How to generate a profit if you are an accounting agency?

How to generate a profit if you are an accounting agency?

September 3, 2020

Has the current crisis caused by the COVID 19 virus affected your business? 

Are the consequences already being felt or are more significant effects yet to come? 

How difficult is it to organize the work of an accounting agency from home in the right way?

And most importantly, is the decline in productivity and profit in the crisis is certain, can it be avoided or used to get a bigger piece of cake on the market?

Crises of various kinds will be more frequent in the modern crazy world, for sure.

However, it is easy to be smart and wise when something has already happened. Being better than others means thinking ahead, which is often not easy in business, but it is what sets you apart from others and rises to the top.

Therefore, it is important that we start thinking ahead from the beginning, set things right on time and automatically the chances of success are greater and more certain.

 

How to get a profit if you are an accounting agency?

Anyone who thinks that profit will come immediately, that just a little effort is enough and then in a relaxed manner sit in an armchair should skip this text.

You need to get into a street fight for profit at the right time in the right way.

Of course, everyone will wonder what the right time is and what is the right way?

How important is mutual trust?

Time is a relative term and a true general will feel when it is the right time to battle. However, even the best general cannot win without a well-trained army that accompanies him.

In order for the army to be well trained, the general must:

  • constantly take care of them
  • to provide the best conditions and 
  • always to be there for them. 

In that way, the army will gain the general’s trust and will never leave him to lead the battle alone. It is not enough that the army only trusts the general, but it is also crucial that the general trusts his army.

The question is, how can a general trust all his soldiers, he is alone, and there are many of them?

In order for a general to trust his soldiers, he must know:

  • how efficient each soldier is, 
  • whether each soldier uses his time in the best way and 
  • what it is that would make every soldier being even better.

 

P.S. The business world is no different from the battlefield. Every potential job is a path to battle. Every deal made is a small victory, every lost job is a small defeat. The ultimate goal is to win the war because you think on time and use the weaknesses of your opponent.

 Time Analytics, truth, or delusion?

The right time to start thinking about how to increase profit is not when the business reaches a point where you can’t breathe from the problems that are accumulating. The moment the first problems start to appear, we should throw ourselves into solving them.  

What is the right way to solve upcoming problems?

When the first problems occur, although they may not seem big and unsolvable at first if they are neglected they can become hopeless.

We want to present a solution to your problems and open the possibility to increase your profits.

Our solution, for our internal problems and of our clients’, and possibly of your own, is time recording software for accounting agencies. We put our expertise and experience into Time Analytics software, specialized for accounting agencies, as well as other service companies.

You must be wondering what Time Analytics software has to do with everything we’ve talked about so far.

The bottom line is that this solution can help you do the right things at the right time and thus improve your business.

HOW?

The key to any successful business is employees. If you have quality employees whose work you can to:

  • plan
  • track
  • rate
  • improve
  • reward or penalize

then you are closer to the goal and away from potential problems.

Where is the hidden profit?

Every manager plans the work of his employees, but the question is whether he does it efficiently and how much time he needs for it. No matter how worn out, the saying “time is money” is true. 

Our solution is automated and enables the work of employees to be planned as efficiently as possible in a short period of time.

Each employee needs less than five minutes a day to enter the activities he has worked on into the software. You will agree that every employee can dedicate five minutes a day to something that can bring us great benefits.

If everyone follows the instructions and fills in the Time Analytics software regularly, the manager will have a complete picture based on the reports generated by the software according to the entered parameters, which refers to:

  • unused employee time
  • employee productivity
  • areas where employees need additional education
  • the possibility of searching for new engagements
  • unprofitable clients, etc.

With the mentioned reports generated by the software, in addition to the quality of work of your employees, you also monitor the quality of your business and your revenue and expenses, and thus your profit. You can evaluate both employees and your own business.

Based on adequate reports, you will report appropriate conclusions, and based on adequate conclusions, we come to the answer to the question of how to get a profit if you are an accounting agency?

Of course, you can reward employees who stand out from others, while you can consider hiring those employees who don’t fulfill their responsibilities.

Now you’ve got the reports with a bunch of numbers and conclusions. But how to read them? 

The answer to that question we provide in the following paragraphs. 

KPIs for accounting business

 

As you may already know, KPIs or Key Performance Indicators are figures that show you the past, present, and future of your business. By reading KPIs, you will understand the current state of your business. You can also see how well your company performed last year, last month, etc. You can see if your company improves or not, by comparing current KPI results with previous results. In addition, you will use them to make strategic and tactical decisions on the future of the business. Our time recording software will help you define and track KPIs.

Since the main resources of your accounting company are your employees, i.e. their working time, the basic KPI is total spent hours. You should track the total amount of spent hours per each employee, as well as per client, activity, project, and service line. You should also track the number of total number of spent hours in a day, a week, a month, a year. In addition, the total number of spent hours should be compared from period to period, whether it is the day, a week, a month or a year. 

