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How many billable hours do partners typically generate?

I know that each firm will be different depending on the choices made and structures adopted, but I would be really grateful for a quick straw poll of contributors thoughts on how many hours of chargeable time they generate per annum as a partner in practice.

We are looking to set targets for improvement in our partnership team of three individuals (18 staff). Last year our three partners generated 1193, 809 and 728 hours respectively. Looking at the year ahead we have ambitiously set the targets at 1050, 1220 and 1383 but I am fearful that these totals look too ambitious and would like to contrast against other firms if you are happy to share this information on this forum?

Many thanks for your input.

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Sorry can't help but....

This is the sort of process I went through for well over 20 years with the firms I ran or helped run and it was applied to all fee earning staff but, given that we had to repeat it year after year after year, with minimal success and lots of stress and number crunching it did beg the question why isn't it working?

Too little space here for the book I'd like to write but, however you measure people's performance, the best results will be achieved if you motivate, train & coach them to work efficiently both on their own account and in how they transact with colleagues & clients.  Also, given that a huge % of our work is reactive to client's needs none of this will work properly if you don't motivate, train & coach clients to do the same in their transactions with the firm.

If you maintain timesheets then, in my experience, you are better off monitoring the non-chargeable time that everyone does (admin staff as well) as here you will identify functions where too many people are getting involved or where nobody is!  If you use use them to encourage? people to get more client time recorded, without the efficiency considerations mentioned above, then all you'll end up with is time you either can't charge or, if you do, upset clients.

Sorry if this is all stating the obvious but since we dumped timesheets nearly four years ago and spent our time instead looking at how we do things, rather than how long it takes, we are all far less stressed, the fees are OK, there's lots more money in the bank and, we regularly knock off early.

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By MBK
17th Jan 2012 13:29

We think ....

.... somewhere between 950 and 1150 hours is right. Depends on other responsibilities and size of portfolio.

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17th Jan 2012 15:55

Wrong question and wrong direction

As business owners shouldn't your hours targets be going down?

If you are at all interested in a new and better way of approaching running/managing an accountancy practice I can send you some audio CDs to get you thinking and before anyone gets on my back about marketing/selling my services, I do not work with three partner firms because they are a nightmare to get them to agree to do anything.

Bob Harper

Portfolio Marketing

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I'll keep it brief

1,000

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17th Jan 2012 17:46

here's mine

1103 client hours in 2011.

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Paul Scholes is right on the money........

Paul's philosophy is spot on. Don't spend time measuring time as your input. Develop targets that measure the desired outputs. Try to measure job completion rates/turnaround times, number of client complaints/fee disputes, staff morale etc.

Whilst moving away from measuing/recording time is usually a big leap for most firms (as it involves breaking a very big habit/routine), I also cant recommend it enough.

I started my own practice about 2 years ago and have never kept a timesheet. All clients are on fixed fees. I believe you can use your many years experience to set a fee for a client without timesheets, and also identify when jobs are taking more work than expected without timesheets (whilst the job is in progress). 

Timesheets are time targets are a hindrance. Set yourself free and bin them. You will be amazed at what else you can focus on for each clients affairs when you are not watching the clock!

The biggest difference when not using timesheets will be in staff morale and performance. I have one full time staff member who used to use timesheets. His performance in previous firm was said to be average and I worked in this firm with him (I was the practice manager). This guys performance now is tenfold what it was with our old firm and I put a large part of this down to dropping timesheets and everything they encompass (the "time policing" system that comes with time-recording, the picking over chargeable/non chargeable etc). It's not that this guy now takes as long as he wants to do jobs, but he has the freedom to learn on the job, which means he now takes the accounts/tax to draft for review, a stage he never reached before because "time was of the essence!"

 

 

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17th Jan 2012 23:01

fees billed rather than hours billed

i'm more concerned by the fees billed by myself and my small team ... and have a monthly budget that we try to stick to.  we can 'feel' if we are busy / slack ... no need for timesheets. a weekly team catch-up does the job - and its my job to weed out the unprofitable jobs & decide where extra fees need to be billed. use your team as your eyes and ears - its a great motivator for the boss to ask "what do you think?" to the staff, whether its a tech query or "does the fee feel about right?"

 

 

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17th Jan 2012 23:07

Yipes

There was I aiming for a target of ZERO.

and by that I mean absolute ZERO, none of your fancy Celsius or Fahrenheit malarkey.

Seriously - are you working on or in the business?

 

 

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By Old Greying Accountant
18th Jan 2012 00:18

Hate to say it ...

