In this series we will look at a wide range of numbers and dive deep into how to nudge the numbers either north or south dependent on which way improves results. Let’s start by looking at one of the key top line drivers – chargeable time, or billable time, or time on or however you prefer to call [client] productive time. My preference is, time on.
- My first observation is to state that clients do not buy time, they buy solutions to problems. However, many accountants believe that they are selling time
- My second is that you are undoubtedly registered as an accountancy business and not a charity. I will explain the significance of this in my commentary after point 3
- My third observation is that your time recording system is not a ‘billing’ system. It is nothing other than a retail costing system. Any similarity between the time and the bill may be no more than a coincidence
So, combining my second and third points it is essential that ALL client time is recorded to the client. NEVER let anybody say that they “can’t possibly charge that time to client ABC.” Donating time is not a good management practice.
- I have a fourth observation – everyone must complete their time records… daily. No exceptions. None. The reason for this is straightforward. People forget what they have done. Research has shown that completing time records daily increases time on in the region of 6 per cent. Ian, one of my managing partner clients said this to me in relation to his 30+ managers charging all their time, “Of course everyone should account for all their time. That will ensure that my partners charge more.”
Now, let’s look at time on for the partners.
Annual range. Partner time on ranges from 400 to 1600 and more. I know that for a fact. Not only in this evidenced in inter firm surveys but I have also seen this when consulting with firm owners. I recently consulted with one 7 partner firm in west London who all recorded thereabouts to 1600 chargeable hours. In fact, the highest hours were recorded by the Managing Partner with 1625 – all fully recoverable. But let’s cut to the chase and answer the question what is the norm? The average?
If all the ‘rules’ emanating from my above recommendations are followed then chargeable time for a partner should not be less than 1,000 hours per annum. The average, as reported by IPA, .
If your partner average is greater than this – press on. Keep up the good work and do all you can to stretch those hours. There has never been a more important time to commit to clients and the services they require to comply, survive and prosper.
If your partner average is less than 1,075 – and many firms have partner time on around the 800-900 hour mark then here are some steps to incrementally improve performance in this area:
- Let your owner team know (yet again) that there is to be a focus on delivering increased time on. Remember the old management adage that informs that you “manage what you monitor”? And recognise that while some partners like to measure others, they don’t always like to be measured themselves.
- Agree with each partner their annual target for the year ahead and add in some stretch – maybe an additional 50-100 hours. Then sub divide this into monthly targets taking into account time out for holidays and so on. It is far easier to manage 12 monthly targets as opposed to one annual target.
- Require your team to account for all their client time – there should be no ‘charitable hours.’ Remember that your time on system is really only a retail costing system – you must know the true cost of servicing clients.
- Spend more time connecting with clients. Did you know that based on a member survey by the South Africa Institute of Chartered Accountants the average time spend face to face with clients in a 12-month period averages 60-90 minutes? Surely as our clients trusted business advisor we should have greater connection? Meeting online can be viewed as meeting face to face can it not? Given the impact of the Cloud and AI on the accountancy business there is an increasing recognition that our work is increasingly segueing transforming from transactional to transformational services. Meeting one on one with clients can be empowering. This also provides an opportunity to identify client needs and your services that can meet those needs and help them to transform themselves.
- Finally, hold your partner team accountable. This is one of the really important areas where they are required to deliver leading edge performance to the firm. There are others we will highlight in this Practice Management blog.