Your clients want it and you want to give it to them… that much we know!
But accountancy firms have always faced an uphill struggle to make money on bookkeeping. In this blog, we’ll explore six ways your firm can make good money from bookkeeping.
But before we jump straight in, we first need to look at the barriers that stop most accountancy firms making money from bookkeeping. Typically speaking, the profession is not known for innovation and risk-taking. However, it is due to the absence of these qualities, which make it almost impossible for firms to make a profit on their bookkeeping. The practices that we see who have cracked the problem of how to deliver a profitable bookkeeping service are the ones who are happy to look at things differently and innovate to stay ahead of their competitors. If bookkeeping for your practice is still heavily rooted in the days of processing ‘bag of receipt’ jobs and billing hourly, then it is definitely time to consider how you could do things differently.
1. Bundle the bookkeeping work into a fixed price package for the client
This is where you offer bookkeeping as part of an all-in-one accounts prep, tax compliance and management accounts package. Your clients get the peace of mind with fixed fees and you get a much easier job when it comes to doing the end of year accounts. If you choose to offer this package do regularly review how much the bookkeeping work is costing you and vary your client’s fees accordingly.
2. Review regularly fixed fee arrangements for bookkeeping
When was the last time you reviewed your fee arrangements for bookkeeping for a client? Over time what was once a fair rate for the volume of transactions required may have changed. It is important that with all your fixed fee arrangements for bookkeeping that you review the profitability of the fixed fee every 3-6 months.
Outsourcing, just as if you hire a new member of staff, has a learning curve. Once you have overcome this learning curve, then it is not unusual to make savings of up to 40% on your bookkeeping costs. Technology has completely revolutionised the Accounts Outsourcing service; the investment in cloud technology means that it is possible to get a very responsive and high service level, normally for a fraction of the cost that your own firm can deliver.
4. Get rid of the problem clients
As the saying goes, it’s the 20% of your clients who create 80% of the profit for your firm and this is very much true with bookkeeping. Problem clients cost you money in more ways than one… they take too much time to be serviced properly as well as reduce staff morale.
Give yourself a monthly goal to fire one problem bookkeeping client a month. This will give you the space to bring in new and more profitable bookkeeping clients whilst making it just a bit easier to do the work.
5. Raise your fees
One of the quickest ways to increase the profitability of your bookkeeping practice is to raise your fees. Many firms worry that if they do this they will lose a significant proportion of their clients. But if you are delivering a good service then you will find that a modest rise in fees will hardly lose you any clients, if at all. The ones that go will probably be the ones you can afford to lose. If you’d like any assistance with increasing your fees, pop on over to this article.
6. Automate more and invest in cloud bookkeeping software.
Software like Receipt Bank is aiming to take the hard work out of bookkeeping. Receipt Bank has a vision to create an effortless system to set up and use. For example, Receipt Bank will increasingly learn your habits and preferences and based on that will make intelligent prompts and suggestions.
There is no one right way to increase the profitability of your bookkeeping service. However, the more open your firm is to using technology and alternative ways of servicing the work, the greater the likelihood of increasing the margins on your bookkeeping service.