You’re providing value to your customers with client accounting services - so why aren’t you making huge profits? There may be some fixes you can apply today. It can be as simple as evaluating some of your processes, strategies, and the way your business views existing customers.
Want to learn more? We’ve put together 5 easy steps you can take to increase your client accounting service profits.
1. Create an Accurate Pricing Strategy
One way to increase your profits is to increase your incoming money, right? Creating an accurate pricing strategy can help with that.
Learn more about how to get paid faster in this guide by ZarMoney. Besides, here are some things to consider:
- Accurate Rates for Employees: As a CAS, you’ll be charging for your employees’ time. Make sure that you’re charging appropriately. For example, a senior-level employee should have a higher billable rate than a junior employee.
- Consider Overhead: Make sure you factor in overhead expenses when coming up with a pricing strategy. You should be thinking about rent for office space, utilities, software subscriptions, and marketing efforts..
- Use Time-Tracking Software: Keep an accurate record of how much time your services take and make sure your pricing reflects that appropriately.
- Keep Your Employees' Time In Check: Similarly to time tracking apps, some apps also monitor your employees' activity during the time the employee claim is working. The simplest versions of them make print screens as the employee works in certain time periods, say every 10 minutes at a random time it makes a printscreen, so you can see what your employee saw. More advanced ones will be able to track activity levels, like mouse clicks, strokes, pages open, documents reviewed, ... This of course only applies only for employees working with electronics, like the computer, phone or tablet. It would be hard to monitor your woodcutter with such an app.
- Establish Clear Pricing Policy: Of course, you are going to paying different people differently, according to skills, expertise, their relationship with you and many other factors. But for the majority of people, you should have created a pricing strategy for your employees. Its much simpler to pay everyone $15.00/hr and have administration done for one employee and then copied over for others with minor tweaks, rather than paying $14.75, $13.89, $12.63, $14.79, $13.29,... to your employees and having to calculate and double-check every of your calculation.
The largest issue here is the memory trap. You'll calculate for 2 employees one value and your brain will be telling you with others to keep filling in the same value. And as you get tired, you'll just listen, making a large quantity of errors on the way you will have to fix later. It's MUCH more efficient to simply raise your employee's pay to a couple of thresholds. They will appreciate it and will work more efficiently, your accountant will appreciate it, and you will too.
These thresholds then define based on criteria important to you. Say, 1-year experience $12.00/hr, 2 years of experience $13.00/hr,... Of course in real life, you will have many criteria, 5, 10, 20, but for setting thresholds use maximum 5-10 most important criteria. The rest can be evaluated as an annual bonus saving you time and energy calculating everything all the time. For most of the work positions, 5 criteria are more than sufficient.
For instance, for front end programmer evaluate his seniority in coding in general (in years), his HTML/CSS/JS skills based on your trial period or his colleagues' evaluation (rate from 1 - 100, where 1 is terrible and 100 is awesome full-stack), his company loyalty (in years), and his industry insights (on a scale from 1 - 100). For sure you can think off additional 200 parameters, but is really important that he baked a cake for your daughter's birthday, or that he wears a nice shirt to work?
2. Focus on Customer Retention
While some client accounting service providers focus on bringing in new customers, you can drastically increase your productivity by focusing on retention. In fact, it costs five times more to onboard a new client than keeping an existing client.
Learn more about how to prospect new clients on social media here.
Think about the learning curve that you undergo when you take on a new client. You have to learn their business, how they’ve kept their books, their needs, and what their process has been to this point. That takes a lot of time- and time is money. The longer you keep a client, the better your ROI is on all that upfront work.
If that’s not enough to convince you, consider this:
According to Huify, increasing customer retention rates by 5% increases profits by 25-95%.
Plus, you can always ask your ongoing, happy clients for reviews and referrals. Word of mouth can do wonders for your business and reviews help build credibility.
In short:
- Make Savings on Marketing
- Repeat Customers Are More Profitable
- Repeat Customers Will Help Your Business Grow
- Customer Retention is Good for Your Employees Too
- How to Retain More Customers
This is a hard one, quite hard to put into just a few sentences. To learn more about how to retain more customers, check this visual guide by beehive.
3. Increase Productivity
The more you’re able to get done in less time, the more work you can take on additional work for more income. Here are some tips to jumpstart your productivity and kick it into high gear:
- Batch Activities: Group similar tasks together in your workday. It keeps you in the same headspace for a longer period of time instead of having to think about a new task every so often.
- Avoid Multitasking: Multitasking is, unfortunately, a lie that we tell ourselves. It is more productive to focus on one task at a time and eliminate other distractions while we work. Only highly skilled professionals can effectively multitask, and that's why we wouldn't recommend it.
