This time of the year presents a good opportunity to look back and reflect on the year that’s gone and plan what we want from the new year. It’s also a good time to ring in the changes and set new goals.
Rae & Associates always wants to stay ahead of the latest developments in our industry. Cloud accounting is the new buzzword and our QuickBooks online accounting software provides tools to bring the latest innovations into our accounting operations.
QuickBooks offers cutting-edge tools to quickly and efficiently manage our client’s data and our firm’s tasks so we can offer value-added services to our clients. They, in turn, appreciate the extra attention and knowledge from us.
So why should you make this change? Good question, the ready availability of sophisticated technology now allows us to work smarter and faster on our client’s books. Ultimately, we spend less time doing the actual capturing, meaning fewer hours being billed with the hourly billing model. This is not productive and definitely not what we wanted in our practice. We wanted to start being paid for the many years of expertise and knowledge we bring to the table and not just the hours it takes to process their work? As an accounting professional your experience and knowledge play a part in how long it will take you to complete a task.
We thought long and hard about what we wanted to achieve with the changes we were making. We looked at some of the difficulties we were facing and found that other firms were facing the same challenges. They were:
- Limited hours in the day – if you’re billing by the hour, you can only bill for eight hours’ worth, so your income is capped.
- Manual processing – we realised we were spending too much time typing and manually capturing clients’ work.
- Travelling time to clients – this is usually not billable.
- Slips and paperwork – extremely cumbersome to keep track of.
- Delay in information – we were always capturing historic work and not using real-time data.
One of the biggest and most exciting changes in the industry is the change from the hourly billing pricing model to value pricing, which is an empowering new concept. Traditionally, all accounting firms used the hourly billing method as a matter of course because this was how you billed your client for the work you did for them.
What is value pricing?
Value pricing consists of fees based on value to the client rather than the number of hours you work. As accountants, we’re not just selling our time but our knowledge, experience, innovation and customer service.
This thinking made so much sense for the vision we had for our practice and we were excited to implement this change more than four years ago. We have only seen growth since then. All our existing clients are now on a monthly retainer with us. They decide on what their retainer will cost because they let us know what services they require from us.
Ultimately, they’re setting their own budgets. This means that both parties have very clear expectations at the beginning of the engagement. This also made our monthly and yearly planning much easier. Once we made this change, we started seeing the benefits almost immediately. Some of them are:
- Constant and steady cash flow made budgeting much easier as our clients’ retainers were paid by debit order each month (this was also a new policy we put in place).
- There was less stress on our staff as we no longer used timesheets to track their productivity. We’ve replaced this with the Tasks feature in our QuickBooks Online Accounting software.
- Clients now know the cost of services each month so they can also manage their cash flow.
- Most importantly, we don’t spend our time manually capturing data. Now we’re advisers looking for trends and advising our clients on what they could do to improve their businesses.
Change might be scary but it’s worth it to stay abreast of the technological evolutions in the accounting industry. It also benefits our clients because we can now advise them on the latest technology. Cloud accounting is here to stay and we’re seeing a host of clients wanting to make the move from desktop software. We want to be able to be the advisors our clients turn to in order to make this change and you can be that too.
Written by: Lauren du Plooy (Rae & Associates)