Knowing your practice inside out through a business health check, will help you find out how it’s performing financially and operationally, and allow you to leverage your strengths, improve your weaknesses, and prepare for likely headwinds.
In this article, we will explore five areas to focus on when conducting a business health check on your accounting practice, and the signs that you may need to review your accounting practice management software.
Conducting a business health check for your accounting practice
1. Are you managing seasonality?
Although tax and audit services are both seasonal in nature for accounting practices, it is possible – and beneficial – to spread out other accounting services over a longer period.
Start by analysing your workflows to identify tasks that can be performed outside of the busy season. Some examples include touching base with clients to find out about significant business developments and evaluating their potential impact on financial reporting and tax preparation and lodgement. Ensure that before client work begins you have agreed timetables, fees and terms of engagements.
If you allocate roles and responsibilities early on, you can balance client schedules and staff holidays, thus reducing the need (and cost) of outsourcing to contractors.
Remember, best in practice workflow software for accounting practices can help you to manage your jobs, streamline your processes, hit deadlines and reach your goals.
2. Are you serving beyond compliance?
Of course, engaging your clients beyond traditional services also reduces seasonality. Indeed, diversifying your accounting service offerings is often considered critical to remaining competitive.
There are several key value-add areas you could turn your attention to, including business advisory services and data analytics, as businesses try to harness the power of real-time data to understand their operations and the market that they’re in.
But investing in services that are relevant requires understanding the specific needs of your clients. SMEs often benefit from help with cash flow monitoring and forecasting, budgeting, preparing financial projections and writing up business plans.
3. Who is more profitable?
Another invaluable exercise is to study your client list to identify profitable clients and the factors driving their profitability.
Similarly, ask yourself who your favourite clients are, and why. The idea is to cross-pollinate tools and strategies that work well, so “difficult” clients can become more pleasurable and profitable to work with.
Also, pay regular attention to the diversity of your clientele, as working with multiple industries strengthens your ability to withstand volatility of different markets.
With our client management software for accounting practices, you'll be able to track all your client activities, to ensure you always have the most up to date information for meaningful conversations with your accounting firm clients.
4. How is your time being spent?
Clearly, a firm needs to serve clients well with the right products, but it must be cost-efficient as well.
But even with star recruits on your team, you’ve got to leverage their skills to drive profits. That’s why it’s important to take a closer look at how staff across the firm spends their time. This can offer insight into processes or functions that need to be streamlined to raise productivity; it can give you an idea of whether people understand their roles and responsibilities; and it may even help with pricing decisions.
With time and billing software for accountants, you can track and control staff productivity, and optimise your resources with full visibility.
You can also read our helpful guide that will help you spend your time more efficiently: Time saving tips for busy accountants.
5. What do your accounting practice clients think?
Finally, it’s been well documented that accountants do not fully understand or respond to what their clients really want. Despite increasing opportunities to offer a broader range of services, some accountants often fail to reach out to clients regularly.
So how are you doing when it comes to client communication and feedback?
To be more proactive about understanding your clients’ changing business needs, and to ensure satisfaction, create goals around client communications and evaluations, then monitor them consistently.
In our handy blog, we take a look at how soft skills for accountants and client management software can help accounting practices to master their client relationships.
When is it time to review your accounting practice management software?
It might seem impractical to replace or upgrade your accounting practice management software solution. But hobbling along with a subpar solution isn’t a way to grow your practice, reduce admin burdens, or inspire a team.
In a rapidly automating world, with richer sets of data, it quickly becomes evident that your operational ecosystem is a living breathing evolving environment. Reviewing how it stacks up against current requirements should be a regular practice for you and your team.
To keep your finger on the pulse and avoid stasis in your approach to practice management, there are several warning signs you can monitor to ensure you are optimally positioned for all the opportunities for growth that come your way.
Keeping an eye on these factors will help identify weaknesses in your approach to practice management. Weakness that can lead to poorer client and business outcomes.
1) Poor access to data and insights
With the current accounting software in your practuce, do you have loads of data about your clients, your practice and your team yet have poor access to it? Is client data easily accessible and highly visible? Do you have poor ability to gain actionable insights from this data?
Learn the benefits of centralised client data in our blog: How can I access my accounting practice data in one place?
For instance, can your current accounting practice software solution easily tell you where your practice sits with lock up, WIP, job status, tracking to goals YTD, and trend analysis on how you are tracking seasonally?
Learn how the best accounting practice management software will help you make data-driven decisions with instant access to accounting reporting and insights.
2) Duplicate data entry
Are you rekeying data across different accounting practice software applications? Do you have to manually enter data multiple times in your workflows? How much time is spent doing this and what is the potential for human error?
3) Manual periodic reporting
Assess how many manual processes are involved in periodic reporting processes with your current accounting practice management software. Do you have any to speak of or is your entire process automated end to end?
4) Real time KPI tracking
Does your team have real-time (and up-to-date) visibility on how they’re tracking in terms of the individual team member’s KPIs? Do you have the same real-time visibility over the broader practice’s KPI's?
Learn more about accounting practice KPIs in our blog: the 11 best KPIs your accounting practice should be tracking.
5) Job, budget and billing visibility
In your practice software for accountants, do you have easy access and high visibility over individual client job progress? At a glance, can you see the exact stage of an individual job, including which team member is currently working on what and how this job is tracking in terms of your budget?
6) Team capacity and workload
Does your practice accounting software have an easily accessible bird’s eye view of your team’s capacity? Can you see the current workload for each team member, what they’re presently engaged with and what kind of bandwidth they have left over?
7) Poor domain expertise and support
Perhaps you have market-leading tools but lack the relationship with your accounting practice software provider to get the most knowledge, customisation and personalisation out of your solution?
You don’t know, what you don’t know. But do you know who to ask to get those valuable accounting practice insights? Do you have vendors, but not partners? Even when you can find the correct subject matter expert, you’re charged for it in every interaction.
8) Not smart or scalable
Does your current accounting practice management software solution have, or is it working to have, cloud-based functionality to serve the needs of a practice with flexible work arrangements?
Can your practice management software scale up and down quickly and seamlessly as the demands on your practice fluctuate, are you positioned well for rapid growth?
Can your accountancy practice software be tailored to suit the various requirements of the modern multi-disciplined accounting practice? Quite often different teams servicing different client requirements require a different approach.
How to spend more time growing your practice?
In summary, there's much to gain from looking inwards and conducting a business health check to improve the ways you do business and review your accounting practice management software.
Are you leveraging cloud based accounting practice software to cut down on time-wasting tasks? Are you providing a broad range of value-added accounting services? These remain key to sustaining profits and building a thriving accounting practice.
Trusted by over 8,000 practices across Australia and NZ, our powerful practice management software has integrated features to run all aspects of your practice, improve client experience and increase productivity.