It’s easy to understand why capacity and leverage are so important, but more difficult to appreciate why accounting firms sometimes struggle to get real success in these areas. Administration is one of the keys to effective leverage in accounting firms; by taking on some responsibility for workflow and client communications, the administrative team can help the firm improve efficiency and profitability.
Let’s start with some definitions:
Capacity: The ability to generate fees, measured as chargeable hours (Fte x average COR x 37.5hr / week x 45 weeks / year)
Leverage: The number of staff per principal or partner. Also the proportion of chargeable to non-chargeable staff.
The 2020 Good Bad Ugly benchmark report showed an average firm leverage of 5.2 and a chargeable/nonchargeable ratio of 4.0. What’s your firm’s capacity and leverage? How does this compare to industry benchmarks?
The debate around the optimum number of administrative staff is ongoing. A recent strategy for firms has been to shift administrative tasks away from chargeable staff towards support staff, so accountants and advisors can focus exclusively on completing chargeable work as efficiently as possible. Followers of this strategy advocate a higher number of support staff, suggesting it will lead to greater revenue.
What can your firm’s administrative team do to increase capacity and leverage?
Obviously, some of the answers lie in taking control of non-technical responsibilities and tasks within the firm. This means identifying the systems and processes that don’t need to be handled by technical staff. It also means documenting those systems and setting up clear guidelines for how they will be managed within the firm. In relation to client and workflow management, specific tasks may include:
- Client induction and engagement
- Scheduling and calling in of work
- All non-technical client queries and contact
- All debtor management and client follow-up
How much control do you have over these processes? What is preventing the administrative team from taking over these processes?
How can you improve the effectiveness of your administrative team?
Here’s our top 5 list of actions:
- Identify all non-technical roles and responsibilities within the firm and ensure, where possible, that they are taken away from technical staff responsible for client matters.
- Take over the calling in of work, from scheduling to contacting clients to get work into the office in a timely manner. This is one of the most effective ways of improving throughput.
- Develop the role of ‘client liason’ administrator, as a key point of contact between the client and the firm for non-technical queries. Train staff and tell clients when and why they should contact client liaison staff in the first instance.
- Critically review internal systems and processes on a regular basis to identify areas for improvement. Keep up to date with software developments and talk with other firms about what they are doing to improve workflow.
- Meet on a regular basis with the firm’s leaders to discuss workflow issues and challenges and develop solutions. Be proactive in identifying bottlenecks in production.
You can give your administration team the keys to unlocking capacity by enrolling them in the CLIENT SERVICES ADMINISTRATION E-LEARNING COURSE
This course is designed to help the administrative team of accounting and advisory firms take control of workflow and clients at an administrative level. The course has 5 key areas of focus – (1) Administrative roles and responsibilities, (2) Client relationship management, (3) Workflow management, (4) Teamwork and collaboration and (5) Special CSA Projects including marketing and lock-up (WIP and debtor) management.
For more information on this course, CLICK HERE
Dale Crosby | Director, CPD For Accountants | www.cpdforaccountants.com.au