Three ways to improve partner margins for accountancy firms

Regardless of the services an accounting practice delivers, there’s constant pressure to find new ways to increase partner margins.

Whether you’re a partner at a financial accounting practice, an audit accountants or managerial accounting firm, your aims are the same — you need innovative ways to improve margins for you and your partners. Here are three ways to do that.

1. Remove the admin load

Professional services is all about people utilization; all fee earners have to bill hours. But it takes an excessive amount of time to manually fill in spreadsheets for time and expenses (T&E), as well as handle other HR-related admin.

These manual admin tasks add no value to the practice, they keep your people from generating revenue, and often lead to human error. This can cause delayed client billing and possible disputes.

It can also leave your firm — and you — exposed to other costly risks including, potentially, costly legal fines from fraud cases (if your fee earners overlook things because they don’t have enough time to spend on audits).

There is a faster, more flexible, more accurate and altogether far more efficient way to do this, using advanced technologies like artificial intelligence (AI). And its already is widespread.

A natural language digital assistant (DA), like Wanda for example, allows your fee earners to automatically record the hours, purpose, location and even client name (using geolocation tells the system which client’s site they are visiting), simply by taking picture of a receipt. All they have to do is manage by exception, which can be as easy as simply saying ‘yes.’

By removing the admin load from your people like this, you would liberate fee earners to bill more time on client accounts, while ensuring accurate and timely information gathering (speeding up time-to-cash). It would also help reduce the risk of fraud by enabling your people to spend more time on audits.

And by giving your people automated tools for T&E and completing repetitive HR admin tasks, you can also improve people experience to empower, enable and engage staff.

2. Create the ‘single business’

Most accountancy firms are spread across multiple offices and locations, and they offer different services. This often means each one is run a different way with different processes.

This causes problems for the organization as a whole, such as extra admin, a lack of collaboration and alignment, plus a lack of organization-wide agility to respond to change and take advantage of opportunities. All of this increases costs and reduces partner margins.

To resolve this, you need the flexibility to do things differently locally, while retaining a commonality of processes across the organization: the elusive ‘single business’ model, rather than many businesses under a single umbrella.

The ‘single business’ model is a single entity which has the flexibility to easily, quickly and efficiently accommodate a multitude of localized processes for offices delivering different services, while retaining unified and centralized processes across all sites.

By creating a single business, you would improve operational efficiency, reduce admin and increase collaboration and agility, to help you identify and act upon new opportunities.

3. Streamline compliance

Your practice is under significant pressure when it comes to legal compliance. This could be daily reporting requirements that affect your type of practice, or it could be compliance related to scaling, such as onboarding new clients or mergers and acquisitions.

The admin involved in satisfying external legal requirements can slow you down, whether it’s making tax digital (MTD) for you and your clients, due diligence checks for onboarding a new entity, or changes to generally accepted accounting principles (GAAP) if you’re a financial accounting practice.

Streamlining all of this through automation reduces admin costs, minimizes time-to-compliance and enables your people to get on with meaningful tasks that add value to your practice.

Improve partner margins

By harnessing a modern, flexible enterprise resource planning (ERP) system which features AI and enterprise tools like DAs, you can modernize admin-heavy processes, unify organization-wide processes and make compliance easier.

By removing the admin load, creating the ‘single business’ and streamlining compliance your practice would not only reduce costs, but boost professionalism and customer service levels, which would win you more business from reference clients.

With more time to spend on client work, like audits, you would reduce the risk of hefty legal fines from fraud as a result of human error. And your people would be able to bill more time, generating more revenue directly. The ultimate result would be improving margins for you and your partners.