The final 'Ask Finola' of the year!

In these difficult times how can I make sure I am making the best profit margin I can whilst providing a high standard of client service.....sometimes it is difficult to get the two to go together!

  • Practitioners I have spoken to have reported gross margins ranging from 30 % up to 75% on the work they bill. Of course there are differences in how work in progress is accounted for,partner time,use of subcontract labour costs and the type of work being billed for.Setting these variances aside there are some basic housekeeping points which apply to all practitioners and I now set out a practical step by step checklist to help identify how to ensure you achieve the best margin you can whilst improving client service levels into the bargain too.
  • Agree a fee in advance with the client for the work to be done.Also agree payment terms-preferably by direct debit or standing order.Clients will value this and see it as part of an overall excellent service offering as you are being up front and transparent.Clients hate unexpected bills!
  • Use a simple 52 week planner to schedule in all work to be done and agree these dates with clients.Clients love to know what is going on and when they can expect their finished product.Clients also love being able to plan for their tax bills in advance and manage their own cashflow.There is nothing worse for a client than finding out what their tax bill is days before it is due when they gave you their accounts months ago to work on!
  • As a practitioner you also want to plan best use of your time and resources.A workplanner will help you do this and plan your labour resources and recruitment needs etc.
  • Use the 52 week planner as a tool to drive the production process in your practice.You can then budget your monthly billing and check that it meets with your own target billing projection.If you don't have a billing projection then now is the time to plan one for next year alongside your own business plan.Evidence suggests that goals are much more likely to be achieved of they are written down!
  • Train your team to take responsibility for managing the workplanner.They can call and chase clients for records in and ensure records are complete before a job is started.Clients will see this as fantastic communication and will appreciate being kept in the loop as to when their job will be done and what they need to do in preparation.
  • No job should be started without a budget which sits comfortably with the agreed fee .Talk to the person doing the job to make sure they understand the budget and are happy with the approach to take in completing the job.
  • At the start of each job set and book meetings in the diary for review time, client meetings and finalisation.Clients have their own time to manage too and will firmly value the fact you are booking meetings in advance and they too have time to think about what they wish to discuss with you.
  • Often money is lost on a job because of the 'pick up put down' culture in wating for missing information and waiting for a partner to review or meet with the client. If this time is budgeted for and booked in advance then efficiency will automatically be improved as will your profit margin.We all know how frustrating it is to place an order for something and then hear nothing for weeks ! Clients are the same-they want to know what is going on and when to expect the finished product.
  • It is not uncommon to find that jobs over-run on budget. The secret is to identify this at the earliest opportunity.The team should be trained to flag potential over-runs before they happen.This will give you the opportunity to address and solve the problem before finding out that the time taken far exceeds the agreed fee and you have irrecoverable work in progress and lost profit.
  • Common reasons for over-runs on budget are either due to the person doing the job needing more training or direction or the agreed fee is inadequate based on the quality ofthe records received or amount of work involved.
  • If you identify the issue soon enough you can take action.Train the individual team member if appropraite or talk to the client about the need to increase the fee due to the extra work required on poor records or the increased volume of work to be done.Clients welcome communication and a discussion on what is happening and are far more likely to agree an extra fee if they are told in advance.You can always give the client the option of taking the records back and bringing them up to the standard that was set when quoting your original fee.In most cases, clients will happily avoid the headache and take you up on your offer to do this for them for an extra fee.Your client is therefore happy and so are you in covering any exra time and costs in completing the job.
  • Have a brief weekly production meeting with your team to check that the workplanner is on schedule and that all jobs to be started have approved budgets etc.This is also your opportunity to check that review and client meetings have been booked ahead in the diary.
  • At the end of each job you should do your own audit on budget versus time taken.This is your safety net to confirm that your systems are being followed. Where exceptions arise you then have the opportunity on a job by job basis to investigate and rectify any issues that remain.This is part of your management role as a partner.
  • Train your team to be clear on what is included within an agreed fee with a client and what is defined as extra work that needs to be agreed and billed separately with the client. It is very common for a team member to believe they are providing fantastic client service by doing what the clients asks of them only to find that the firm is not billing for such work and not making any money! Again, ask your team to think first 'is this work included in the fee or do I need to have a discussion with the client first ?' At worst the client will say 'don't bother as I didn't realise it would take time to do this for me and I didn't realise what was involved' or, at best 'that is fine and I am happy for you to bill me extra when you have completed the work.' Either way, you have a happy client who is being communicated with and you are ensuring you have maximum recovery of your billable time.
  • I often use the analogy of leaving your car in to be serviced to get this point accross.We all have a rough idea how much we expect to pay for a basic service. However, we wouldn't dream of paying extra for new tyres,brakes,exhaust etc if the garage hadn't called us first to agree the extra work and charges- even if there is no doubt about the work being essentail to get the car through its MOT. Client work is no different.
  • Pre-agreed or fixed fees are just like a shopping list.We all know what we have on our list when we go to the supermarket and if we put more in the trolley then, of course, we expect to pay more ! Client work is no different just need to make sure that the client knows in advance if you are doing extra work on top of the agreed fee and accpet there will be an extra bill for it.
  • Some of the extar work you do for clients can be billed on a value basis and not just on time spent.This is especially true for tax planning work or projects where the time spent is not a true reflection of the difference you are making to a client and the years of technical training, experience and research time you have spent in acquiring the knowledge in the first instance, which you are now passing on for the benefit of your client.A washing machine repair man recently told me his hourly rate was £100 and I thought this fair given the years of training he had to do,despite the fact he was only changing what looked like a few nuts and bolts to me ! However, I valued his expertise and the fact I needed by machine to be reliable on a daily basis and was therefore happy to pay.The accountant client relationship is no different- sometimes we just need to take more pride in the value of what we do and communicate this better to the client.


The above answer is a brief overview to get you thinking and to allow you to put the basics in place.If followed consistently then you are guaranteed to improve your profitability.In this economic climate it is essential we look at our own housekeeping and ensure the simple basic stuff is in place and working well.It often proves easier to increase pur profits from what we have as opposed to just focus on winning new business alone.There is little point in winning new business only to lose the profit margin because of internal weaknesses in our production processes.

As always, please e-mail me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it if there are specific areas you would like me to go into in further detail.


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