Back to basics: Budgets and planning

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A little time spent on planning and budgetary control will provide a return on every job in terms of client service and gross margin, says Finola McManus.

Many practices are struggling to recruit staff at present and therefore workflow production and maintaining client service levels is a challenge.

Monthly billing targets are difficult to achieve and there is a firefighting culture of trying to keep up with client service and deadlines. There is also the issue of tax return deadlines approaching.

In such times, it’s important to remind ourselves to get the basics right. Strong systems and control over budgeting and planning jobs will drive success in managing client service, production workflow, and profitability.


Planning is often overlooked on jobs when the focus is on getting the job in and completed as quickly as possible. Lack of planning can result in loss of margin on fees and poor client service.

Here are the 11 key points to help you avoid those pitfalls:

1) Look ahead to year-ends coming up three months in advance. Of course, you will have a backlog to consider too.

2) Contact clients to set a start date for the job and advise clients of what the fee will be based on the quality of the records you expect to receive and when you will receive them.

3) Book time on the planner to work on the job. Remember to allow time for review, client meeting and finalisation.

4) Many work planners just look at job production time and fail to plan for the review, client meeting and finalisation time.

5) Before any job is started, ensure all the records are complete, in the state you expected to receive them and confirm the fee for doing the job. If the quality of the records is not as expected then talk to the client and agree the fee before you start for extra work required.

6) Review any work in progress and debtors balances. These should be billed out and settled before you start working on another year of accounts.

7) Most firms now have fixed fee and standing order arrangements in place. Review these to ensure you are covered for any unbilled work and there is minimal time delay between completing work and getting paid for it.

8) Once the records are in check them for completeness within 24 hours and contact the client to set a final meeting date. You can then plan for the review and finalisation time. Reschedule the start date if there is missing information.

9) Ensure you look at last year’s file to identify what the issues were. Will these recur and what can you do to manage them better this year? Is there a better approach to adopt based on previous year’s knowledge?

10) Make time for a ‘planning briefing’ with the partner. Even on the smallest of jobs, 5 minutes spent with a partner can provide valuable information on what has happened on a client’s business in the last year. Occasionally partners can ‘forget’ to put notes on file when they have had meetings or calls with clients!

11) Have a system in place so staff know what to do if they are over running on budget once they have started a job. This needs to be communicated as quickly as possible.

There are only two reasons for a budget over running: either it’s a staff training issue or the records and fee aren’t as expected. Both issues can be resolved easily if you know about them as soon as possible and not after the event. Create a workplace culture where team members are confident in asking for support – don’t let them think it is their fault and suffer in silence.

No one wins in this situation as staff can’t develop their skills and you end up with a write off on the job and poor client service if final meetings need to be delayed.


While budgets are an essential part of the planning process, it still remains an area to improve on. But where should you start? Like with planning, here are some reminders.

To begin, the person doing the job should ideally prepare the budget and have it approved by the manager or partner. You are more likely to buy in to a budget which you set yourself.

The annual fee will include other services not just the accounts production. The accounts element of the fee will also include planning, review, client meetings and finalisation time. Inexperienced staff often take the whole fee as their budget or the entire accounts fee as production time.

Once the budget is prepared it is for the manager or partner to compare it with the fee. If there is disparity then assess whether it is a training issue or whether a discussion is required with the client.

Training time

Often poor quality records will be the issue and this can be readily explained to a client to ensure you are paid for the work actually required. Every client will tell you they have excellent records and you base your quoted fee on this. In reality, the case is often different. You need to manage this. That’s why you should allow for training time if it is required.

A manager or partner should ‘check in’ with each staff member twice a day to see how a job is going and how the budget is standing up. This will provide a further safety net of identifying issues as early as possible and avoiding over-runs and write-offs.

A manager or partner should ‘check in’ with each staff member twice a day to see how a job is going and how the budget is standing up

Staff support

Once a job is presented for review the budget should be updated and again post review and on finalisation. You then have accurate information for the following year.

Ensure your staff know and believe that a budget is in place to support them with training as well as to make their life as stress free as possible. Don’t allow a culture to breed whereby staff think budgets are just to make them to more work in less time.

The broad rule of thumb of 1/3, 1/3, 1/3 remains. A fee for accounts production can be broken down into 1/3 planning, 1/3 production and 1/3 finalisation time. Many firms overlook the time required for planning and finalisation and this is where margin is lost.


Finally, some firms argue that they no longer need to worry about budgets and planning as they don’t keep timesheets or follow time based billing systems. Such firms still need to monitor and manage training requirements and recoverability and gross margin.

Planning and budgets remain a key tool. Sound planning can also identify extra services you could provide to a client and generate additional work and fees.

About Finola McManus

Finola McManus profile

With over 25 years in practice, McManus spends her time helping other accountancy practices change and grow. She is passionate about sharing the secrets of success and working with accountancy practice owners. 


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