Date posted: 19/04/2017 2 min read

Revenue tips for accountants from financial planners

Learning how financial planners organise their workflow and negotiate client fees and remuneration could transform the way you run your accounting practice.

In brief

  • Introducing an automated payment system can save chartered accountants precious time.
  • Imagine a business with no debtors and reduce the monotony of monthly invoicing.
  • Organise recurring client work and know your revenue at the start of the year to gain financial security.

Much of the work performed by accountants and financial planners revolves around providing repetitive annual services, but the way in which clients pay for these services is radically different. CAs who work in public practices would benefit from learning how financial planners are remunerated.  

Picture this: it’s a week after month end and you have just finished reviewing a pile of invoices, which now have to be finalised and sent out. In recent days you’ve had team meetings to drum up fees, poured over WIP reports, had clients ringing to complain about fee surprises and gloomily contemplated your outstanding debtors. It’s hard to know what’s more exhausting – what you’ve just been through, or the thought of starting again at zero and doing this all again in a month’s time.  

Contrast this scenario with a well-run financial planning firm, where all recurring work is paid progressively, by automatic payment each month. Even work for new clients is paid via client authority on a nominated account. Imagine a business with no debtors.  

Not only is there much to like about the latter model, but there is a lot that accountants can do to engineer this scenario in their firms.  

Differing annual expectations

Planners aspire to have enough known recurring revenue at the start of the year to cover operating costs and their salaries, with income from new clients creating the profit. Contrast this with accountants, who apply a growth percentage to last year’s revenue and hope that it will all work out.  Accountants’ budgets are often prepared in late July, well after the new financial year has commenced.  

Planners negotiate client fees annually in advance and instigate payment authorities accordingly. Such arrangements take into account the predictable level of care and attention to be provided over the ensuing 12 months. Conversely, accountants store up service items over the year, then agonise how much of this to invoice at the time a client’s year-end work is performed.  

Differing organisation of workflow

Planners tend to be highly organised with recurring client work, with client review meetings booked well in advance and the preparatory work scheduled accordingly by dedicated client administrators. This schedule allows for work on new clients and new projects for current clients to be performed in amongst pre-booked tasks.  

On the other hand, accountants place themselves at the mercy of clients who largely determine when they send their information in and how urgently they respond to queries. Cash flow suffers accordingly, particularly where invoicing only occurs after the work is completed.  

The monthly revenue experience

For planners, the payments deducted from client accounts throughout the month typically get swept up by their licensee, thereafter to be paid to the planner weekly or fortnightly. Subject to spikes when new client revenue comes through, the amount received is highly predictable.  

Contrast this with an accounting firm, where dips experienced in cash flow can often be traced to public holidays, annual leave and delays in receiving information from larger clients.  

What CAs can draw from this comparison

If you’re a CA working in or running your own practice, there’s merit in taking these positive aspects of the planners’ model and applying them in your practice. Here’s how to get started.

  • For each core client profile, work out the typical amount of service required and determine an appropriate all-up fee for the work to be performed. You may care to construct two to three different levels of service for clients to select from.
  • Package up these services into easily understood options and then encourage your clients to take them up. Your better clients will likely relish the removal of fee surprises and value being able to call you up without hearing a clock ticking as you answer the phone. Many clients will also appreciate not having to pay your fees in big lumps – monthly instalments are far better for their cash flow, as well as for yours.
  • Make getting onto periodic payments quick and painless.
  • From here, schedule the performance of each client’s work, when the meetings will occur and the extra elements of value incorporated into your packages.  

Moving onto such a system is exciting in many ways. Clients will appreciate a smoother payment system and relish feeling a greater sense of control on what they spend with you. On your side, not only will you have vastly reduced lock-up but the time saved in monthly invoicing can be productively applied elsewhere.  

This article is part of an ongoing Working In Practice column aimed at CAs working in SME accounting practices. If you’ve got something specific that you would like this column to cover, email the Acuity team now.