I have been known in my seminars to refer to the “collusion” between technology and government. Let me explore this a little further.
Key Fact 1: Technology companies require considerable up front expenditure (time and cash) before their solution is launched. When launched, subject to system maintenance software/Cloud technology normally produces results instantly.
Contrast that with the accountant. We invest our life in qualifying and then trust we have the wherewithal to utilise our expertise in providing solutions to problems -i.e. Finalising financial statements, preparing tax computations etc.
Key Fact 2: Many firms have lock up (receivables and WIP) of 25% of annual income – sometimes more. Therefore, (assuming we bill as soon as it is possible) there are 90+ days locked up. Or put another way – work has not been completed and/or the client has not settled their account.
Contrast that with the technology company. They normally are paid up front monthly or maybe even annually.
Key Fact 3: The accountant delivers a personal service wherein the personal relationship and assurance are key and integral components.
The technology company provides instant results, maybe even accompanied by multiple reports which the user may or may not find useful.
- Compliance will increasingly be delivered by technology.
- Accountants will, to some extent, be able to segue from compliance to value added. This has been discussed in my last four blogs.
- Our personal role in this noisy, busy ever complicated world will still be massively important and in demand.
- We MUST, I repeat MUST tackle the issue of timeliness. Blaming the client for providing records late cannot be an excuse. Why? (1) Our competitors (technology) are timely. (2) The world expects timeliness as a given.
Key Challenge: Catching up and keeping up to date is not going to be easy. But, it is essential.
Key KPI: What is your WIP (at realisable value) today? What do you have to do to drive this down to 5%. Why 5%? Leading US benchmarking surveys show that the top 200 US firms average WIP at 5% (at hourly charge values). Surely if larger firms can achieve this level of WIP, you can also?
Key Recommend: If your receivables are over 15% of annual revenue you need to work on debt recovery. Where to start? Your 60+ day columns. Who to involve? All those who manage a block of fees. Start by asking what needs to happen to reduce the time it takes for work to be completed. Take ownership and responsibility. Don’t let clients cause you these timeliness issues any longer.