After you get information on total spent hours, you may derive most of the rest of the necessary KPIs for accounting companies. We divided the rest of them into three groups:

  • Financial KPIs
  • Marketing KPIs
  • Productivity KPIs

Financial KPIs

Using Time Analytics software enables you to track the following financial indicators per client, employee, and service line:

  • % of billable hours in total hours: how much of your work is billed to the client? Using this financial indicator, you see how well the company’s resources are utilized in providing services. In addition, you can see if you are providing free services to the client. In addition, you can see how much time an employee spends on internal company activities (administration, preparation of invoices and agreements, sales activities etc.).  Usually, a high % of billable hours in total hours means that employees are productive and that most of his/her work is billed to the clients. However, in some cases, certain % of non-billable hours is necessary (for example, senior managers need to spend some time identifying and communicating with potential new clients)
  • Revenue per hour: whether you are engaged by the client by a fixed or variable fee, this is one of the key KPIs to analyze the profitability of engagement. 
  • Costs per client (service line): you already know the revenue that you generate from each client/service line. But do you know the costs of each client/service line? Our time recording software helps you to simply calculate the costs of each client (service line). The costs are based on the costs of salaries and other indirect costs related to employees. 

Marketing KPIs

Using our time recording software for consultants enables you to analyze the position of consulting company on the market:

  • A total number of clients: does your number of clients increase month to month, year to year? You may already know that is much less costly to keep a current client than to acquire a new one. What is your CRM strategy?
  • An average number of service lines per client: do you perform cross-selling? Do your largest clients know what types of services you may provide? If you spend a lot of time with the CEO and other managers of the client. You sit with them in conference rooms, on business lunches. You talk with them all the time on the phone, exchange many e-mails and SMS messages. Use this time to discuss their business, try to provide them advice on running a business. In that way, the client will look at you not as a specialist, but as a generalist. You will become his special strategic advisor. The client will then realize that you may provide an extensive portfolio of services 
  • The total number of hours spent on sales (marketing) activities: how much time you and your senior managers spend finding new clients? Maybe you need to put more hours on sales activities. Or maybe you need to change your approach, to spend working hours more efficiently.

Productivity KPIs

Crucial accounting firm productivity KPIs you need to track using time recording software are:

 

  • total spend hours per employee: are employees overwhelmed with work? Who carries the most of workload? Are they under risk of burnout? Which employee has some free working time to help other colleagues?
  • Structure of an employee’s working activities: what do your managers do? Are they able to delegate routine activities to consultants? How much time do they spend finding new clients? Are they overwhelmed with administrative and reporting tasks? By looking at the structure of the working activities of employees you can identify new working positions that need to be opened. 
  • Overtime: compare total planned hours with total spent hours on a project. If much more time is spent than it was planned, you should analyse the reasons for it. 
  • Number of engaged employee’s per client: did you plan project execution well? If there are too many accountants on the same assignment, maybe planning was not efficient or opposite.
  • Revenue/profit per employee: does employee bring more money to you than you pay him/her?

Looking for additional profit as an accounting agency?

Again, profit is not something that will just come. If you use Time Analytics software, it is not guaranteed that you will make a profit. First, you need to understand in the right way the reports that the software generates.

This is where the chance for additional profit lies.

We will return to the beginning of our text again.

  • Has the current crisis caused by the COVID 19 virus affected your business? 
  • Are the consequences already being felt or are more significant effects yet to come? 
  • How difficult is it to organize the work of an accounting agency from home in the right way?
  • And most importantly, is the decline in productivity and profit in the crisis is certain, can it be avoided or used to get a bigger piece of cake on the market?

Every crisis is a serious matter, but you don’t necessarily have to get out of a crisis as a defeat once.

Why not turn the crisis to your advantage?

Our solution can help you become an absolute winner when everyone loses. 

Crisis vs. additional profit?

When a crisis occurs, anyone who does not have all the strings in their hands will largely neglect the needs of their existing clients. The main occupation will be its own company. 

  • Organization in a new situation, 
  • Work from home, 
  • Responsibilities, 
  • Control of employees, 
  • Communication, etc.

Rarely will a manager neglect his company in the described situation and turn only to Clients, but the crisis has not only affected you but everyone, including your Clients.

But …

A situation in which you have the strings in your hands turns things in your favor and here is the answer to the question of looking for additional profit. When everyone is busy with their own company, you will be able to dedicate yourself to finding new clients.

Things need to be put in place here. Clients won’t immediately run into your arms, they will first turn to their well-known partners, but when their answer is missing, it is your turn. 

It is the moment when you take the lead, the moment that separates you from the competition, and the moment when you know that you have managed your company well.

Does it make sense?

