5 Signs You’ve Outgrown Your Practice Management System

As accounting firms have expanded in recent years, firm leaders have struggled to get the performance they need from their existing practice management systems. Gone are the days when separate systems for billing, internal accounting, client relationship management (CRM) and project management could meet the demands of growth-oriented accounting firms.

Today’s leading firms draw on business intelligence that spans offices and functions to inform everything from day-to-day project management to strategic business decisions with long-term ramifications. Managing partners are looking at their PM systems through a new lens and demanding that they become more productive, accomplish more and work more efficiently — all so that the firm can focus on its real business of serving clients.

Yoked-together point solutions simply can’t deliver the performance that progressive firms require. But change isn’t easy or cost-free, so firm leaders frequently postpone the decision to upgrade even when the existing system is clearly not serving as well as it once did. How can firm leaders determine the best time for change? The following five signs indicate that the moment has arrived — or long passed.

  1. Constant patching of tenuous connections between point solutions. The need for timely and comprehensive data has challenged the limits of PM software, pushing individual firms and partners to create innovative ways of linking data stored in different silos. Though often impressively engineered, these tools for cobbling together disparate data sources represent a failure of PM software. If the firm is investing time in patching, tweaking and stitching together information just to get a clear picture of what’s going on, that’s a clear sign that it’s time for a PM system upgrade.
  2. Decreasing ability to course-correct. How much profit are you writing off due to inaccurate or inaccessible information? Lack of visibility into project status, time spent, and other key information means mistakes slip by. When leaders can’t see critical data, they can’t correct course during the engagement. As a result, they face a no-win situation: present clients with a fee increase after the fact or eat the loss. If unmet visibility needs are hurting profitability, a more capable PM system is definitely in order.
  3. Disjointed information damaging the client experience. If partners and marketers across the firm can’t access the same client relationship data and see an inclusive history of engagements, firm connections, communications and touches, the client experience suffers. Disjointed data that leads to client attrition or negative feedback signals that the firm needs a new PM system — one that incorporates full CRM capability.
  4. Increasing discrepancies in data from different stakeholders. One meeting, one question, three different answers. That’s the unfortunate situation for firms that rely on an inadequate PM system. How much revenue is the firm generating by practice area? By industry? Which partners or projects created the most profit last year? In many cases, this kind of information is nonexistent or almost impossible to tease out. If analyzing revenue (or other business intelligence) takes superhuman effort and excessive time, the firm requires a more full-featured PM system.
  5. Concerns about downtime. If a natural disaster, a power outage or other threat to local servers can bring work to a halt, the firm is vulnerable to costly and disruptive delays. Such external factors could spark problems that persist long after the original issue is resolved. PM systems that limit accessibility based on device or location won’t cut it anymore, at least not for a busy accounting firm. Firms that haven’t yet adopted a system with secure, cloud-based connections and anytime-anywhere access for all kinds of devices are putting performance and profit at significant unnecessary risk, and should seriously consider upgrading.

All five of these worrisome signs indicate that an accounting firm is missing out on opportunities for enhanced growth and profitability. If you recognize your own PM system in this list, you may be wasting resources that could be better spent on billable work and growth initiatives. The sooner you make the move to a more functional system, the more quickly you’ll be able to redirect those resources to generating revenue, delivering improved client service and creating sustainable firm growth. To learn how PracticePro 365 can help you deliver the performance you need, request a demo today.


Transform Technology Resistance to Create Innovation Champions

Growth in a competitive environment typically depends on adoption of new technology. But CPA firm leaders often encounter resistance to such investments, sometimes from unexpected quarters.

Highly talented, experienced partners and stakeholders are willing and able to provide feedback regarding new technology under consideration. Much of that feedback is valuable, helping firm leaders recognize potential pitfalls and overcome the inevitable challenges that accompany such a significant initiative. However, sometimes pushback stems from misunderstandings and attachment to the status quo. Left unaddressed, such resistance can derail the adoption of what might become game-changing innovation. But by tackling these concerns head-on, firm leaders can transform resistance into evangelism.

1. Nonspecific resistance to change. A general resistance to change isn’t new among accountants — or anyone else, for that matter. Some team members might have a hard time imagining how a current system can be improved — even an inefficient one. Most firms will hear comments like “If it ain’t broke, don’t fix it” and “If it was good enough for [founding partner’s name] then it’s good enough for us” from staff at all levels.

