Cash flow management: Common pitfalls

Going forward

Include your staff in what you are doing. In order to agree fixed fees you will have to prepare accurate budgets on compliance work. Budgets must be contingent on the quality of records you expect to receive at the start of the job. Explain to staff this will make their lives less stressful and help them achieve monthly billing targets.

Avoid the common pitfalls of not pricing work correctly and not being able to recover time spent. Agree with staff and clients what the process is when a job is taking longer than budgeted. You need decide if it is due to the fee being inadequate and records not as expected and/or is there a training requirement for the person doing the job? Check that your planning systems are in order and address these areas as soon as possible. Staff should know who to talk to and what to do when they realise there is a budget overrun. Managers should be checking in with staff daily to see if work is going according to plan and supporting when it isn’t.

Clients should never be presented with an unexpected bill after the event. When bills are expected then they are most likely to be paid. Where you perform work outside the scope of the fixed fee; for example, HMRC enquiry, business advisory, questions of whether to buy a new vehicle in the business’ name or personally, ensure you agree upfront with the client how much the fee is likely to be and bill them each month ongoing if it is a project that will run on.

There remains a small number of firms who still bill annually on completion of annual compliance work. This is a very outdated approach which doesn’t help manage cash flow - both for the practice and for the client. Even the smallest of clients prefer to pay a monthly standing order in advance so by the time you come to complete the rump of the annual compliance work you have been paid in full. Many successful firms have direct debits in place and when clients feel confident in what and how they are being charged for it is never a problem.

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Client year end planning and business reviews- the essentials.

The more successful and truly proactive firms start planning 3 months ahead of a client’s year end. Like fixed fees this is now fast becoming standard best practice. For those of you with client March year ends looming it is still not too late to change the way you do things and increase both client service and your own efficiency and gross margin as a result.
All grade A and B clients should have a meeting with you 3 months pre year end. You are likely to be having regular contact with these client anyway. Agree an agenda, send it to the client in advance and ensure you cover the following points at that meeting;

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How does your client service offering measure up?

In January we looked at what you need to do differently in order to beat the post 31 January client service cycle. This month we look at how you can measure results. Most practitioners say ‘client service’ is our main focus but when asked what that actually means it is often a challenge to answer. Can you prove what you hold to be true?

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What you need to do differently on client year ends in 2017

Once again you have survived the 31 January deadline and are drawing breath for the first time in 2017! Wondering what next to focus your attention on or simply look forward to a quieter February? This is the perfect time to review how well you service your business clients and change the way you deal with year-end planning systems.

Whilst December year ends have passed, use this as a checklist to confirm you have done what you should in order to deliver best quality client service and in the process make your own life easier too. Then apply the same system to all business clients with year ends coming up during 2017.

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Systems - Part Two

HR Systems-why they matter even for the smallest practice.

In Part One we looked at basic but essential systems for planning and budgets which are key drivers in improving gross profit margins. Here we look at HR and people systems- without the resource of people to do the work a practice will fail! Many sole and smaller practices believe HR systems are for the larger firm. This is not true. With an ever increasing competitive market for good quality recruitment candidates now is the time to check whether your own systems are up to standard and in line with what your competitors are doing.

These simple and inexpensive systems will help attract the best candidates as well and ensure you keep the existing staff you have. Don’t fall into the trap of being so focused on winning new clients and daily work production that you lose sight of what you should be doing to develop and support your employees. Make sure you know what they think of your firm and are the best advocates for wanting to work there.

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2016 Review and why client communication
is so important

As 2016 draws to a close and we are focusing on deadlines, it’s time to remember why client communication is increasingly important. For many businesses uncertainty still reigns post Brexit and the US Elections as well as the recent Autumn Statement. More so than ever before Clients are looking to their advisors for advice and re-assurance in terms of business and financial planning. See this as an opportunity to generate additional fees and client retention rates.

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Systems - Part One.

Budgeting and planning -why they matter.

It’s time for back to basics and the simple stuff which we often can overlook. If you don’t have proper budget and planning systems in place then you will be left feeling as if you’re pushing water uphill!

These essential processes underpin the operational success of any firm. This means they drive client service, gross margin and profitability as well as team morale and stress.

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Is your firm an award winning practice?

Every year we read of amazing firms who win awards, read their stories and ask ourselves ‘Could we stand a chance of winning that too?’ If you have the basics in place within your firm any award entry takes very little time and it is a wonderful way to reflect on what you have achieved.

Entering awards is a key success driver for boosting team moral and a valuable marketing tool. Sharing such news with clients will reinforce why you are the best advisor for them. Your firm will be perceived in a more positive way and it helps with recruitment and attracting stronger candidates.

Here are 4 key areas which can set a practice apart from the rest and take minimal time or money to implement;

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Referral systems as part
of your marketing plan.

Last month we looked at referral systems and how effective they can be in generating new business. Every practice is currently focused on maintaining, if not increasing, profit levels and winning new clients.

Given it is a very tough and uncertain economic climate at present for many, there is even more focus on keeping up with competitor accountancy firms and getting the best return on the time you invest in growing the business.

Referral systems should be an integral part of your marketing plan. Even sole practitioners and the smallest of firms should have a marketing and business development plan. It is a good use of your limited time resources and gives you a clear focus and action plan to work on- remember, little by little and small chunks of time each week will ultimately yield results. A marketing plan should be shared with your team- they will ‘buy in’ to the firm more when they feel part of what the future plan is and know what is going on.

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How to manage referrals and increase fees.

Every practice is looking for new business- the right kind of new client that fits their ideal client profile. Given the increasingly competitive marketplace all practitioners know it takes time to convert a new client and build a relationship that will retain them as clients for years to come.

Many practitioners have tried various business development and marketing tools with varying degrees of success. Listening to the more successful practices I deal with, it is widely acknowledged that the best new business comes from referrals.

Referrals are just those networking contacts you keep in touch with every so often. Every practice should have a referral system that they use consistently in order to generate the best results.

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Topical staffing issues and how to deal with them.

Every practitioners has experienced the frustration of losing staff members to competitor firms and not being able to recruit new team members of suitable quality. There are two main issues to deal with here; firstly how to retain the team members you want to keep and develop within the firm and secondly, how to attract high quality new recruits to keep pace with the firms growth.

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How to agree fees and avoid disputes

Fees and how to charge for work done and recover your time is an ongoing issue for practitioners. Whilst fixed price agreements become the norm it is a challenge to identify what is included within that fee and what is outside the scope of the fixed fee. Then there is the issue of how to discuss and agree extra work with the client and bill it separately.

How often have you spent time and energy researching and delivering advice to a client only to find they don’t appreciate what was involved and are unhappy to pay for it? This leave bad feeling between both parties and is a situation that can easily be avoided.

The golden rule is to never do any work on a client’s affairs without agreeing the fee with them first.

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Perfect time to Spring Clean your service offering to clients.

March is the perfect time of year to review what you are doing for clients, secure if not increase our fees and ensure you are offering levels of client service that make them want to stay with your firm.

Many clients have a March year end or are looking at the end of a tax year whilst thinking about planning for the financial year ahead. This is why more so than ever, clients will want to hear from you. It is also a time of year when your firm is likely to be less busy after the January rush and lull of February.

Many practitioners understandably don’t feel confident is contacting clients out of the blue and do not want to appear ‘pushy’ or trying to ‘sell’ services.

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