- Upgrade Software: Get the right tools to keep your business running smoothly. Investing in the best software for your business can help your productivity and keep everything moving forward. Of course, we don't mean to spend all your savings on one piece of software. Definitely check out options and pay for what you need, not for something that will be effective, but you won't use it.
Did you know Quickbooks Intuit, one of the most popular accounting solutions on market has direct, much cheaper and much more powerful competitor? Check out the back-to-back comparison of Quickbooks and ZarMoney to discover the best accounting software for you. - Use Proper Resources: There are tons of resources online you could be using right now, but you aren't. Why not? Because there are so many and one doesn't even know where to start. That's why we have prepared for your brief guide on 5 most important accounting resources you should be utilizing in your business.
- Make Your Process Smooth: Do you often suffer from running from one place to another? And then back? And forth? And to the side? This is likely due to your processes not being very streamlined and smooth. One would hardly imagine how much time and resources he would save if his processes would be smooth. If all his emails and email templates would be in one place. If he could call, email, SMS or Messenger text from a single place and wouldn't have to worry about his channels being synced. But once you have systems in place that will send automatically all documents needed to your client the moment you hang the phone with a single push of a button you will feel the relief and at the beginning quite a weird feeling that something is wrong. It was too effortless to be true. There are marketing, sales and accounting systems allowing you just that. Among best CRM for Small Businesses out there is Teamwave and SalesForce (where Teamwave is much cheaper and is similarly powerful), and among best accounting systems there are ZarMoney and NetSuite.
4. Market to Your Target Audience
This seems obvious, but some businesses struggle with it. Marketing can be a big expense and it’s important to get it right so you’re attracting in the right clients.
First, get very detailed on who your target clients are. Be as specific as possible. It might help to consider one of the clients that you already love working with.
Think about their industry, size, and what kind of work they provide you. Also, consider what makes them easy to work with.
To market for that client, ask yourself what their pain points are and how you can solve their exact problems. You can even ask the clients you love working with. Ask them what made them choose you and what they were looking for when they signed up for your services.
Create your buyer personas with the data you have gathered, visualize it, print it out, stick it to your wall and make sure your every decision is driven thinking about your persona.
Not sure what is a buyer persona and how to create one? Check out this very detailed resource by HubSpot How to Create Detailed Buyer Personas for Your Business [Free Persona Template].
5. Create S.M.A.R.T. Goals
Having your goals written down makes them easy to turn into a plan. You can assign different objectives to make sure you’re meeting your goals. Seeing the plan can help you align with the goal and increase your motivation.
However, you need them to be more than just vague ideas of what you want to accomplish. Instead, you should be creating S.M.A.R.T. goals:
- Specific
- Measurable
- Actionable
- Realistic
- Time-bound
Sometimes SMART is being exted to SMARTEE:
- Economic
- Ecological
Here’s an example of a goal that you might have concerning profitability:
I want to have a more profitable business
Don’t we all? Let’s turn this into a S.M.A.R.T. goal:
I want to increase profits by 10% in 12 months
Now, you just need to assign the steps it takes to get there. Perhaps you need to evaluate and update your pricing strategy, upgrade your software, cut unnecessary expenses, and get clearer with your marketing efforts.
Did you know your accounting software can cost anything between nothing and $99/user/month? And how much is the right amount you should be spending on it? (Well, this is an easy one, check out our guide How Much Should You Be Spending On Accounting Software? to learn how much)
Did you know ZarMoney offers FREE trial without requiring your credit card details? And that it offers one of its plans completaly for free to small business owners? Check it out for FREE today.
Final Thoughts
Creating profitable client accounting services isn’t out of reach. In fact, using the steps above can put you on the right track to achieving it. Keep your goals reasonable and write them down. Then, create an action plan using some of the suggestions provided above to make it happen.
The steps to building your own profitable client portfolio are to:
- Create an Accurate Pricing Strategy
- Accurate Rates for Employees
- Consider Overhead
- Use Time-Tracking Software
- Keep Your Employees' Time In Check
- Establish Clear Pricing Policy
- Focus on Customer Retention
- Make Savings on Marketing
- Repeat Customers Are More Profitable
- Repeat Customers Will Help Your Business Grow
- Customer Retention is Good for Your Employees Too
- How to Retain More Customers
- Increase Productivity
- Batch Activities
- Avoid Multitasking
- Upgrade Software
- Use Proper Resources
- Make Your Process Smooth
- Market to Your Target Audience
- Create SMARTEE Goals
- Specific
- Measurable
- Actionable
- Realistic
- Time-bound
- Economical
- Ecological
The list doesn't end here, but we thought you might need a break absorbing all the information provided. When you'd be ready for more business-oriented advice, visit our blog at https://www.zarmoney.com/blog/ where we publish interesting and important information from fields of business, accounting, tax laws and regulations and more.
