Are These 5 Key Issues Consuming Your Billable Time?

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In my experience working with Accounting Professionals, I often hear about the challenges within their own businesses. It seems that we are collectively very good at solving problems for our clients, but we are all too often content to build a make-shift spreadsheet and “make do” when it comes to our own internal problems. As a collective, we tend to face problems in the following areas:

    • Tracking deadlines and managing staff workloads
    • Staffing
    • Billing and realization
    • Cash flow timing
    • Managing workflow
Unfortunately, software cannot manage the human aspect of staffing issues. However, Client Track, as a Canadian based practice management solution, can definitely help you manage the work within your firm. Better management of work generally leads to more control over your cash flow.

You may call them different things, but at the heart of it, the following are five key issues that impact the vitality of our accounting business and have the potential to drain your productivity.

5 Key Issues Affecting Accounting Business and Your Productivity:

    1. Monitoring deadlines internally
    2. Reminding clients about upcoming deadlines
    3. Tracking client information
    4. Managing workload
    5. Tracking time and managing your receivables
We will discuss each of these in detail, as they really are at the heart of workflow issues within a firm. Billing and collection issues usually stem from workflow challenges, as clients are far less willing to pay an invoice on time (or at all) if their work is seen as not being a priority or if you consistently miss deadlines.

I have rarely seen true collection issues, most of the disputes center around the client’s perception of your value as opposed to truly being unable to pay an invoice.

If you use one or more Excel spreadsheets to track your work flow, please read on to see how you consolidate the information into Client Track and take your practice to the next level.

1. Monitoring Deadlines Internally

I have seen many variations of spreadsheets that were built in order to monitor deadlines. Usually, an accounting firm will have a separate spreadsheet for corporate clients, personal tax clients, and then for preparation of the various T-slips. The spreadsheet method works very well if you have a small practice and only have a few people updating the spreadsheet.

As you grow, you will quickly learn that spreadsheets have an inherent flaw, they only work if we update them. In my experience, spreadsheet updates fall through the cracks when we are at our busiest. Unfortunately, this is also the time when we need them to be at their most functional.

The need to monitor and track deadlines grows exponentially as your practice grows. As you add people, you also add another layer of complexity to the deadline mix, which is staff scheduling and managing workloads.

In a single person firm, you can decide that you will work forty hours in a given week. Based on that decision, you have a finite capacity to do work. The good news is that you would likely have a small workload and would easily be able to prioritize.

With the addition of staff, you need to be aware of the number of hours that each staff member is willing to work, who is working on which days, and you also have to be aware of the skill levels of each staff member. One hour of a designated person’s time cannot be replaced straight across for one hour of an administrative person’s time.

Scheduling and deadlines can be challenging enough if all staff are fully utilized and are all at work as anticipated. The real challenge is to deal with unexpected absences and down time.

I often see some combination of calendar application and spreadsheet being used to attempt to manage the above. This type of system can work, but it relies heavily on staff diligently maintaining their workload inventory and updating the spreadsheet/calendar solution regularly.

The risk in all of this, as we all know, is that a critical deadline will be missed. In the end, how much does a missed deadline or late fee cost the firm? Is the cost just measured in dollars? Usually not, there always some cost to our relationship with the particular client.

My view is that the client feels unimportant – would we miss a deadline for an important client? This puts them at risk for leaving us. If this happens enough, we really have to fight for credibility.

There is a simple solution to this challenge. Client Track populates your database with all of the federal and provincial deadlines, making it very easy to track them. We all have some type of custom deadline to monitor, Client Track can do that as well within the same module.

2. Reminding Clients About Upcoming Deadlines

Even firms that are able to monitor internal deadlines seem to struggle with reminding clients about upcoming deadlines. The reality is that the vast majority of firms that I deal with operate under the model where clients bring in work when they bring it in. Work is completed on a first-in, first-out basis, regardless of actual deadlines in most cases.

This responsive strategy is flawed for many reasons:

    • It is difficult to predict workload.
    • It is difficult to schedule staff vacations and other time off
    • We place control of our firm in the client’s hands
    • Clients do not feel that we care about their work and may go elsewhere
    • Clients may forget deadlines and then face late fees
    • We look unprofessional if we are constantly fighting fires
If nothing else, being proactive gives you more control over the work that you have and makes it easier to track the work that is coming in or is due in. If you ever intend to sell your firm, a buyer will pay more for a firm that has been proactive with their clients than one that neglects them.

The most common reason that I hear for not being proactive is that the accountant is too busy to chase work. The second most common reason is that we just don’t have the systems or resources to help us with this.

I have worked in and with a few firms that decided to be proactive, but most regretted it at least once a month. For the most part, the process was onerous. Staff would have to dedicate time to reviewing client files to see who had upcoming year-ends, then the details were manually entered into a letter to be sent to the client. Each letter was then printed and mailed to the client.

The next step was to wait and see which letters were returned as undeliverable – often the first sign that we have lost a client! Sadly, a few of these firms went back to a reactive approach because they found it more work to be proactive than not.

Proactively managing upcoming deadlines allows us to take control of our practices and to ensure that clients are reminded of deadlines in a timely fashion. Being in control of this will relieve a lot of stress at all levels in the firm.

Clients also appreciate the professionalism inherent in being aware of the workload. Lastly, staff will recognize that the firm is proactive and will feel lower stress levels – resulting in less turnover and absenteeism.

The real challenge is to find a system that works simply and easily. Client Track has built in functionality that can automatically send notifications to your, reminding them of all of their upcoming deadlines. The system does the vast majority of the work, making this something that can be easily implemented and it will save you a lot of time as you work towards being proactive.

