2012 – The Year of Effective Practice Overhead Management?

The writing is on the wall for accountancy practices, whatever size up and down the country.

With the administration last year of Top 50 accountancy firm, Target and the hitherto almost hero worshipped RSM Tenon experiencing cash flow problems with an accompanying severe drop in its share price, can any firms rest on their laurels and think that 2012 will not continue to be exceptionally difficult for all businesses.

And of course an accountancy practice is just that – a business.  Although judging by how some are run you wouldn’t always think it.

Surely as accountants we have been taught all of the essential business lessons – you’d think we would follow them.

Get started with costs and overheads

Now is the time to get back to basics.  Dig out all those long ago learned lessons about costs and overheads.  You are an accountant after all!

It would be very hypocritical of you to dictate to clients about minimising and controlling costs whilst maximising profit if you didn’t do just that yourself.

The lessons of controlling your fixed and variable costs – assuming of course you know what your fixed and variable costs actually are!

When was the last time you reviewed all of your costs?

Can you reduce them?

Can you get better deals?

Are there alternative ways of doing things that will reduce costs?

Just how much is your complacency costing you?

Do I really need to remind accountants that costs have a direct impact on cash flow – something that the management team at RSM Tenon wouldn’t dispute I’m sure.

Is outsourcing the answer?

Part of the challenge of any practice is managing the workload and balancing the resource plan.

Who wants resources:

·         Sitting around doing nothing

·         Not reaching their fee earnings potential

·         Too busy to take on new work

A review of your resource plan against the workload should be something done on a very regular basis e.g. weekly and at the most monthly.

As your practice grows and you want to take on more clients this becomes even more crucial.

Managing peak periods such as self-assessment on P35 deadlines can become a challenge.

Couple this with ensuring that you ‘sweat your assets’ and get the maximum fee earning potential out of your resources, it can cause even the most organised of practices to experience the worst headaches!

Whilst in the eyes of some, outsourcing is viewed as the pariah of the business process re-engineering decisions; if you get the right supplier then it could work very well for your business.

What should you look for in an outsource partner?

Appointing an outsource partner should be accompanied by the usual supplier due diligence.  In fact more so than a regular supplier, given that you will be sharing client data and records with them.

Look at things like:

·         Will you have a single point of contact with an Account Manager?

·         Is the Account Manager a professional accountant?

·         Is work done by UK based staff or is the work taken out of the country?

·         Is there a service level agreement?

·         Are there any hidden charges?

·         Are fees fixed?

·         Is there a no poach agreement?

Opportunity cost

Generally many businesses outsource based on a cost saving equation – the work can be done cheaper by the outsourced organisation.

However, there is another consideration.  Can your resources generate more income by working on other fee earning work than the work that could be outsourced?

The Tax Advisor

Take the tax advisor as an example.  Can they take on more clients generating higher fees from tax planning if they freed up their resources from the detailed accounts preparation tasks.

Implemented and managed well, outsourcing can be of great benefit to a business especially an accountancy practice.

We know because we offer an outsourcing service to other firms of Accountants and Tax Advisors…

http://www.cheapaccounting.co.uk/accountants