Making compliance services profitable
Compliance services have always delivered the ‘bread and butter’ revenues to many small and medium-sized accountancy practitioners.
Such services typically involve the preparation of personal and corporate tax returns, monthly or quarterly management accounts, annual financial accounts and other areas such as company secretarial duties.
According to our research, however, the face of the accountancy services market is changing. There are greater levels of competition for compliance work, new business models utilising technology are bringing the price of the work down and larger numbers of clients are demonstrating greater fee-sensitivity.
In fact some accountants tell us that they fear compliance work is heading towards commodity-status. For these practices that means increasing fee pressure and a negative effect on their profit margins.
But that is not to say there are still commercial opportunities to be had from offering compliance-related services. The key to success though, is ensuring your work in this area is as efficient and ‘smart’ as it can be to protect profit levels.
What profitable practices do
As part of this efficiency drive, the more successful practices are systemising as many of their internal processes relating to compliance work. This helps them to ensure that:
- the right task is undertaken at the correct time by the right person (charging the right fee rate)
- important deadlines are not missed and, as a consequence, clients are not penalised with late filing penalties
- time is not wasted searching for client specific documents
- client expectations are consistently met with regard to timely completion of work, i.e., well before filing and payment deadlines.
Is Software the answer?
HMRC’s ongoing insistence upon electronic filing of personal and corporate tax returns means there are now few accountancy practices who don’t rely on software in some form or other. Signing up to a piece of software is one thing, but how you integrate it with your practice’s processes and systems does make the difference when it comes to efficiency gains and profitability boosts.
We still see many practitioners using spreadsheets as their client database. These contain key details of clients, dates and services performed for them etc. At the same time planning in some practices takes the form of scheduling on whiteboards or colour coded spreadsheets. Neither method offers automation, efficiency savings and security. A key solution then is to develop integrate.
Integrated practice management systems are available on the market and store data in a central hub. They allow tasks including the preparation of tax returns and year-end accounts to be linked to specific clients. They also automatically produce reminders for one-off or recurring events. Over time these systems can automate a number of fee-earning tasks and can have a great impact in making a practice more efficient, proactive and profitable. They can free up fee-earning hours to be spent on more valuable activities.
Integrated systems enable a firm to become more effective with its client record creation and workflow. They also bring greater parity of the actual workflow across the practice’s team.
If you feel software is adding to (not reducing) your workload, now’s the time to consider whether you’re using the right software for your business or if you’re using it in the best way.
We at BTCSoftware have created software solutions that have been researched and developed through close consultation and testing with small and medium-sized accountancy practices. We invest time and effort keeping clients up to the minute with the latest burden of compliance and reporting obligations to various authorities, such as Companies House and the HMRC. In doing so, we strive to find efficient and affordable ways for accountants to meet the obligations required, and at the same time protect the profitability of their practices.