Final remarks

The essence is very simple.

  • Is Time Analytics an expensive solution?
  • How much can you gain and how much can you lose?
  • What is the opportunity cost of not using the Time Analytics solution?

There is a saying that says, it is better to do something and regret so than to regret that you did not even try.

If you decide on the first variant, we are sure that you will not regret it, but that you will raise your business to a higher level.

Ready for a ride? Test a time tracking solution for an accounting agency today

Discover what’s possible with Time Analytics.
Request a trial, but first, take a look at what is the most important part:
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How to increase profit if you are a consultant?

How to increase profit if you are a consultant?

August 27, 2020

How to increase profit if you are a consultant?

What are your greatest problems in managing a consulting company? You consume hours and hours solving problems of your clients, but do you have time for solving your own? Are you disciplined enough to take your own medicine, the one you prescribe to your clients?

Do you have time for business development? How much time do you spend finding new clients and partners? How much time do you spend thinking about the future of your business? Are you feeling that you spend too much time on operating stuff? What is your time frame in planning: five years, a year, a month, a day, a minute, a second? Do you feel that you do not have time for strategy, as you are overwhelmed with merely tactical issues? 

As a general of your army, do you have time to get up on a hill and see how the battle goes on? Or you are losing your nerves in rough trench warfare?

Do you sometimes feel that you are the coach of the team, as well as a leading scorer, assistant, and a main defensive player? Consultancy is not a one-man show, you need to build a team on which you can rely on. Even Michael Jordan needed Pippen to win championships. John Lennon needed McCartney to form The Beatles.

As a captain of your consulting ship, do you know which direction it sails? Or you are too busy rowing below the deck with the rest of the crew?

Do you feel that you’ve got control over your business?

  • Do you know for each employee on what project/client he/she is engaged in? 
  • How do you assess the work of your consultants?
  • Are your employees satisfied? Are they ready to go the extra mile, an extra inch on each project? Do you have problems with employee turnover?
  • Are clients satisfied with the services provided?
  • Are services provided efficiently?

And finally, bottom – line:

Are you satisfied with your profit?

If these questions give you nightmares, well, you are not the only one.

Since we come from a consulting background (finance and tax advisory), we are facing the same internal problems as you are. In addition, many of our clients come from the service industry. Therefore, we may know a thing or two about managing service companies. In the following text, we would like to present you with our solution that will help you:

Take back control over your business. And over your time.

Bring more money at home. Plus fewer headaches.

What is our solution then?

Our solution, for our internal problems and of our clients’, and possibly of your own, is a time recording software for consultants. We put our expertise and experience into TimeAnalytics software, specialized for consulting companies, as well as other service companies.

In the following paragraphs, we are going to show why time recording software will help you solve many of your management issues.

P.S.: You may say that you are a boutique advisory firm with too few employees to implement a time recording software. However, our solution is applicable for both boutique firms and large-scale consultancies. Just because you are small does not mean your problems will not (eventually) get you strong headaches. Also, you will not be small forever. You have to prepare for times of scaling. Read Sun Tzu’s Art of War: solve great problems while they are still small and manageable. Or in his very own words:

Plan for what is difficult while it is easy, do what is great while it is small. The difficult things in this world are better to do while they are easy, the greatest things in the world are better to do while they are still small. For this reason, sages never do what is great, and this is why they achieve greatness.

Current global coronavirus pandemic made many companies organize work – from – home regime. Some experts believe that the current epidemic may accelerate the trend of remote work. Time recording software can enable companies to organize this new type of working regime more efficiently. Using the software, managers can coordinate the work of remote employees in a more structured and transparent manner.

What is the root of all problems?

Before we explain our time recording software and how it can help your consulting business, let’s take a step back. What is the key resource of each consulting practice? It’s not the fancy office space, nor your ERP system, nor your brand new computers. It’s your people, your employees

You need to find a way to not only choose the right people but to make sure everyone works in a way that’s the best for him and for the consulting team.

How a time-recording software help you do that? Well, remember the words of Peter Drucker, the father of modern business management:

If you can’t measure it, you can’t improve it.

Our time recording software enables your employees to fill in quickly and simply the hours spent on different clients, projects and activities. By providing total hours spent by employees on clients, activities, projects and service lines, their work gets measured and quantified. You get a simple dashboard on the basis of which you can make management decisions and lead your people more effectively.

Now you’ve got the numbers. But how to read them? The answer to that question we provide in the following paragraphs. 

Define KPIs

As you may already know, KPIs or Key Performance Indicators are figures that show you the past, present and future of your business. By reading KPIs, you will understand the current state of your business. You can also see how well your company performed last year, last month etc. You can see if your company improves or not, by comparing current KPI results with previous results. In addition, you will use them to make strategic and tactical decisions on the future of the business. Our time recording software will help you define and track KPIs.