Resolution: Help resisters understand how the new technology will benefit them in their day-to-day work, saving time and making their jobs easier. Even better, demonstrate to them how the new technology will help them run more profitable engagements and make the firm more competitive, enabling them to elevate their personal brand in the firm.

2. Protective attitudes. Among those who have the most invested in the status quo are the team members who have designed integrations that allow the firm’s separate point solutions to function together. With so much of their blood, sweat and tears invested in these workarounds, it’s not unusual for these technical advisors to worry about their future at the firm. If the integrations they’ve labored over are obsolete, will the individuals who tended to their daily “care and feeding” also become extraneous?

Resolution: Acknowledge, respect and offer thanks for the extraordinary effort and commitment they have demonstrated. Remind them how their achievements have laid the foundation for the firm’s success. Reiterate that you’re counting on them for the same kind of critical thinking to solve future problems and enable continued firm growth.

3. Governance concerns. Given their high levels of capability and commitment, these technical advisors may worry about what will happen if they are no longer governing the flow of information into and out of the system. Will the data still be handled properly?

Resolution: As the individuals who were already overseeing the input and management of data, these gatekeepers are in an ideal position to maximize the value of a new system. Assign them an active role in providing training on the new system, updating manuals and processes, and monitoring compliance with revised protocols.

4. Fear of being left behind. Technology’s head-spinning rate of change can leave even tech-savvy staff anxious about their ability to keep up with an entirely new approach. Technology angst is both real and reasonable; it’s probably not limited to the team members voicing concerns.

Resolution: Firm leaders must promise — and deliver — effective training on the new system. Offer training in groups, with less tech-savvy staff getting a learning experience that is deeper, more comprehensive and more repetitive than the one provided for digital natives. You can also offer refresher courses and in-depth seminars for those who need additional help (but do this gracefully to avoid the appearance of remediation).

As the firm’s visionary, one of your primary jobs is to encourage others to embrace innovation. Accountants are skeptical by nature, but don’t let their pushback derail needed innovation. When approached with sensitivity and respect, the resistors of innovation can be transformed into vocal champions who can help leverage technology to launch your firm to the next level.



The Perils of Point Solutions

A data-driven approach to business decisions is key to accounting firm profitability and growth. And that makes tracking, crunching and integrating numbers across disparate firm functions mission-critical. But the tools available to accounting firms haven’t yet caught up with their needs.

Progressive CPA firms have devised a variety of solutions to boost the capabilities of their existing tools. Many firms rely on point solutions that have been cobbled together with a series of integrations. While these techno-Frankensteins are often truly impressive accomplishments of engineering, a closer examination reveals that this approach leaves firms at a competitive disadvantage.

  • Excessive costs — Each one-trick pony adds licensing costs as well as time and money for maintenance and training. When firms use a dozen or more point solutions, as is common, these costs become a significant and unnecessary drain on resources.
  • Platform incompatibility leads to brittle or nonexistent integrations — Each point solution is designed for a specific platform (e.g., Microsoft or Oracle) and space (cloud, on-site or mobile). Making these solutions work together requires either homegrown or third-party integration tools. Besides the added costs for consulting, development, maintenance and training end users on integration protocols, there’s the inescapable potential for failure. Carefully balanced integrations are sensitive to many factors, and productivity and profitability both take a hit when one element falls out of alignment. When a single user enters data in an unexpected way — or when a linked system is updated — the entire house of cards can collapse.
  • Inadequate visibility — Firm leaders need a holistic view of client and engagement status. Point solutions struggle hard in this area. Data taken from different sources makes it nearly impossible to generate powerful, high-quality business intelligence visuals.
  • Bad data — Working with multiple point solutions elevates the risk of relying on data that is inaccurate or incomplete. Which group is most profitable? How many hours really remain in the budget for an engagement team? Managing partners lack confidence in the numbers when they’re looking at multiple “versions” of the truth. Open systems like Excel are particularly vulnerable to user error that can throw unpleasant wrenches into the numbers leaders rely on.
  • Bottlenecks and inefficiencies — Managing data and replicating it across point solutions takes time that could be better spent on billables. This tedious work usually falls to just a few individuals. When the person responsible for a data manipulation task is unavailable, it can be impossible to proceed. Delayed dissemination of important information prevents timely decisions and encourages suboptimal decisions based on missing, incomplete or inaccurate data.

Ingenuity, spit and glue are valuable tools that can solve immediate problems. But in the long run, cobbled-together point solutions are no match for a cohesive practice management system that unifies all firm activity — from ideation to balance sheet.

