts tremendous stress on accountants. The partners don’t want to have the “come to Jesus” talk with the client and raise the fees. However, they do want their K-1s to increase each year. Therefore, we have the trickle-down effect and I don’t have to elaborate on just how downstream it is.
Most accounting firms want their staff to work 60-plus hours (sometimes 80) during busy season and even at other deadline times throughout the year. The reality is that while some staff may be paid overtime, exempt employees are not. Furthermore, their bonuses are unlikely to rise to the level of the value put forth in their work. How unattractive is that?
We have a continuous erosion in student enrollments for accounting programs. Why wouldn’t enrollment decline? Any student who gets a whiff of these overtime requirements is going to run the other way. Therefore, indirectly, the profession loses talent every day as a result of these old-school principles.
So what we have here are a bunch of burned-out public accountants doing too much work for too little pay. We have tiredness, staffing problems, and a general sense of unease. This impacts everyone involved in the cycle of client work, including the client!
So what should we do? First, the time & billing platform of yesteryear should be thrown out the window. Value billing should be the rallying cry. With the cost of liability insurance, an audit in this day and age is certainly worth more than the time & billing that is put into the job.
Second, rather than hiring fewer employees and making them work more hours, hire more employees and require them to work less. More is more in this case.
In closing, I have done well in the accounting profession. However, it has also taken its toll on me. Unfortunately, in my younger days, I did not realize that there was more to life than working 40 overtime hours a week. Life is short, and each of us must seize the day for the accounting profession to thrive.
Stephen A. Bonick, CPA, CFP, PFS, CGMA, MST, is an accountant in Monterey, Calif.