In previous paragraphs, we kind of already mentioned one KPI. Since the main resource of your consulting firm are your employees, i.e. their working time, the basic KPI is total spent hours. You should track the total amount of spent hours per each employee, as well as per client, activity, project and service line. You should also track the number of a total number of spent hours in a day, a week, a month, a year. In addition, the total number of spent hours should be compared from period to period, whether it is the day, a week, a month or a year. 

After you get information on total spent hours, you may derive most of the rest of the necessary KPIs for consulting companies. We divided the rest of them into three groups:

  • Financial KPIs
  • Marketing KPIs
  • Productivity KPIs

Financial KPIs

Using Time Analytics software enables you to track the following financial indicators per client, employee and service line:

  • % of billable hours in total hours: how much of your work is billed to the client? Using this financial indicator, you see how well the company’s resources are utilized in providing services. In addition, you can see if you are providing free consulting services to the client. In addition, you can see how much time an employee spends on internal company activities (administration, preparation of invoices and agreements, sales activities etc.).  Usually, a high % of billable hours in total hours means that employees are productive and that most of his/her work is billed to the clients. However, in some cases, certain % of non-billable hours is necessary (for example, senior managers need to spend some time identifying and communicating with potential new clients). In order to manage this KPI you can implement easy and free time tracking software for consultants.
  • Revenue per hour: whether you are engaged by the client by the fixed or variable fee, this is one of the key KPIs to analyze the profitability of engagement. Also, this KPI provides you with information for pricing strategy, whether you want to renegotiate the terms with current clients or you are planning to negotiate new engagement.   
  • Costs per client (service line): you already know the revenue that you generate from each client/service line. But do you know the costs of each client/service line? Our time recording software helps you to simply calculate the costs of each client (service line). The costs are based on the costs of salaries and other indirect costs related to employees. For example, the costs of one employee are 100 EUR per hour. If that employee spends 10 hours on providing services to certain clients alone, the total costs of the client are 1.000 EUR. Costs of client/service line can be tracked in total amount and in amount per hour.

Marketing KPIs

Using our time recording software for consultants enables you to analyze the position of consulting company on the market:

  • A total number of clients: does your number of clients increase month to month, year to year? You may already know that is much less costly to keep a current client than to acquire a new one. Do you have problems with customer attrition? What is your CRM strategy?
  • An average number of service lines per client: do you perform cross-selling? Do your largest clients know what types of services you may provide? You spend a lot of time with the CEO and other managers of the client. Sitting with them in conference rooms, on business lunches. Talking with them all the time on the phone, exchange many e-mails and SMS messages. Use this time to discuss their business, try to provide them advice on running a business. In that way, the client will look at you not as a specialist, but as a generalist. You will become his special strategic advisor. The client will then realize that you may provide an extensive portfolio of services 
  • The total number of hours spent on sales (marketing) activities: how much time you and your senior managers spend finding new clients? Maybe you need to put more hours on sales activities. Or maybe you need to change your approach, to spend working hours more efficiently.

Productivity KPIs

Crucial consulting firm productivity KPIs you need to track using time recording software are:

 

  • Did total spend hours per employee: are employees overwhelmed with work? Who carries the most of workload? Are they under risk of burnout? Which employee has some free working time to help other colleagues?
  • Structure of an employee’s working activities:  what do your managers do? Are they able to delegate routine activities to consultants? How much time do they spend finding new clients? Are they overwhelmed with administrative and reporting tasks? By looking at the structure of the working activities of employees you can identify new working positions that need to be opened. For example, you may realize that you need a person for administration activities. You may also realize that you need reporting or controlling specialist. Or you may see that you need to organize a new  service sector
  • Overtime: compare total planned hours with the total spent hours on a project. If much more time is spent than it was planned, you should analyze the reasons for it. Maybe you underestimated the necessary workload for a project. Or engaged consultants were not productive enough
  • The number of engaged consultants per project (client): did you plan project execution well? If there are too many consultants on the same assignment, maybe planning was not efficient. Or if just one employee is engaged in a critical project, maybe you should provide him/her support of other colleagues
  • Revenue/profit per employee: does the employee bring more money to you than you pay him/her?

Final remarks

After reading our text and if you are still not convinced that your consulting business needs time tracking software, the words of the famous French General Napoleon may help you:

Perhaps I owe my success to mathematical conceptions; a general must never imagine things; that is the most fatal of all

Each day, you as a manager need to make many decisions on your team and projects which will decide the very fate of your business. These decisions should be based on facts and numbers (or mathematical conceptions, as Napoleon said), not solely on your intuition, your gut.

In the end, you may say that our software cannot solve all problems of your consulting firm. That is true. But, our solution can be a reliable management tool.

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Finexepertiza
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Arcadius
Fidelis
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