... I agree with Bob to a degree. A firm of this size the partners should be aiming at zero hours, they should be networking and growing the practice, visiting clients and holding their hands etc etc, you have all those staff to crunch the numbers!

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18th Jan 2012 06:57

Phew!
I'm so glad I continued reading down this thread, I thought I was going to be the only one to say that partners should had very little chargeable time.

We average about 5-6 hours per week for each partner - sometimes we might do as much ad 20 hours if a specific project requires it, and quite often only 2 or 3 hours.

Partners should be working on strategy, leading the team and winning work not reviewing files and posting journals etc - unless of course you are a very small practice that can't support a non fee earning partner

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I am interested in who the poster is in relation to the partners. Who is running this businesses exactly?

Not having timesheets encourages you to work quicker as your billing stays the same regardless of how long you took doing it.  Having a time sheet encourages you to sit there picking through things just to "spend the time" they are willing to pay.

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By Old Greying Accountant
18th Jan 2012 09:52

That reminds me of ...

ireallyshouldknowthisbut wrote:

I am interested in who the poster is in relation to the partners. Who is running this businesses exactly?

Not having timesheets encourages you to work quicker as your billing stays the same regardless of how long you took doing it.  Having a time sheet encourages you to sit there picking through things just to "spend the time" they are willing to pay.

... when I started out the first thing you had to do was look up last years hours, and then make sure you didn't do the job significantly quicker, otherwise you felt the wrath of the senior clerk as it put pressure on whoever did the job the next year!

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Can beat that

Hi OGA - when I started out the time sheets were kept in 15 min units and my charge out rate was £1 per hour but, because they couldn't be bothered with pence (or shillings, can't remember), my charge out rate for 1, 2 & 3 units was also £1.

So all I and my fellow juniors did was to call over 7 sets of accounts in a day, at 10-15 minutes each, put 4 units each down on the time sheet and 2 for toilet & coffee breaks and we had done a day's time in 2 hours, leaving loads of time to play cards or cricket (we had a long thin office) or finish that awful jor where we were already 200 units over budget.

Those were the days.

 

 

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18th Jan 2012 17:22

Many years ago

Stoy Hayward partners had no charge out rate, I'm told. The idea being that their time was not to be spent on billable work but on business generation, managing client relationships and the like.

This changed as fee pressures grew in the 1980s I think. Too many partners were doing work themselves (at zero chargeout rate) to avoid jobs going over budget....

As has been said above, what matters is NOT the time charged by partnbers but the fees billed AND RECOVERED.

There is little point in pushing for high chargeable hour budgets if fee levels do not match up.

Mark

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20th Jan 2012 10:28

Thank you

Many thanks one and all for your insights, greatly appreciated. We all have have differing opinions on how to operate our practices as I stated in my opening line. By way of explanation of where we are as a firm it may help (in particular i'reallyshouldknowthisbut ' to explain myself as follows;

I am a founding partner of the firm. We are a reasonably young firm, around 6 years old and have achieved £900k pa turnover from a standing start. We now have a very motivated team of great guys running the 'engine' of the practice, our partners have very little input in our compliance services at all. We have implemented internal HR/Finance/Admin functions and a strong corporate structure. We take 11 weeks holiday as owners of the firm, and our earnings are in the top quartile of firms in the UK for firms of our size. The three partners are all keen 'advisers' and the majority of our 'chargeable' hours are generated  when working closely with the client base on strategic business and tax advisory projects, which we absolutely love, in fact this gets us out of bed in the morning. We try to adopt best practice when possible and learn so much from other practitioners. We also had the benefit of a 'blank page' when we started with no historic baggage to shake off. We operate fixed fee billing for the majority of our recurring work, but use our timesheets as a management tool. I accept that in Ron Baker's eyes this is somewhat counter intuitive, and not ideal for all. At some point we may drop the time recording, that time is not now for us. 

I am very grateful for everyone's input, this is a wonderful forum with very generous contributors, thank you so much and all the very best to you all in reaching your own personal goals.

Bob, whilst I am very grateful for your offer of your audio series, I will respectfully decline. We are comfortable with our current approach/providers thank you. We are also very proud of the fact that we get things done as a three partner firm, but maybe in your experiences we are an exception.

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20th Jan 2012 11:05

Fundamentals

@Scotchguard - good growth, high margins but I not sure if you are the exception, my experiences are multi-partner firms are that they are effectively sole-traders sharing a resource pool.

With respect, it sounds like that is what you are doing as all partners are heavily involved in client work. Chargeable hours (tax or business advice) is still working IN the business! But, it sounds like that floats you boat.

I am glad you have not confused value pricing with fixed billing and (in my opinion) time recording for management purposes is a massive mindset issue that will hold you back. At best your resources will get better and doing what client's don't really value.

