IN PRACTICE
Success is not always about doing things by Colm Divilly
Success is not always about doing things by Colm Divilly
Success is not always about doing things
by Colm Divilly
Practice management articles tend to focus on positive actions you can take to improve your firm. In this article I thought I would take a different approach and focus on some things you should stop doing to improve the management of your firm.
Stop always putting clients’ needs ahead of your firm’s needs.
Your firm is a business and like any business it needs to be managed. Some accounting firms postpone management tasks because they are so busy servicing their clients’ needs. Ultimately this is not a sustainable business model, and both the firm and clients will suffer if the firm is not managed. Among the areas that you need to devote time to are:
- Budgeting.
- Monthly reporting.
- Human resource matters (staff planning, staff reviews etc)
- Technology planning and implementation.
- Marketing.
- Data security and privacy.
- Credit control.
- Compliance with regulation
Stop putting off difficult decisions.
Management involves making difficult decisions. It can be easier to avoid or postpone these decisions, particularly if they relate to staff matters. When decisions are postponed, it can result in bigger problems that will need to be tackled at a later point in time. Do not hesitate to take action on difficult matters.
Stop putting off investing in the latest technology.
The immediate future of accounting will be greatly impacted by developing technologies. Artificial intelligence, automation of data entry, automated data processing, greater use of data analytics and cloud computing are just some of the technologies that are already impacting the accounting profession. These technologies will threaten the future viability of many of the current services your firm delivers to your clients. Accounting firms that are proactive in the adoption of new technologies and not reactive to new technologies are the firms that will thrive in the future. The technologies coming on stream will greatly enhance productivity and change fundamentally the work undertaken by accounting firms. Accounting firms will move away from processing data, towards interpretation of information and advising clients based on this information. The most effective accountancy firms will be those who embrace this new role and develop new service offerings arising from these technology changes. Technology changes need to be embraced, not feared.
Stop complaining about increased regulation.
An increase in regulation is likely to continue in the future. Constantly complaining about increased regulation is not going to achieve anything for your firm. Your firm should strive to understand your regulatory requirements and develop inhouse policies and procedures to ensure all professional services are delivered to clients in a manner that complies with regulation.
Stop taking on new clients without having completed and fully documented an appropriate anti money laundering client due diligence procedure.
It is tempting to start acting for a new client on the understanding that they will shortly supply the required client due diligence documentation and information. Do not be tempted as this in breaking the law. Complete and document all required and appropriate due diligence procedures before commencing to act for the client.
Stop signing audit reports without having the audit file fully completed.
When numerous company annual returns are due to be filed in the companies registration office on the same date, it can be tempting to do an assessment of the quality and adequacy of audit evidence obtained and proceed to sign the audit reports notwithstanding that all audit evidence may not be adequately documented. In such situations the Responsible Individual usually signs the audit report having resolved to complete the documentation of the audit work once the annual return filing date has passed. While this intention may well be genuine, life has a habit of getting in the way and weeks and months may pass before the Responsible Individual gets back to complete the documentation of the audit work. At this point the individual may not recall crucial evidence that was gathered but not documented or may not be able to recall the logic behind important audit conclusions made at the time of sign off. The setting of early completion deadlines months in advance of the annual return filing date will avoid the problem identified above. It is reasonable to work to a completion date for audit financial statements six months after the financial year end and such a deadline avoids the scenario outlined above.
Stop trying to be an expert in all accounting and tax related matters.
Taxation, accounting, auditing and company law have become exceedingly complex in recent years. It is not humanly possible for an accounting professional to be an expert in all these areas. A wise accountant is the accountant who is prepared to say to a client “I do not know the answer to that question”. When a client needs advice or a service that your firm is not qualified to provide, be prepared to acknowledge that reality and assist the client in meeting their service need by the engagement of a suitably qualified expert in the particular field.
Stop allowing clients demands determine the course of your workday.
Many Accountants feel a need to always take clients’ calls and reply to emails immediately. This results in the accountant not being able to plan their workday. Plan your workday in advance and build in time to that plan for returning clients’ calls and replying to emails. Turn off your mobile phone and silence your email. This approach will allow you achieve the tasks you have planned for the day and avoid that end of day feeling of not having completed what you had planned.
Stop working late nights and weekends.
Life is short and working late and at weekends is bad for your health, your family life and general productivity. If you find that you are working late or working weekends, resolve to stop at once. Work tends to fill the time available and consequently if you decide at 11am in the morning that you will need to work late to complete an assignment task, you will likely find that the assignment will take the time you have made available. A deadline tends to focus the mind and if the normal day finish time is your deadline you will likely be more productive throughout the workday and finish the assignment within the normal workday.
Stop acting for clients where fee recovery is below an acceptable profit level.
Growing accounting firms can often act for clients that were originally acquired by the firm by offering the client a heavily discounted fee structure. As the firm grows and the related cost base grows, these clients can become a drain on the firm’s resources and profitability. It is good to regularly do a client evaluation to identify such problem clients. One possible evaluation approach is to grade clients into grade A or B or C clients. Grade A clients will be profitable client with low client risk. Grade B clients will be clients who are not grade A clients but with work have the potential to be developed into grade A clients. Grade C clients are clients where the firm should cease to act as the client is no longer an appropriate client for the firm. While such an evaluation may seem harsh, it is probably something all firms should do on a regular basis.
Stop allowing trade credit to clients outside the agreed credit terms.
Many firms adopt an ad hoc approach to credit control. Your firm provides a high-quality service to your client and your firm deserves and should expect to get paid within the agreed credit terms. The following approach will assist in collecting your fees within the permitted credit period.
- Develop clear billing and collection procedures that must be followed by all fee earners.
- Communicate clearly to the client what the credit terms are and the firm’s expectations that fees will be paid on time.
- Provide clients with a means to spread the payment of fees over the course of the service year where this is desired.
- Have specific time-based collection procedures that apply to each outstanding fee. This should include date when work must be billed, date customer statements are issued, date follow up collection phone calls are made, date fee is sent for collection if not paid, etc.
- Allocate responsibility for credit control to a senior manager.
- Fee earners should only become involved in collection where the normal collection procedure has failed to get the fee paid.
Conclusion
I hope that some of the actions outlined above will if implemented make a positive contribution to the betterment of your firm and remember “Ní bhíonn an rath ach mar a mbíonn an smacht “(Success demands discipline).
Colm Divilly
F.C.A., Principal of Professional Education, Seminars
A provider of educational and support services to the accountancy profession www.professionaleducationseminars.ie