Reworking client data is one of the things I don’t think has received sufficient airtime in recent years. Rework has in lots of cases become the norm but in my opinion, this is something that needs to change.
After conducting research in collaboration with Accounting Web, we found that 95% of accounting jobs incurred a 95% rework rate in Q3 2015. In Q3 2016, this figure rose to 99%. In both cases, a job required either some considerable reworking or a complete rework of a client’s books.
Let’s drill down into those statistics. Looking at the 95% in Q3 2015, 52% of those required either a complete rework or considerable reworking. For the same period in 2016, this figure rose to 73% of the 99%.
Not only are the time and resources to perform rework a headache but accountants are increasingly concerned about getting paid for it. In autumn 2015, 1 in 4 accountants are expected to typically write-off most (9%) or a considerable amount (19%) of the time they spent reworking client-prepared books.
In 2016, the proportion grew to almost half, with 35% expecting to typically write off a considerable amount of any rework and 12% expecting to write off most of it.
Fixed-fee billing issues
Understanding your own rework data is crucial as we are seeing more and more businesses wanting a fixed-fee billing option. Of course, that means it’s highly likely you’ll be left with the bill.
Most clients probably wouldn’t be prepared to accept a higher or additional cost because they would be confident they had reconciled correctly or put the right entries into their accounting package.
Having a strong, cohesive plan for your practice will not only help to improve efficiency but will also help pave the way for a seamless transition to HMRC’s forthcoming Making Tax Digital (MTD).
Making Tax Digital
Making Tax Digital is HMRC’s move to digitise tax and the goal is to help you get it right – whether you’re a business, accountant or bookkeeper. Learn about what it means for you.
Reducing time taken for reworking client data
Here’s what you need to do to reduce the impact that reworking client data has on your practice.
1. Make efficiency the new normal
Reworking client data has become normal and expected but it shouldn’t be that way. Make sure your practice is recording and reporting on the time it’s spending on reworking.
Firms of all sizes would benefit from being clued up in terms of the statistics I highlighted previously. It doesn’t matter if you’re part of a large firm or working as a sole practitioner – in fact, for the latter, it’s even more important as your time is perhaps more precious, while there isn’t a cloning facility available.
2. Don’t forget time is money
Along with the improved reporting I mentioned above, you can use that reporting to work out the cost of the rework. Because we are seeing a demand for fixed-fee billing (along with a trend for clients who want monthly direct debits to help distribute costs), your initial fixed fee must incorporate an element of rework, without collecting and running these statistics.
Picking a figure to factor in for rework is probably the equivalent of staring into a crystal ball. However, taking ownership of these figures will mean job profitability will increase and so will time, allowing you to get on with more important tasks.
3. Don’t be afraid to talk to clients
You may have been hesitant to raise the issue of rework with your clients – if so, you’re not alone. But having a clear pragmatic strategy and talking your clients through it regularly will help to reassure them while also helping you feel like you’re empowering them to get better and improve the quality of their accounts.
4. Dangle a carrot
Fees are seemingly stagnating for lots of firms who are afraid to push the roll-out of increased client fees. If you’re in this boat or operate in a highly competitive area, then drive efficiency to make the current fee more profitable.
Clients will be open to making sure they’re doing things correctly if they think it will save them money when they get told that you’ll forgo the fee increase if they undertake X, Y or Z actions.
5. Do it right first time
Get into the habit of the most appropriate person doing the task right the first time. If a client is constantly struggling with something they just can’t get right (after significant training and support) then it’s time to figure out who is best to pick it up.
Over the past four or five years, I’ve seen a huge increase in the number of accountants who received a copy of their client’s books, only for them to use it as a point of reference and start from scratch using the bank statements.
I can see their argument because starting afresh is far less time consuming than unpicking. If you have a clear strategy in place to help improve the quality of your client’s own bookkeeping, this won’t be an issue and the accuracy will be greatly improved.
6. Keep on top of client data
For your annual clients, get them reporting to you quarterly; for your quarterly clients, get them reporting monthly. This will help to smooth out workflows, decrease bottlenecking and break the job down into smaller chunks that mean you can allocate work to quieter periods. It will also benefit your clients because you’ll be on top of issues before they become habitual.
The time to act is now. Having a firm grip on these numbers will allow you to set achievable milestones for the next 24 months.
Guide to Making Tax Digital for accountants and bookkeepers
Discover what Making Tax Digital means for your practice including the key dates you need to know and the five steps you should take to prepare now.