Like any other business, your accounting firm is designed to make money. Of course, the main goal is to offer the best accounting services to your clients. But let's face it, all businesses are created to be successful financially. Accounting firms are generally good at finding ways to maximize their returns on investments, ROI) without selling more, and they do this through a variety of tactics.
First let's put a definition to exactly what ROI, return on investment, actually means. From Investopedia:
Return on investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments. ... To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment.
If you are looking to generate more return on your accounting firm’s investments, you could implement some of these tips.
- Stop Charging By The Hour
Charging by the hour is not the best pricing model for many accountants. Numerous accountants use this pricing model because some client accounts take longer than others and charging per hour means that customers are charged relative to the time it has taken for the work to be completed. This often means the work is charged after completion, which can increase the time it takes to receive payment. Therefore, more time, and consequently more money, is spent chasing payments.
Instead, consider charging clients based on their revenue and ensure payments are made before the work is started.
- Monitor Cost Per Acquisition
Acquiring clients can be very expensive. It is important for any business to monitor their acquisition cost to ensure they are getting the best deals and that costs are kept to a reasonable level.
For instance, some Pay-Per-Click campaigns can be expensive if the wrong keywords are used. Also, certain marketing avenues might not yield results.
By monitoring costs carefully and reducing marketing activities that are not beneficial, ROI can be increased.
- Subscription Services
Another good way to increase ROI is to not charge customers for each job but to charge them on a subscription basis. This allows clients to spread the cost of their accounting across the year. It also benefits accountants to work on accounts throughout the year and avoid being excessively busy during the key tax season.
It’s also great for allowing clients to see how small fluctuations are affecting their business on a regular basis.
Subscription models can also enable accountants to obtain a steady stream of income which is always good for proper tax calculations, predictions, and savings – another way to increase ROI.
The team at MoneyThumb hopes these tips will help you improve the ROI for your accounting firm. For even more assistance, download this free ebook courtesy of Canopy titled Build the Ultimate ROI Machine for Your Accounting Firm, A connected practice management tech stack blueprint.
In this ebook, you’ll uncover the ways you can leverage a variety of tools by connecting them to a single practice management hub. It will walk you through which pieces you need and how to make sure they can “play nicely” together.