Maintaining Profitability or improving profitability Phillip Rosebrook, Jr. CR.
The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.
-
Upload
cori-warren -
Category
Documents
-
view
240 -
download
0
Transcript of The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.
![Page 1: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/1.jpg)
The Keys to Profitability, Accountability & Efficiency
Changing How the Work Gets Done
![Page 2: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/2.jpg)
Keys to Profitability
• Profession wide issues • Firm staffing & operation• Individual accountability &
efficiency
![Page 3: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/3.jpg)
PCPS Top Issues
• Partner accountability/unity• Bringing in new clients• Retention of current clients• Fee Pressure/Pricing of services• Developing a succession plan
Source: AICPA 2011
![Page 4: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/4.jpg)
Challenges of the Profession
• Demographics
• Technology
• Value & Relevance
![Page 5: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/5.jpg)
AICPA Demographics
Source: AICPA 2009
![Page 6: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/6.jpg)
AICPA Demographics
-20 -15 -10 -5 0 5 10 15 20 25 30 35 40
26
31
36
41
46
51
56
61
Women
Men
![Page 7: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/7.jpg)
Current Demographics
CPAs
Non-CPAs
MenWomen
Women Men
![Page 8: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/8.jpg)
Firm of the Future
CPAs
Non CPAs
![Page 9: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/9.jpg)
Technology
• Ownership• Strategic partners• Process driven• Unintended consequences
![Page 10: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/10.jpg)
“And we missed it.”Samuel J. Palmisano, Chairman of the Board, IBM
![Page 11: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/11.jpg)
Relevance & Value
• Reliable information– Financial statements– Quality
• Value– Better Decisions
• Current information• Positive outcomes
– Cost savings
![Page 12: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/12.jpg)
National Survey
• 2010 Career Development Survey– INSIDE Public Accounting– Over 1800 responses– Well being & work research
![Page 13: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/13.jpg)
Average Profit Margins
26.0%
28.0%
30.0%
32.0%
34.0%
36.0%
2005 2006 2007 2008 2009 2010 2011
34.6%
32.5%31.5%
30.5%29.1% 29.1%
30.0%
Perc
enta
ge
Margin
© INSIDE Public Accounting 2011 Used with permission
![Page 14: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/14.jpg)
Pricing and Margins
• Pricing trends– Have not kept up with
expenses– Realization issues (Real %?)– More fixed fees– Client expectations not always
managed
![Page 15: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/15.jpg)
Firm Staffing & Operations
• Personnel Costs• Passive management• Realization/efficiency• Utilization• Processes & procedures
![Page 16: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/16.jpg)
Salary & Benefit Costs• Average personnel costs as
a percentage of net revenues – 2007 44.7%* – 2008 45.4% *– 2009 46.8% *– 2010 46.4 %*– 2011 45.1%*
• Many firms now 50%+
* © INSIDE Public Accounting 2011 Used with permission
![Page 17: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/17.jpg)
Salary Trends
5000055000600006500070000750008000085000
Dollar A
mount
Average Pay per Professional
All Firms
T100
© INSIDE Public Accounting 2011 Used with permission
![Page 18: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/18.jpg)
Average Pay per Professional
0.0%
5.0%
10.0%
0-2 3-5 6-7 8-9 >10 Avg
Percentage Increase 2007-2011
© INSIDE Public Accounting 2011 Used with permission
![Page 19: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/19.jpg)
5 Year Trends
0.0%1.0%2.0%3.0%4.0%5.0%6.0%
7.0%
All FirmsT100
Avg Salary
Realized RPH
© INSIDE Public Accounting 2011 Used with permission
![Page 20: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/20.jpg)
False Reporting
Over 60%!
![Page 21: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/21.jpg)
Salary Strategy
• Reverse upward delegation– Unintended consequences– Don’t allow people to work below
their level– Higher level personnel must
leverage– Utilization levels need to increase
![Page 22: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/22.jpg)
What tasks are you doing that you shouldn’t be doing?
