Did you know client work that spans around two months can represent 16% of the total revenue of the profit for an accounting firm? Things like tax advice don’t drag over several months, meaning accountants usually deal with a high volume of shorter projects to generate a steady stream of revenue. What many don’t realize though, is that these shorter projects can be very risky for their business when poorly managed. Here’s what you need to know about managing your client work so that you can keep turning a profit.
It’s easy for small losses to go unnoticed when you’re juggling multiple clients at once. By small losses, I mean things like spending too much time on any given task and losing track of your output. This is important because, with the high volume of clients you’re managing at any given point, the overall profitability of your work will be lost if you’re not careful—time is money. That’s where the necessity of managing your workflow becomes critical. The very nature of shorter projects means a higher volume of them, making managing it all a slippery slope without the right tool.
A Harvard Business Review study found that on average, 27% of service based projects go over budget. For you, that might translate into putting more hours into work for a client than makes sense economically. If an accountant on average has fifty clients and does work for each twice a year, that’s one-hundred work assignments. If 27% of those go over budget, that’s over a quarter of your work exceeding its scope. You need to make sure you can always see exactly where you’re turning a profit and where you could be doing better in each client account. If not, you risk incremental losses which can quickly add up and put you in the red.
It’s essential that you track the time you put into client work or risk putting in more hours than you've billed for. With a high volume of shorter work projects, it’s crucial for you to closely monitor the time you put in so that you can see and measure the profitability of your accounts. Simply put, shorter projects become risky when they ever-so-subtly creep outside of their scope in time and effort.
If you haven’t done so already, you should really do some research into the technology platforms out there that can integrate with tools like Xero or QuickBooks and streamline all of these processes for you, which Patti Scharf wrote a great post about. That way, you can focus on crunching your clients’ numbers instead of your own ;-).