Every job comes with its challenges, but being a CPA is especially difficult. Between the deadlines to be met, client mergers to sort out, and audits to complete, you still have to make sure you avoid error, lest an unhappy client seeks legal action for a small mistake you didn’t know you made.
In the financial world, there will always be pressure to work accurately. However, you still need to consider profitability—and with that, efficiency. In 2021, things are changing in the world of accounting. There will be new processes to adopt and new tools to get used to. With the rise of AI (artificial intelligence) and automation, it’s important to leverage technology while cutting the fat to maintain your firm’s profitability.
How can we ensure we work smart and remain profitable in a world that’s changing in every way? Keep reading to find out.
Get Rid of Low-Value Services
Now is the time to spend more time on delivering profitable services. Before anything else, take the time to assess the services you are offering and see which ones you can eliminate. These are services that don’t yield good profits, yet take a lot of time.
By evaluating every part of the services you provide, you will likely identify tasks that are taking time and money away from other more profitable endeavors. If they are crucial parts of your services, consider the possibilities of streamlining or automating portions so you can deliver more services but spend less time on tedious, manual tasks.
Cut Down on Operating Inefficiencies
How much money are you putting on operating inefficiencies? Reassess the tools you use, your processes, and how you communicate with your team and clients. If you think you don’t have any inefficiencies with your operations, then you’re probably looking at the wrong places.
When you think about this, you will be able to think of better ways to store data, eliminate or automate steps in workflow, and manage projects. Put aside plenty of time to break down every step of the process because even if you think your operations are efficient, there will always be inefficiencies and bottlenecks that you can address to improve your bottom line.
Focus On A Value-Based Pricing Model
Most CPA companies rely on hourly pricing models, in which the rates are based on how long tasks take. The problem with this is that it can create additional work because you will be forced to spend more time accounting for every minute of the day.
When you focus on a value-based pricing model, however, you charge clients based on the amount of value your CPAs provide. Therefore, the selling process becomes more effective because your clients will place less importance on the time you spend on a task—what they want is the value you bring to the table.
Upsell On Existing Clients
To increase your profitability, you don’t need to focus all your efforts on bringing in new clients. Instead, upsell existing ones. For example, you can offer ongoing services to existing clients, such as payroll and auditing.
Increasing your firm’s profitability is a challenge, but it’s possible—if you know how to do it. You can use these tips to increase your profits and grow your firm.
Manage Your Firm Effectively, Boost Your ProfitsWith effective firm management, you can increase your profits. Fortunately, aside from these tips, you can use a lot of tools to implement more efficient management in your company. Improve your CPA firm management with Financial Cents; we provide an easy to use cloud-based accounting practice management solution. Start a free trial now.
This article first appeared on the Financial Cents blog: https://financial-cents.com/2021/01/06/accounting-firm-profitable-in-2021.
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