3. Tracking Client Information

In a perfect world, clients would deliver complete files, we would process them at one sitting, and we could then move on to the next task. Efficiency experts have studied the phenomenon of rework and have concluded, not surprisingly, that rework lowers overall profitability.

I will state the obvious. If you have a fee sensitive client, your profit diminishes every time you pick up a file and have to put it down again. Every time we change our focus, we have to spend time getting back to our original thought process on a given file.

With knowledge workers, it generally takes us up to twenty minutes to regain our focus on a task once we have been interrupted. Thus, we can finish a file much quicker if we do it all at once, rather than by doing the work in split sessions. If you don’t believe me that this is true, start a file before lunch and time yourself to see how long it takes to regain your focus in the file after lunch. There is a reason that we avoid starting new projects near the end of the day, especially on a Friday!

Ideally, a staff member will review the client information when it is received in order to ensure that the obvious omissions are requested (for example, a missing bank statement). Typically, the person working on a file will make a list of missing items and contact the client.

Organized staff will make notes in the file, just in case the client calls to follow up and the staff member is otherwise engaged. Less organized staff will use Post-It notes that may or may not stay with the correct file over time. In the latter case, it is highly inefficient if the client has questions about their file and staff cannot locate notes.

It may seem like a small issue, but imagine the impact as you add staff and clients. Over time, you can spend a lot of time trying to figure out which files are ready to complete and which require information.

A good system for tracking client information should mean that anyone answering the phone is able to quickly identify missing information and update the client. This is highly efficient as you don’t have to find the physical file in order to help the client. Client Track has a system which allows you to record which paperwork clients have brought in and also to track the status of missing documents and questions. The information is accessible to all staff, so any staff person can update the status.

4. Managing Workload

You will have a very hard time managing your firm’s workload if you are having issues monitoring deadlines internally, reminding clients about upcoming deadlines, or tracking client information. Plain and simple, problems in one area will spill over into the others.

Managing your workload involves knowing what work is to be done, who is available to do the work, and what level of priority the work should be given. First-in, first-out is a very simple solution, but it does not address the need to meet deadlines. Also, the order breaks down the minute a file is missing information – does it go to the very back of the line or just on hold until the information comes in?

I once worked with a firm that had an employee who worked non-stop. He was a GST specialist and everyone avoided his desk due to the piles of incomplete files around it. A simple misstep could cause an avalanche of paper. Unfortunately, he became ill for an extended time period and we had to go through his files to find out what had to be done and when. It was a bit like an archaeological dig, we found all kinds of treasures buried in his “system”. We realized that he was so over-whelmed, he just kept piling work on top of work. The new work this week would be the bottom of a pile by next week. Needless to say, we had a lot of fires to fight and a lot of angry clients.

A good workload management system would have flagged the fact that this individual was missing deadlines and was working overtime far in excess of any of his co-workers. In this particular case, the firm ascribed to the “pile it so you can see it” mentality and “out of sight, out of mind” was the standard operating philosophy. Not surprisingly, they had a lot of staff turnover and a lot of client turnover.

Proactively managing workload means that staffing levels can be adjusted as appropriate and ensures that deadlines are met. This reduces the risk that your key employees will suffer from being over worked and burn out.

Client Track allows you to view all of your client’s tasks at a glance by using the calendar and list views. There is functionality to prioritize tasks and review staffing levels. This is a very simple way to solve a significant problem area for most firms.

5. Tracking Time and Managing Your Receivables

Time tracking and receivables are the final issues to be addressed. Time tracking is an area that many firms struggle with. If you are in a professional services firm that bills hourly, you need a system to track time. This system has to be reliable, accessible, and easy for staff to use.

The most important feature is that it cannot take a lot of time to track time, as this will really frustrate your staff. Frustrated staff will start to take shortcuts and you will ultimately be missing out on billable time.

In the early days of my career, we had manual time sheets that had to be filled out. The time-sheets had to be added and cross-added on a weekly basis. In tax season, it would not be uncommon to have six pages for a single time sheet. The administrative staff would then take the data and key it into our time and billing system. If they could not read the staff person’s writing, the time would not be entered until such time as the staff person was available to interpret their handwriting. We often had staff out on assignment for weeks at a time, so this meant that the firm would either have to delay the monthly billing cycle or risk missing time.

I raise this example to demonstrate the obvious inefficiencies of doing things by hand. However, it is not uncommon to see firms entering data in multiple systems. I once worked in a firm that required us to enter our time sheets on two platforms. To this day, I have no idea what the redundant platform actually did. The point is that we dreaded time sheets and put them off as long as possible.

Delayed time entry can cost the firm a lot of money. The first issue is that staff may forget which files they worked on, losing the time permanently. Time is usually recorded in some “admin” category and ignored.

The second issue is that billing may be late or incorrect if time is not entered on a regular basis. The latter issue can significantly impact your accounts receivables. The longer it takes to bill a file, the longer it takes for you to recover the wages that went into the file. This may seem insignificant, but it can be a large number if you have enough staff.

I actually worked with one firm that had a spreadsheet to track the files that could be completed before cut-off. Staff were required to work overtime to ensure that the larger files were completed before month-end in order to avoid having to wait another month to bill.

It is not uncommon for firms to enter track their time and billing in one application and then enter the same information into their accounting system. This is highly inefficient and can be error prone.

Client Track has a full system for tracking time and managing accounts receivable. You can track your account balances as well as productivity levels for your clients, staff, and projects.

Conclusion

We have discussed how the following key issues can consume your billable time and profitability:
    1. Monitoring deadlines internally
    2. Reminding clients about upcoming deadlines
    3. Tracking client information
    4. Managing workload
    5. Tracking time and managing your receivables
If you can effectively solve these key issues, you will see immediate gains in productivity and profitability. Implementing Client Track can save you time and money, as well as help you grow your business.