The end of the year may be a good time to review your accounting firm's work process to identify and alleviate any inefficiencies that may be costing your firm time and money
Earlier this year, we surveyed more than 500 tax & accounting firm professionals about their strategic priorities for the year. Among the top four priorities were (no surprise) talent, growth (which should always be a priority), efficiency, and client services.
While it was interesting that efficiency was highlighted once again as a top priority for tax & accounting firm professionals to manage going forward, based on survey respondents’ answers to the other questions, the impact of inefficiencies on other priorities may be equally top of mind.
It’s natural, of course, for tax & accounting firms in a general sense to want improvement in their efficiency level in order drive growth and best serve customers. Yet, as firms close out their year, there may be further opportunities to ponder where inefficiencies lie and how these could be resolved (or at least put on a pathway to resolution) for the new year.
Yet, what is the gold standard of efficiency — the place where firms and tax & accounting professionals may want to work towards? In the survey, respondents identified several of the standout skills and qualities that should make up the core of an ideal and efficient tax advisor, such as someone that:
- has demonstrable knowledge and experience;
- pays attention to changes in the tax code;
- knows how to use tax technology to be more productive, accurate, and efficient;
- is dedicated to serving client needs;
- has the communication skills to explain tax strategies to clients;
- can interact productively with colleagues; and
- delivers high-quality work in a timely manner.
To know where it is going, a firm first must know where it currently is. Thus, reflections on the firms’ current state are required, and that includes a look at inefficiencies around talent, technology, and how clients are served. Failure to take a microscopic, internal look can keep a firm and a tax & accounting professional in the same place — meaning, no growth — or, worse yet, decline.
What’s the cost of inefficiency?
Talent — The lack of efficiency might have a high cost to what is considered firms’ greatest resource: its staff. Without proper and efficient work processes, people often work harder, but not smarter, as the saying goes. Even if there are efficiency processes in place, if those become outdated, it’s almost the same as not having any at all.
For staff that often has to work harder, including working longer hours, the impact can lead to the team feeling overworked. About 80% of those surveyed stated their performance was impacted by illnesses, while one-third said they experienced work-related health issues. When discussing their own well-being and career advancement, many survey respondents said they would consider leaving their current positions because of a lack of opportunities for growth, including training. Inefficiencies and their impact on talent go beyond just retaining talent, but they can and do influence hiring new staff. Perhaps firms should ask themselves the soul-searching question, “Would I work at this firm?” If the response is no, or even maybe, imagine what a prospective employee is thinking when it comes to joining the team.
Clients — Measuring the success of how well clients are served can be subjective. Does a number of clients mean success? Or firm profits? These are a few indicators, but by far not the only ones. Other factors to consider include, How much does the client engage with you? Or, are they asking for additional services?
A tax & accounting firm that has trouble meeting customers’ demands or can only provide the minimum level of service may consider looking at how efficiently it is servicing its clients. There are times, like tax season, when work is excessive; however, if your firm is constantly in this mode, it may be a problem. And if your firm is finding little time to consider and execute acquiring new clients or adding services, especially when being beseeched by clients to offer more, it may be time to re-evaluate priorities.
Recognizing common inefficiencies
There are numerous symptoms of inefficient work processes in tax & accounting firms that need to be identified before being dealt with, including:
- Difficulties finding information — How long does it take your professionals to locate the information they need? How many steps does it take to gather that information into a usable form?
- Technology — Is your firm’s technology use maximized? Do professionals and staff have the best understanding of how to use it, or are they in need of training? When was the last time the software was updated?
- Extensive time on tedious tasks — Much like gathering information, the length of time required to do mundane tasks manually can be benchmarked against internal metrics, such as how long the same task took to complete a year ago? Or external metrics, such as how long do other firms or professionals take to do this task?
- Poor standardization — If there is difficulty duplicating a task and getting the same result each time, then that task isn’t being done efficiently and should be reviewed, updated, or stopped altogether, and then replaced with a more efficient system that gets the same results each time.
Firm leaders should remember that having processes (whether it’s intentional or not) doesn’t mean you are operating at optimal efficiency. Old and outdated processes will let you know it’s time to change by showing themselves to no longer work in the same way. And like people and technology, failure to update processes will result in costly inefficiencies.
As the year draws to a close, this may be an ideal time for tax & accounting firms to reflect on where inefficiencies may lie within their own work processes and create a roadmap to eliminated them and drive further efficiencies forward.