How to be the FD of your own practice and why it matters

Last time we looked at what are the key areas in your practice to manage and measure. You will have taken stock of where you were at the start of the year, where you are now and where you want to be going forward. Hopefully, you will have systems in place to ensure you are booking time to work on practice management and hold regular partner meet-ings which are documented with an action plan every month.

In this feature we are looking at what makes the best practices successful and prize winners within the profession. The most progressive practices treat their own firm as if it were their top Grade A best client! They ensure time is made to act as their own business advisor or quasi-FD. This is the key to success.

Clients would be rightly astounded to learn that whilst you are trying to give them business advice (including how to improve profitability, succession planning, personal and business goal setting, marketing and development) you do none of these things on your own business! If you are able to say you do all these things as a standard part of running your own firm then clients are much more likely to seek and trust the business advice and support you offer them. It makes you more credible. You are also best placed to generate additional fees and grow your income stream from this business advisory work.

Many practitioners are trying to increase the amount of business advisory work they offer clients and providing a basic compliance service is no longer enough and not what clients value most. This is why being your own firms FD and practicing what you preach matters.

Firms that effectively have a partner acting as FD are the firms which are valued at a premium when it comes to succession or sale planning.

Practitioners are well versed in what an FD will review each month, there is no need to list those key areas here. However, many practices report they do not have accurate and up to date management accounts and if they do then the ‘work in progress’ figure is a hot topic.

Ask yourself realistically if your management accounts show an accurate picture. Be honest with the painful truth! Review that WIP figure in detail and either bill it (making sure it is actually recoverable) or write it off. You cannot make sound business decisions based on financial information that isn’t up to date and reliable.

Many firms avoid the WIP problem by ensuring they have fixed fee agreements in place whereby clients pay monthly on account during the year. This is now standard best practice and something which clients both prefer and expect. You won’t carry WIP and you won’t have debtors’ collection problems either. Seems obvious but there remain a significant number of practices who do not operate in this way.

By treating your firm as if it were a client you will be more objective and equipped to tackle the problem areas. You will also make time to work on important practice management matters. You may thing you can’t afford the time but the reality is you can’t afford not to. Practice management time spent consistently with a documented action plan and measurement of progress will result in better client service levels and profitability.

This is the right time to think about change and make the time to effect those changes. As always, start with the simple and basics then build on your success. Draw up your checklist and work on one thing at a time. Do unto yourself as you would advise your best client!

In the next feature we will look at succession planning. This is where the importance of a practices’ management information is paramount. Best to be prepared…

August 2017 Copyright - Finola McManus, Practice Perfect

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