14 Feb How can an accounting firm maximize profitability?
The accounting industry around the world is a crowded space with a lot of firms competing to increase their share of the market in a constantly evolving environment. As a CPA, you’re busy servicing your clients, managing your teams and wearing the many hats that successful business leaders must wear. In this role, you may be living each day as it comes, focusing on your to-do-list, a single day at a time. But it’s time to ask yourself: are you doing everything to successfully increase your piece of the industry’s pie? In other words: are you mindfully strategizing to maximize your potential profitability in this ever-evolving climate?
Here’s how you can:
Technology is the future. In this industry, it’s time to embrace it now more than ever. Moving to the cloud reduces your IT costs, improves your efficiency and increases flexibility on the whole. The freedom of being able to access a document anywhere, anytime can help you service your clients better. Cloud-only firms have been known to have faster turnaround times without compromising on quality. Not only will you have the capacity to cater to more clients, your efficiency will make them stick around and improve client retention, positively impacting profitability.
Streamline for ‘efficient processes & procedures’ (E.P.P)
Standardized workflows and processes create efficiencies and save you time, effort and money so you can enjoy higher profit margins. They also reduce errors in procedures so you can avoid the cost associated with redoing tasks and unhappy clients. Keep reviewing your processes and streamlining them. The more well defined your processes, the higher your earnings.
Offer the ‘right’ services
Identify what services areas bring you higher profit margins. If you find yourself doing tasks that take your time away from high-earning tasks, then you need to reassess your offerings. Look for ways to either eliminate or outsource low-margin services or, if possible, automate them, so your core resources can be dedicated services that bring in more money into your firm.
Acquire the ‘right’ clients
At times clients can be ‘high-maintenance’, and not necessarily worth the business they are giving you. You might be losing money on a client because the time and effort you put into their work costs more than the fee they pay you. Eliminate such clients or find a way to automate their tasks to reduce the cost of keeping them. Dedicate your time and resources to organized and productive clients that take up less of your time and increase your profitability.
Outsourcing is a cost-effective strategy to grow your accounting firm’s capacity with high profit margins. It not only offers you access to a larger talent pool; the process is less intensive and time consuming for accounting entrepreneurs. The right outsourcing partner can increase your productivity and take away the hassle of employee management and/or training.
As your profit margins increase, so will your share of the market you’re doing business in. You’ll then need to increase your capacity to serve your new clients.
CONTACT US when you’re ready to grow your accounting team.