To learn how PracticePro 365 supports visibility, real-time insights and an integrated approach to managing key data, request a demo today.

How Visionary CPA Firms Align Technology with Strategy

Accounting firms are transforming. The days of individual CPAs running their own fiefdoms under a single brand are gone. Over the past decade, visionary CPA firms have adopted a top-down approach to governance that mirrors the traditional corporate management style. This new practice management style allows for greater operational efficiency and profitability. But such improvements do not follow automatically. 

The new accounting firm practice model demands a fresh approach for everything from cross-team collaboration to marketing, business development and billing. In the quest to build a single firm with high efficiency and standardized business processes, leaders must consider a number of key strategic needs:

  • Collaboration and cross-selling across practice disciplines
  • Professional marketing and business development, including social media outreach, event management and marketing campaign management
  • Visibility into billing, project status and client relationships
  • Secure, always available access for an expanding and remote workforce
  • Effective growth platform and culture

  The demands of the new practice model call for a different approach to practice management technology. The right solution can enable multidisciplinary firms to reap the efficiency and profitability benefits they envision. But matching the available tools to the firm’s specific needs often poses a complex and frustrating challenge. While individual firm’s goals vary, a number of features and capabilities appear consistently on the technology wish lists of growth-oriented firms of every size.  

PracticePro 365 was custom built to support the growth needs of visionary CPA Firms. Request a demo to learn how PracticePro 365 can enable your firm’s growth and profitability.

The Accounting Profession Demands a Better Solution

The accounting profession is undergoing rapid change, but many of its greatest challenges are issues that firms have been wrestling with for years — among them, fragmented software solutions that do more to obscure the state of the firm than illuminate it.

This year’s BDO Alliance USA Conference provided an excellent opportunity to hear from CPA firm leaders representing about 80 firms across the U.S. In our discussions with these leaders, we confirmed that most practice management systems — rather than solve firm management problems — create additional barriers to running a profitable practice.

Technology provides today’s firms with unprecedented access to critical business intelligence: clients, engagements, billing, and firm performance can each be tracked in detail to provide useful information. However, when that data exists in separate silos, its value for driving business decisions is significantly diminished.

Practice management systems are designed to reflect the real-world needs of accounting firms, yet what we heard at the conference confirms our belief that most leave users spending too much time in exchange for poorly integrated data. The predictable result is a widespread sense of disappointment and frustration that the software doesn’t deliver the increased efficiency, visibility, and profitability firms had hoped to gain.

Based on our interactions at the conference, these are the three biggest frustrations that accounting firms find with their practice management systems:

  • Multiple point solutions, each requiring “care and feeding.” Many of these single-function solutions do in fact perform their individual tasks well. The problem is that when relevant data is siloed and can’t be easily combined with the data in other systems, it’s impossible to make strategic decisions based on current information. The solution: Accounting firms need a client-centric, holistic ecosystem that provides a single source of the truth about their clients and their firm.
  • No real-time insight into how a project is progressing. This lack of visibility leads to understandable frustration. Worse, it creates the potential to leave huge amounts of money on the table due to inadequate communication. Without access to real-time numbers regarding engagement data (billables, deliverables, actual time spent on a job versus projected time), isolated reporting makes it impossible for firm leaders and project managers to determine and pursue an optimal path. The solution: A practice management system that truly meets user needs must provide anytime, anywhere access to real-time work-in-progress data to inform strategic decisions.
  • Lack of visibility into metrics that matter. Point solutions typically provide metrics relating to the function they perform. But they don’t begin to meet firm leaders’ need for performance measurement data. How is the engagement progressing in comparison to the original plan for it? Which types of engagements are the most profitable? Without being able to find answers to questions like these, isolated metrics have limited utility. The solution: A fully functional practice management system should include a dashboard with real-time, actionable business intelligence that integrates data from all sources, avoiding the need for error-prone and inefficient manual migrations.

Most practice management systems can yield answers to some of their users’ questions. But unfortunately the answers are too often incomplete, inaccurate or overly broad. Meaningful answers tend to require a granular approach along with access to data from multiple sources. To deliver full benefit, your PM system should be able to offer clear answers to questions such as:

  • Are my billers getting bills out the door on time?
  • Who owes the firm money?
  • How much business have we done in each industry?
  • What’s our work in process? By office? By business line? By responsible partner?
  • Could a current engagement become more profitable with more or different staff?
  • Are my operations as efficient as they appear at first glance?

