Updating the accounting practice

The other day I was reading through the website cpatrendlines.com and came across a most interesting article written by Steve Erickson – an accounting firm consultant based in the US. To be honest I’ve never given the area of changing roles within the firm much thought before since my focus is on the client side. However, Steve’s insights got me thinking about how changing roles can help make firms more effective in serving their clients. Enjoy the read below! (source http://cpatrendlines.com/2011/11/21/three-new-staff-positions-you-didnt-know-your-firm-needed/)

I have been giving quite a bit of thought to the cost/price squeeze facing many CPA firms. Salary and benefit costs are at an all time high as a percentage of net revenue and profit margins have been decreasing for a number of years.

This is, in many cases, due to the upward delegation of routine tasks to experienced accountants just because they have scanners and computers on their desks.

Technology is supposed to replace high cost labor, not the reverse. As a result we have many of our best and brightest performing clerical tasks in an inefficient manner. CPA Firm staffing choices can make a significant impact on bottom line and overall firm performance.

Bill Gates once said: “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency”

I have come to realize that the CPA profession is operating by the second rule in many instances.

It is time to rethink your staffing models to make sure you have employees with the right skills to perform certain tasks.

Here are a few that come to mind:

1. Data Management Specialist — An employee that prepares and files electronic data for use by the professionals in the firm. This year I have been in firms where $100,000-plus managers are preparing PDF documents. It’s really hard to make money with this cost structure. Hire an expert in electronic documents. Costs will go down and productivity will increase.

2. Email Expediter — An employee who files email into folders for use by the professionals. According to a survey I recently conducted, professional staff are spending in excess of 1 hour per day dealing with email. In a firm with 25 professionals with an average billing rate of $150 this represents almost $1,000,000 in potential lost fees every year. I have no doubt that this position would pay for itself many times over in the span of a year.

3. Technology Coordinator — Hire some folks who really know the software and can become expert in its application. Let your professionals focus on professional matters. I’m not saying to not allow professionals to use software. I’m just saying they shouldn’t have to become software experts to practice public accounting. Just look at all the training costs and lost efficiency simply due to the lack of expertise in software use.

Keep smiling and bye for now,

James E