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An alternative approach to practice

19th Apr 2010
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Having identified the key problems with our practice structure (see my last blog for details), we began to formulate a new approach to improve profitability and service our clients better.

The main characteristics of our approach are:-

  1. One point of contact i.e. an account manager for each client.
  2. Highly efficient processing systems including highly integrated in sourcing of accounts resources.
  3. Undertake accounts ‘back-office’ function for clients.
  4. Produce regular client management information (monthly or quarterly).
  5. Provide added value advice as a direct result of undertaking the client back office function.
  6. Reduced practice costs and greater profitability.

The new factory
The key elements of our new organisational structure are:

  1. Hosted IT
  2. The use of in sourcing from specialist in sourcing providers
  3. The use of a mass scanning facility for client documents
  4. An in house document management system
  5. Workflow systems
  6. Value based pricing and fixed fees
  7. New value added services

Hosted IT
For us this has been the enabler of all the other aspects of our new approach. The benefits of hosted IT cannot be overstated. Among the most important are:

  • Data security – essential in a paperless environment. Case studies have shown that having both business applications and data repositories in enterprise class business data centres located on the internet backbone means leads to business availability of 99.9%. Continuous back-up facilities mean that lost, overwritten and corrupt data issues are eliminated.
  • Scalability – there is no pinch point when a new server needs to be installed.
  • Accessibility - staff and clients can all be granted access to the relevant areas of the server to encourage truly collaborative working. Gone are the days of e-mailing data files back and forth. In sourcing organisation have access to their own workspace.
  • Consistency – everyone using the same version of the same software
  • Technical support – no internal IT staff or expertise required; all the required expertise resides with the hosting company. Downtime minimised.
  • Cost – Low spec PCs required in house together with economies of scale associated with outsourcing to expert providers. Case studies typically demonstrate a reduction in total cost of ownership in the region of 40%.

In sourcing
The adoption of in sourcing, i.e. subcontracting work to a third party who has controlled access to practice server and software provides the following benefits:

  • Management of peaks and troughs – the in sourcing organisation that we use effectively has infinite capacity. This helps massively in coping with peaks in demand and takes a lot of the headache out of staff planning.
  • Cost and staff efficiency – undoubtedly the major advantage. Effective labour rates are approximately 50% of internal rates (see below for more detailed cost evaluation).
  • Professional staff role change – the major spin off benefit is that qualified staff perform a review role rather than being involved in the detail of the ‘doing’ and are freed up to undertake the value added work that is both more satisfying and more profitable for the practice.

Scanning facility
The introduction of a remote mass scanning operation allows economic scanning of the archetypal ‘carrier bag job’ with a 48 hour turnaround using the latest technology scanners. It’s a very cost effective way of making the source documentation available to the accounts preparation team.
 
Document management
This is an essential ‘enabler’ within the new way of working. Without a document management system remote working and in sourcing is not viable. Other spin off benefits include space saving and massively reduced time in searching for correspondence and previous years working papers to name but two.

Workflow systems
In order to make the overall process as efficient as possible we have invested heavily in the time needed to understanding what we wanted out of our practice management system. As our fees are based on value pricing manifested as fixed fees the emphasis for us has been on setting up our practice management system to monitor work flows thereby tracking deadlines and information flows between staff and our in sourcing partners.

Value based pricing and fixed fees
The way that we have set our practice up would work equally well for any firm that bills by the hour. However our emphasis is on a fixed fee approach. Of course we do still monitor the actual profitability of each job and each client. However we use this as a way to change the fixed fee for the following year’s work rather than to raise supplementary invoices.

Implementation considerations

The considerations are manifold but can be summarised as follows:

  1. Develop a blueprint for the practice after the transformation.
  2. Understand in detail how all the various elements inter- react.
  3. Consider and plan the staffing changes.
  4. Review, test and select the appropriate partners relating to in sourcing and IT.
  5. Appoint a project leader and ensure that they have the time and authority to make the changes required.
  6. Review progress regularly and be prepared to adapt as the implementation progress.

For our firm, there’s no question that we were operating an ‘accounts factory’ model as described in my first post. By standing back and viewing it as such we have managed to set our practice up so that we operate more profitably than we did in the ‘old world’. We have positioned ourselves such that we really can act as an outsourced finance function for our clients and in doing this we are able to provide the added value services that have been elusive historically. At the same time we are able to spend more time doing the work that is interesting and stimulating rather than managing a disparate and dysfunctional factory.

Nigel Simmons has drawn on his experiences as a Project Manager within the consulting arm of PWC (then Price Waterhouse) as well as executive director roles in number of SME manufacturing companies before starting his own practice, Acconomy, in 2003.
 

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By sandralee
19th Apr 2010 18:45

Alternative approach seems good

I like this blog. Thank you for writing it and being so open with your experiences. I like it, because, it rings bells with me as to how I would eventually like my practice to run. You've confirmed that my thinking is definitely along the right lines. Now all I need to crack is lead generation to secure new clients.

 

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