Minimizing risk, knowing where the firm stands, and maximizing profitability aren’t new hurdles by any means. These are the frustrations, which we have experienced in our own CPA firm,  that led us to develop PracticePro 365.

If your current practice management system can’t give you the answers you need, think about the opportunities you could be missing. Is that lost potential an acceptable cost? To learn how PracticePro 365 supports visibility, real-time insights and an integrated approach to managing key data, request a demo today.

Wakeup Call to CPA Firms: Stop Writing Off Your Profits

How much money did you leave on the table last year? Based on industry averages, it was probably as much as 20% of gross fees.

Maybe it was higher this busy season, since this was the first tax season after the full implementation of the most significant tax reform in decades.

Most private companies and nonprofits are implementing the new revenue recognition standard this year, and then we have the new lease accounting standard in 2020. If yours is like most other mid-sized CPA firms, your clients are ill-prepared for these new standards. Are you prepared to bill them for all of the time you spend helping them get ready?

The truth is that running a profitable CPA firm is hard, and it’s only made worse by the fact that we seem to have this profession-wide delusion that writing off between 10% and 20% of our standard billings is totally acceptable.

We tell ourselves things like, “We put in too many hours on that job,” or “It’s too late to bill for those hours.” Also, “They are an important client, so it’s OK that we have a lower realization rate on audit and tax compliance work.” Why is this acceptable? After-the-fact rationalization does not replace upfront anticipation and communication. Unless you start doing things differently, you can’t expect things to get much better.

Clients want proactive service and a reasonable cost estimate for services before the work is undertaken by the firm. Partners are supposed to anticipate client needs and communicate the level of effort required and the related cost. When this gets out of order, client satisfaction rapidly declines.

I would argue that a main reason for underbilling is because until now, we have lacked the tools to monitor and manage engagement profitability, including adjustments to billing arrangements, when it really matters.

Think about your firm’s budgeting process. Chances are it consists of a spreadsheet that allows each project manager to input the number of hours each team member is expected to spend on each task. But what if that person discovers they need more time to complete a task? What if they finish in less time?

This manual, static process is part of the reason we usually don’t find out until after the engagement closes that the staff had to put in many more hours than budgeted because the client wasn’t ready, and the staff had to help with prep work that the client was supposed to have done. The result: Unbilled scope creep.

One of the great ironies of our profession is that we don’t know what our true profitability is until after an engagement closes and we scramble for additional billing opportunities.

According to the 2018 Rosenberg Survey, the average firm with at least $20 million net revenue had roughly 83% realization. This means that the assumed 10 partners in that average firm left more than $4 million — or $400,000 per partner — on the table. Put another way, if they hadn’t taken those write-offs, those partners could have increased total partner compensation by about two-thirds.

How do we stop this cycle of writing off our profits?

First, CPA firm leaders must commit to the necessity of continuously monitoring engagement status and profitability in real-time in order to make the necessary adjustments in staffing and client communication. And then we need the tools that allow us to make changes before it’s too late. It is imperative that firms put tools in the hands of the people who are closest to the engagements — our project managers.

With our latest release, PracticePro 365™ brings these tools to the market. We designed our new Profitability Forecaster to provide visibility into planned and ongoing engagements, giving you the power to make changes that will increase profitability.

The Profitability Forecaster adds a new dimension to CPA firm engagement planning and performance. Not only does it show you who will be doing what on each engagement and how many hours each person is expected to bill, but it also shows when they will perform these tasks. And it makes it easy for team members and project managers to record changes in those estimates, so when circumstances change, so does your estimate at completion.

Armed with this tool, CPA firm leaders have the power to:

  • Monitor and manage profitability of projects in process
  • Project accurate estimates-to-completion
  • Properly estimate engagement realization and create more accurate financial statements
  • Prioritize their best clients
  • Balance the supply of people with the supply of jobs, helping to smooth out peaks and valleys
  • Avoid scheduling conflicts
  • Identify and reward star performers, and identify team members who need coaching

The Profitability Forecaster is a tool — a powerful one that illuminates which jobs (and which people) are making money for the firm. But at the end of the day, it will only benefit those firms where the leaders have the courage, vision and energy to commit to act on the insights it surfaces and change the status quo.

Want to see how PracticePro 365 Profitability Forecaster can add a new dimension to your firm’s engagement planning? Schedule a demo today.