In our last issue we started to look at ways in which time-on for firm owners can [and should] increase. Why is this important? The first benchmark for any accountancy business owner is that firm profitability should not be less than firm owner time on. The really successful firms generate profit per equity owner in the region of 150% of firm owner time on – the exceptional firms even greater.
In 2020, IPA (USA) reported average annual chargeable hours per equity partner of 1,048.
Chargeable hours are usually accounted for in three areas:
The first two were covered in our last blog – if you missed this – see here. That is Desk time, and Team time.
And you may recall that we look at these in order of reverse importance. So, now we will look further at the third area (and most important area) and that is, client time.
The aforementioned time on hours is what I call “invisible time.” That is time not seen by the client. Client time is what I refer to as “visible time”. Much of our client work is historical in focus and usually culminates in (1) the client being advised the quantum of their tax liability, and (2) the account for the service performed. It is not too much of a stretch to recognise that, from the client’s perspective, they might apparently be thankful for your service, but we must accept that this is not a service they would necessarily seek were it not for the demands of legislation and compliance. So, let us ask the question on their behalf, “What’s in it for the client?”
What’s in It for The Client?
The first two areas of time are invisible and historical in nature and purpose. Client time is visible. That is face to face, eyeball to eyeball, kneecap to kneecap time when you meet one on one with the client.
Based on surveys undertaken by SAICA (South Africa Institute of Chartered Accountants) and by myself at seminars over the past 25 years, the average visible time an accountant spends with a client in a 12-month period, is between 60 and 75 minutes. Now let’s consider what happens in that time:
Possible structure of a four-part client meeting:
- You probably start with a social connection – For example, “How are you?” “How’s so and so?” “What did you think to….” How are you managing Covid issues? and so on. Then,
- Down to business – discuss the reason for the meeting – obtaining information, answering queries etc. Then,
- A look at current and future matters relating to the business, maybe some personal matters. Finally,
- Maybe the meeting ends with further social interaction.
Conversations 1 and 4 assist in reinforcing the personal relationship. But it is only the third phase of a meeting that focuses on the client’s present and future.
Let me present this another way using the Pareto (the 80:20) rule. There is, of course, value in all the time that you and your team undertake (Desk time and Team time) for the client. But this work has an historical compliance focus. Therefore, from the client’s viewpoint, I suggest this only represents about 20% of the value you deliver. But when the client is with you the value scale rockets up to 80%.
Pricing for this time? However, you cannot price this ad hoc advice that is tendered at the compliance meeting – it is an integral component of the compliance service from the client’s perspective. At best your invoice can include the line, for example, – Sundry advice from time to time.
Action Point: Look at how long you spend on average with your clients in a year. And also encourage your other partners to do the same.
INCREASING YOUR VISIBLE TIME
When the client comes to see you for a compliance-related meeting it is good practice not to journey too far down the path of delivering ad hoc business advice. After all, the client has probably only come in to address compliance matters. As they came into your office their mobile was showing 3 new emails, 2 incoming calls and 1 text. By the time they leave those numbers might have doubled. Maybe, your great advice and suggestions are forgotten (or maybe relegated in their conscious mind).
The alternative? Use this meeting as a reason to set up a separate [chargeable] meeting. One that is dedicated to addressing a problem/need/issue that was identified during phase 3 compliance meeting. After all:
- The client may need to access further information,
- May wish to have someone else attend the meeting, or
- You may wish to do some further thinking or research
The Benefits of This Approach
This dedicated meeting will allow both you and the client to explore options. It provides:
- The client with the focus to implement the advice discussed
- The creation and transfer of value
- A billing opportunity. This advice can be charged for – provided you discuss and agree a [fixed] price up front.
Use the power of questions to uncover client needs. Seven sample questions you might pepper into your conversation could include:
- How concerned are you about the future of the business?
- How do you see the business developing?
- How do you see the ongoing impact of Covid?
- What are your competitors doing that is causing you a problem?
- Does the business have a plan for the next 12 months?
- Does the business have a profit /cash flow forecast for the next 12 months?
- What is your income retirement goal?
Key Point: As we have all become accustomed to virtual meetings these present/future focused meetings could be held online if, either you or your client have Covid concerns or government stay at home regulations preclude a personal meeting.
- Increasing your visible time increases your value
- Increasing your visible times [should] give you greater business advisory revenues
- Increasing your visible time provides opportunity to ask the client for referrals
- Increasing your value and significance to the client keeps them happy and increases their loyalty to the firm
Finally, surely this also provides a more meaningful role for your firm owners.