Be honest, do you know exactly which of your clients, services and business areas generate the most profit?
As an accountant, you know how important visibility of this data is for your clients, so we apologise in advance if this article preaches to the converted…
By using AM, you can track staff costs against client revenue. This means you can see which jobs are most, and least, profitable. Helping you make business-critical decisions around pricing and efficiency and business strategy.
Identify where your profits are coming from
Start by tracking the time your staff spend on any chargeable work. We took a closer look at time tracking last month. Simply add the fixed fee you charge for services and an actual hourly cost for each staff member. Then, at a glance, you can see:
- Total revenue
- Total value of time
- Total cost of labour
- Total hours
- Total budget profit
- Total actual profit
You can then filter this data to see exactly how much profit specific clients and services are generating for your practice. Your overview will show your profit over the year and you can filter this by month.
Use profitability insights to plan your next move
The power of this feature lies in how you use this new data. Your accounting software already gives you visibility of your cash flow and AccountancyManager shows you what everyone is working on. Add profitability to the mix and you can pinpoint areas of improvement, uncover opportunities for new revenue streams and track the profitability of any new approaches or ventures.
Track the success of your growth strategy
Your business goals probably feature growth in some form, whether that’s more staff, more clients, more profit or ‘all of the above, please’.
Even if you’re happy with the way things are, in a constantly shifting, increasingly competitive market, just keeping up requires continual improvement. (Especially if your competitors are already ahead of the curve with this level of business intelligence.) See how your strategy is fairing in real-time and make decisions based on hard, cold data in AccountancyManager.
Carve out your niche
Finding your niche is a hot topic right now. It seems it’s becoming more and more important for people to find accountants that align with their personal vision and goals.
Heather Townsend of the Accountant’s Millionaire’s Club offered her five steps in a recent AccountingWEB article, while Xero chimes in with some tips over on their blog.
Some great content that comes to the same forgone conclusions – test the market and make sure the niche you choose is profitable. In fact, by looking at your current profitability, you might find some ‘niche’ ideas to consider.
Review your fee structure
Make sure your fees represent the time you’re spending on your clients’ accounts. Many practices have agreed to support clients and submit coronavirus claims for free. So it’s a good time to check that the profitability of business as usual is healthy enough to support your cashflow over the coming months.
How to track your profitability in AccountancyManager
1. Go to Settings > Account Settings > Hide Unrequired Features and untick Hide Profitability Section.
2. Now you’ll find Profitability listed in the Tools drop down (to any staff that have the right permissions). Here, you’ll be able to see an overview of your profitability for the business and also per client, with the option to filter by manager and time period.
3. To enter an Hourly Chargeable Rate and Actual Hourly Cost for your staff, head to Settings > Staff, click the three dots next to the person’s name and then select Edit Details and Permissions.
4. Add fees under Services Required on your client’s file.
5. Once this is done, your team simply log time for their work from the Task List.
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