Bob Harper

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Imperial or Metric

You have got the tape measure but you might be spending too much time with playing with the self retracting mechanism. 

Measure the total hours you are doing then look at what is not chargeable and why you are doing it.  Can you delegate that work?  Is it necessary?  Is it mismanaged?

Downsize on the dead hours and use them to either get a family life (if you want one), or an extra marital interest or more billable hours.

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20th Jan 2012 11:11

I don't count my hours

As a one-man band working from home I am obviously very different from the OP, and I do suspect that my hourly rate is not what it should be (mmmm, let's see, turnover divided by average working week = about £28 an hour). A pleasant surprise for me since I counted all hours and not just what would be 'billable' to a specific client. Of course I don't have all the traditional overheads, staff etc so it is unfair to compare me with the OP.

 

Except that I, like sparkey999, charge agreed fees rather than hours - have done for 28 years. About 18 years ago I experimented counting time religiously, and boy, what could I earn if I applied an hourly rate! But the big lesson from this was that I did not have an interest in generating hours, what mattered was what I was delivering for my clients. Quality counts way over quantity, and the hour-generating mentality is what, in my perception, creates fee-resistence and general unfairness. We have all seen this happen, surely?

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20th Jan 2012 11:49

2 or 3 a week

Even less if I can manage it !

trouble is with billable hours is that you have to write them off.....although my experience (with larger firms) was that partners drive to meet their billable target hours would mean lots of small units appearing on your client time record (phone the manager and interupt to see how the job is going..book .25 hours).

Which then meant the manager had taken too long on the job and caused a write off......always good to devalue a staff members contribution to the work ! LOL

I have to say at these firms the partners were just really just employees with the title partner...I don't think any of them understood they owned the business.

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20th Jan 2012 12:09

Thanks again guys. I appreciate your input.

Bob, I guess to a certain degree any partnership will share resources. My own opinion on this is that that is the whole point as it creates a synergistic impact and we all do better than if we were sole practitioners. I presume your opinion is implying this as a negative where this creates silos within the organisation and no common purpose. Delighted I am not in that position. incidently all three directors do at times work on the same client as we all have different specialisms.

 

My apologies if I cannot comment in response any further on this thread, but I am just signing off now for a ski break. Happy to get back involved on my return if appropriate in February.

Appreciate everyone's input.

All the best.

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20th Jan 2012 23:11

good for you

scotchy ... 

good for you ... i'm impressed ... 900k fees in 6 years.  

can i ask you ... does your per partner profit make it worthwhile to build the business to that level?  if you are making 300k fees per partner, and your margin is 40-50% (your profit 120-150k), do you think you could do that as a 1-partner firm with staff ... and if so, what do you think are the benefits of being a 3-partner firm?

 

the reason i ask is .... there is a firm near me ... 4 partners, i'm pals with one ... they have 1m in fees & share it 4 ways. at their 40% net profit they make 100k each.  to me, it doesnt seem worth the hassle/effort to me ... i'd rather have 250k fees & be a sole partner (note: not a sole practitioner!  i want staff LOL)

 

whereas, another firm in manchester, 4 partnetrs, £2m fees ....40% of that is 200kpa ..... so for me well worth it.  in my neckj of the woods 200kpa is really good money. 

 

just interested in your views as someone who is where i would like to be ... we're at about 215k fees after 19 months, target is/was to get to 250k by 2 yrs.  i work in a niche area & attracting good clients/fees is not hard .. we met up with a referrer who could easily double our turnover inside a couple of years ... but ... a nagging feeling .... will it be worth it financially?  is there a significant benefit to growing the practice from 250k to £1m if i have to bring partners in to do it? 

(hopefully you took your PC / Blackberry with you skiiing ...LOL)

 

Scotchguard wrote:

Thanks again guys. I appreciate your input.

Bob, I guess to a certain degree any partnership will share resources. My own opinion on this is that that is the whole point as it creates a synergistic impact and we all do better than if we were sole practitioners. I presume your opinion is implying this as a negative where this creates silos within the organisation and no common purpose. Delighted I am not in that position. incidently all three directors do at times work on the same client as we all have different specialisms.

 

My apologies if I cannot comment in response any further on this thread, but I am just signing off now for a ski break. Happy to get back involved on my return if appropriate in February.

Appreciate everyone's input.

All the best.

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10th Feb 2012 16:05

Happy to comment if of value.

Our experience is such that it is worthwhile.

