How to Reduce Costs in an Accounting Practice
Simply checking rates with suppliers and getting rid of unused costs isn’t going to move the needle. In order to reduce costs and become a much more profitable firm read this article. Below is a list of what Archimedia Accounts, a Nottingham based accountants do:
1. Outsourcing or offshoring
This is a topic which makes many Accountant’s uneasy.
Usually it takes 6 months to get outsourcing and offshoring working. Give it this amount of time so they develop the right relationship with your team and understand all the particulars of each client.
Ideally you should have standardised systems so that it is relatively easy to offshore work. As far as cost reduction strategies go, this is your main option.
If you want some recommendations for outsourcing and offshoring companies, simply reach out to me.
Some things to think about when offshoring:
- Choose a recommended company: There are so many companies to choose from, make sure you ask your friends and others within your network. Request case-studies and call the firms they work for. Many companies will also send you examples of their work.
- Go slow: You know you have found a good company when they suggest you send a test client to them, however you also know it’s a good company when they won’t simply do ad-hoc work. Pay their minimum monthly fee and test work with them before developing the relationship.
- Make sure your existing team is fully on board. You don’t want to create two “camps”. The best results will come if everyone works together, where communication flows. A quick win here is to position it to your existing team like a lot of the mundane work will be carried out offshore, and the team can now do a lot of the more interesting work such as forecasting, and financial management. Another good way of ensuring synergy is by making sure the offshore team are good at communication. One way of ensuring this is thinking about (and asking your team) whether you would like a dedicated staff member or not.
2. Dealing with unprofitable clients
Unprofitable clients cost you and your team time, energy and profit.
Analyse the profitability of each client, also decide who you actually don’t like working with, who you love working with. Try to spot patterns and make the conscious decision to actually get rid of some clients, I promise you, you will skip into work the next day from happiness!
You should be using timesheets to identify how much time your team is spending on each client. Also ask your team who they don’t like working with.
Many firms do not get rid of clients each year, but you must know the rule that 80% of your profits come from 20% of your clients. Over-servicing the D-grade clients means you are under-servicing the A-grade clients. Those who love your work and you would probably get a lot more profit out of if you and your team had the free time to spend serving them more. You could find out their needs and help further solve their problems.
You can propose a price increase to the D-Grade clients, you never know, they might be willing to pay a lot more money.
My experience in working with these types of clients is that the ones who aren’t going anywhere tend to be the ones that want to pay you less. They aren’t going anywhere because they refuse to pay good money for a good solution to a very real problem in their business. There are plenty of fish in the sea!
Once you have offshored a lot of you work, then it’s time to consider which clients you don’t like working with and who suck up your time. Carrying out these two strategies will improve your bottom line and help you be one step further in achieving your goals.