• Scanning• Admin duties• Setting up files• Making copies• Inputting 1099s• Typing letters• Write up work• Payroll reports
• Chasing client info• Data entry• Data imports• Filing PDF docs• Ordering supplies• Deliveries• Filing• Bank
reconciliations
![Page 23: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/23.jpg)
Firm of the Future
CPAsCore
Non-CPAsNon-Core
![Page 24: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/24.jpg)
Passive Management & Client Service
• After the fact monitoring – Charge time/Budgets– Accountability/Profitability– Credit & A/R
• Inefficient processes & systems
• Reactive client service
![Page 25: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/25.jpg)
Active Management
• Continuous budgeting and reporting• Partner & staff accountability plans• Manage
– Margins– Leverage– Scheduling/utilization
![Page 26: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/26.jpg)
Client Expectations
• Manage client expectations about fees– Better engagement letters
• Bilateral• Time sensitive
– Stop quoting fee ranges
![Page 27: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/27.jpg)
Change Orders
• Develop a firm wide standardized change order process– Starting and stopping work– Failure to prepare– Errors in records– Records not ready at time specified
![Page 28: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/28.jpg)
Credit Strategy
• Stop extending excessive credit• Firm wide credit policy• Payment arrangements
– Scheduled payments– Budget payment plans– Deposits
![Page 29: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/29.jpg)
Utilization
• Overall utilization averages about 52%
• Declining for some years• Significant competition for
our time
![Page 30: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/30.jpg)
False Reporting
Over 60%!
![Page 31: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/31.jpg)
Utilization Strategy
• Plan• Block out time to work
exclusively• Schedule every week• Reconcile actual hours worked to
the schedule
![Page 32: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/32.jpg)
Pay Structures
• Pay when services are needed– Is the 40 hour work week a thing of
the past?– Pay for time needed?– Core vs. non-core positions
![Page 33: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/33.jpg)
Processes Lagging
Over 60%
![Page 34: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/34.jpg)
Files not Consistent
Over 72%
![Page 35: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/35.jpg)
• “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency”. Bill Gates
![Page 36: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/36.jpg)
Reactive Client Service
• Service centered – Task oriented– Deadline driven– “Have to” services– “Emergency room” processes
![Page 37: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/37.jpg)
Reactive Client Service• Not managing client
expectations– Timing of work– Fees– Delivery– Value– Scope– Risk
![Page 38: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/38.jpg)
Individual Accountability
• Engagement• Coaching • Accountability• Success
![Page 39: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/39.jpg)
![Page 40: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/40.jpg)
Gallup Q12™
• 12 questions to measure strong feelings of employee engagement
Source Gallup Consulting 2010
![Page 41: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/41.jpg)
Decreased Staff Engagement
• Due to after the fact:– Job management– Feedback– Career coaching
![Page 42: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/42.jpg)
Limited Guidance
•Expectations are not clear
•Budget overruns are more likely
Over 60%
![Page 43: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/43.jpg)
Unrealistic Expectations
•Lack of creditability
•Less accountability
•Less optimism
Over 60%
![Page 44: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/44.jpg)
Involuntary Overtime
Over 60%
![Page 45: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/45.jpg)
Personal Plans on Hold
Over 70%
![Page 46: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/46.jpg)
Insufficient Feedback
![Page 47: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/47.jpg)
Confusion About Advancement
![Page 48: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/48.jpg)
Rating of Motivators
![Page 49: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/49.jpg)
Management/Staff Engagement Strategy
• Annual plans• Career Development• Coaching• Focused on success
![Page 50: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/50.jpg)
Copyright ©2012 Steve Erickson LLC
![Page 51: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/51.jpg)
Implementation
• Change process– Simplified– Incremental– Positive– Sustainable
![Page 52: The Keys to Profitability, Accountability & Efficiency Changing How the Work Gets Done.](https://reader033.fdocuments.in/reader033/viewer/2022061602/56649eaa5503460f94bae8bd/html5/thumbnails/52.jpg)
Copyright © 2012 Steve Erickson LLC
Accounting FirmProfit Improvement Model TM