One of our partners is a salaried partner and the numbers work out ok for him in his role. The equity partners do well too, without wishing to disclose all in this case both northwards of your estimates. So in our case we are comfortable with our lot. However I regularly share information with our peers and the 'stars' in my circle who earn the most are actually sole 'partners' in the main. I am aware of some really strong performers who have achieved solid returns on their own. Not sure if there is an optimal size or structure, I guess it's down to the way the practice is run and the people within.

Sorry this is a bit of a wishy/washy answer!

Good luck with your decision making, and you chosen path.

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12th Feb 2012 12:19

gotta be happy with 200k+!

scotchy,

 

thanks.  if you're around the 200k+ net income per equity partner mark (reading between the lines LOL), that's a great result for you & no wonder you are happy with it.  thats inspirational to a relative newbie like me.  

 

I thought long and hard about taking a partner on.  had a good friend lined up when we were at around 150k fees who was willing to chip in 80k to buy in, then 50-50.  i decided against it & went for a really good 'number 1' instead - who has been with us around 9months and a great sounding board & as well as 'technician'.

 

i agree that that there probably isn't an optimal size/structure.  my practice has a high number of fairly similar types of clients, and much of the work can be done by lower-level staff. so, i might spend an hour on the phone every year with a £1k client, plus the odd email & call mid-year.  this means I can handle more clients so less need for a partner.  I'm not naturally inclined to a partnership anyway, methinks, so interesting to hear 1-"partner" firms can still make a decent wedge ... cheers, LB2.

 

Scotchguard wrote:

Happy to comment if of value.

Our experience is such that it is worthwhile.

One of our partners is a salaried partner and the numbers work out ok for him in his role. The equity partners do well too, without wishing to disclose all in this case both northwards of your estimates. So in our case we are comfortable with our lot. However I regularly share information with our peers and the 'stars' in my circle who earn the most are actually sole 'partners' in the main. I am aware of some really strong performers who have achieved solid returns on their own. Not sure if there is an optimal size or structure, I guess it's down to the way the practice is run and the people within.

Sorry this is a bit of a wishy/washy answer!

Good luck with your decision making, and you chosen path.

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20th Jan 2012 14:09

This has been a great thread

I am not in practice but would have an interest in how practices work well as businesses.  This thread has been most interesting and demonstrates the best of the AccountingWeb community.  Thanks to all who contributed.

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By lizzit
20th Jan 2012 14:25

Management guidelines I aim for are: No more than 25% for partners (less is okay), 60% for senior account managers, 80% for licensed employees, and 95 to 100% for dogsbodies.  

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20th Jan 2012 14:34

@Scotchguard - I can understand partners working on the same client  (tax, financial planning and business development services being examples) but I was thinking more about the structure of the firm.

It sounds like the day-to-day client contact is fronted by partners rather than employees. Out of interested what percentage of fees in non compliance or basic tax planning?

 

​Bob Harper

 

 

 

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10th Feb 2012 15:52

Just back from my break and catching up on this thread.

Bob, client contact in our firm is available to all team members, in fact actively encouraged. No doubt some clients like to speak directly to partners but certainly not the majority. Each client has three named contact team members(partner,manager, technician) who knows their affairs for continuity. The managers have ultimate responsibility for clients, partners act as specialist advisers/leaders in the main and other specialist team members (including the full admin team) are available to our clients when required.

If I interpret your query regarding fees our prior year performance shows 22.6% of our overall fees related to tax planning. However it may be that this was not what you were asking.

 

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20th Jan 2012 21:14

Great comments scotchguard
It's really great to hear your rise to success - that's a very good rate of growth to achieve £900k in only 6 years!

Your first comment hinted of an antiquated firm where partners are always working IN the business, fees are based on time spent etc, but in reality you are not at all like that! It just shows what a little extra information can do to ones perceptions.

And I admire the way you have handled bob's attempts to get you to begin a debate/argument over value pricing etc. You don't need his help or advice - you probably earn more than him and have a business more valuable than his too!!

I would really like to chat to you about what you have done to achieve all of this success - would you mind sparing me 30 minutes to share ideas?

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10th Feb 2012 15:54

Thanks for your comments. Please check your private message box.

All the best

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10th Feb 2012 16:04

Tax Planning

@Scotchguard - what I was getting at was what percentage of fees was non compliance and basic tax planning and by that I mean incorporation and profit extraction.

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10th Feb 2012 16:09

Thanks, I have stated what we describe as basic tax planning in my earlier post which includes other tax planning than your two examples e.g. IHT advice, CGT advice, etc. I am sure I could extract the % for the two activities you have listed, not sure why though, so hopefully my earlier answer will suffice for your purposes. If there is a wider benefit for it on the forum will consider providing.

Have a great weekend.

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