Boomer’s Blueprint: 5 ways to improve 3 firm processes

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Every firm and small business has processes. A process is an organized group of related activities that together create value for clients or customers. No single task creates the desired value. Value is created by the entire process in which all tasks are merged in a systematic way for a clear purpose. Without processes, firms crumble in chaos and conflict.

Dave LaRue, an entrepreneur and respected business coach, recently stated, “You don’t have to love the process in order to like the results.” To me, that means processes must contain rules and ensure discipline to be efficient and effective. In this article, we are going to focus on three processes that every accounting firm utilizes and how they can increase client value and firm performance. The processes are:

1. Billing and collections;
2. Tax return preparation (personal returns — 1040s); and,
3. Planning — accountability.

What you are about to read and hopefully act upon is primarily focused on mindsets and skill sets, not the toolset. It is not technical or compliance-based, but focused on creating value. I have heard countless times that partners don’t bill because the practice management software or the tax software is difficult to utilize. Technology is playing an increased role in the automation of all parts of the practice, so I don’t want to discount the importance of combining great processes with technology to achieve the desired results. Typically, accountants only see part of the process, as all of the above processes are delivered by a unique-ability team, not a rugged individual.

One of the mindsets everyone must adopt is that people add value through skills other than accounting — e.g., project management, marketing and sales, data analytics and client service. The solution is not about technical skills, but more about the DMAIC model:

  • Define.
  • Measure.
  • Analyze.
  • Improve.
  • Control.

Successful digitization efforts begin with designing the future state for each process without constraints (e.g., shortening the turnaround time from weeks to days or even hours and eliminating unnecessary steps and loops in the process). Once you have defined a compelling state, you can introduce constraints such as regulations.

Often the constraints are personal preferences and can be overcome through discussion and debate. This can even be the case with regulations that were designed for manual rather than digital processes. All of this is part of the DMAIC model. Let’s summarize the three processes and focus on ways firms can quickly increase value and reduce the required time. Also, your mindset must change from how value is created by effort, to the reality that value is determined by the client. Otherwise, you will simply increase value, improve the client experience, and reduce the price to the client if you don’t move from the cost-plus model of pricing (hours times dollars).

We will limit each process to five examples or fewer for brevity and illustrative purposes. Some may not apply to your situation, but approach these examples with 10X thinking: How can we improve 10 times, not 10 percent?

Billing and collections

Some of the mindsets necessary to improve are:
1. Spend time upfront asking questions and scoping the engagement. Price to the client, not the service. (Know your client.) Offer multiple service level options.
2. Think like a managerial accountant — cash flow, not financial reporting. Move toward a model of payments in advance, rather than after completion of the work — at least a deposit and periodic payments. Subscription pricing is becoming accepted in advisory and consulting services. Do not let the traditional service model pricing impact your future. Don’t be afraid to use external resources for payments and collections. Your unique abilities are not in finance and banking.
3. Have a filtering and client approval process in place.
4. If you use timesheets, require daily entry, and bill more frequently.
5. Reduce or eliminate the partner time in the billing process.

1040 tax return preparation
1. Improve the client experience and reduce professional time by utilizing web-based aggregation tools for client information.
2. Do not accept 1040s that are not associated with other firm services.
3. Utilize one-way workflow to eliminate loops in the process. Grade preparers on each return.
4. Expect payment with delivery or bundled within a subscription pricing model.
5. Do not use the same process for all returns. Rate the complexity and risk of each return.

Firm planning and accountability
1. A system of accountability is the fastest way to improve results. Accountable people strengthen standards, welcome measurements, expand uniqueness, and achieve superiority. Non-accountable people undermine standards, avoid measurement, demand equality, and ridicule excellence.
2. Start with a vision. What do you want to be, do, have, experience and create over the next three to five years? This exercise will build consensus and become the foundation of your strategic plan.
3. Develop a one-page strategic plan including your vision, mission, core values and strategic objectives on the front and the measurements of success, strategic initiatives, due dates and responsible parties on the back.
4. Drive the responsibilities down to the individual level through 90-day game plans and accountability reviews. Become a self-managed firm where people know expectations upfront, focus on priorities, and review progress every 90 days.

Think about your thinking

These are only a few examples of how mindsets, skill sets and toolsets can improve processes in your firm. The purpose is to get you to think about your thinking. Become a thought leader and transform your firm. Are you trapped in an outdated business model or moving to a model to sustain success and remain future-ready? Addressing these three processes in your firm can help address the question. Don’t be afraid to utilize outside resources. As Kurt Gödel, the Austrian-American logician, mathematician and philosopher, stated, it is difficult, if not impossible, to evaluate and change a process if you are part of the process.

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Business process management Practice management Tax preparation Growth strategies Strategic planning