Strategies for Helping Your Clients Earn More Money

The traditional accounting professional can perform a number of services for small businesses that will help them see more profit. Unfortunately, most small business owners only associate their accountant as the person who keeps the books and prepares the tax returns.

However, there is a large group of accounting professionals who concentrate on “Advisory Services” – all of the services accounting pros offer their clients beyond traditional compliance. These services take many shape and forms, but the top services that I feel have the most immediate impact to a business’ bottom line include:

  1. Pricing Analysis
  2. Process and Workflow Improvement
  3. Key Performance Indicator Analysis

Before we deep dive into the details on how each of these services can help a business become more profitable, let me clarify the three types of results that will increase the profit, or bottom line, for a business. Those include:

  • Increasing volume/sales, while also maintaining the same profit margins and operating expenses.
  • Increasing profit margin, while also maintaining the same operating expenses. This ties to increasing prices, while also maintaining the same sales volume (even reducing the volume, but with a higher price per unit).
  • Decreasing operating expenses, while also keeping prices, sales and volume the same.

Ideally, going after all three of these will yield the best results. However, it is likely that the advisory services you offer your clients will aim for only one of these at a time. It is also important to mention that at the heart of any of these services, there is an accounting system, such as QuickBooks®, that records all business transactions, while also having the capacity to produce reports to provide objective data to back up your assertions about how to implement any of the advice that will be given.

Let’s go into each of these services, in detail, to discuss the effect it can have on your clients.

#1: Pricing Analysis

Through experience and knowledge, you know how to build a report that will break down all the sales for a particular period (let’s say, last year), the average price per product, product category and maybe even the receiving client. This type of analysis can provide insight into which products or services can bear an increase in pricing across the board. While price increases have the very obvious benefit of providing an immediate increase in profits on every specific sale or engagement, they also have the feared backlash of a reduction in the total volume or sales – something most business owners fear.

How can you help? For starters, you can help monitor profit as your clients experiment with pricing, during a specific time period, to find the perfect balance between increasing prices and maintaining the client base or volume. Increasing prices will have the fastest and most significant impact to the bottom line. In some cases, the decrease in volume can reduce the impact on the cost of resources or fixes expenses, giving the staff back some time, and possibly, less fixed expenses. This time and money could, for example, be reinvested into improving the quality of the product/service sold. Also, in some cases, a pricing analysis leads to creating multiple products/services that target different client types based on price, and this can even lead to increased volume/sales.

#2: Process and Workflow Improvement

Here is another great advisory service you can offer that guides your clients on how to integrate its current accounting system with apps or other software to streamline process and workflow improvement.

For example, QuickBooks maintains an entire customer list with contact information for each client. When your business interacts with its customers, there is likely a place where all of the conversations, price quotes and potentials deals are recorded, such as in someone’s notepad or spreadsheet, both of which are neither secure nor efficient.

Instead, you can help implement a customer relationship management (CRM) system that syncs with QuickBooks to track all these customer interactions. Common CRMs include Method:CRM or Insightly. With QuickBooks integration, your clients can avoid entering or searching customer contact information. This could seriously improve workflow!

Another example is tracking employee productivity. For small businesses, productivity is a subjective term; it is hard for an owner or manager to use objective ways to reward or coach their employees into improving their effectiveness. Here, you could recommend implementing a timesheet management system, such as TSheets Time Tracking. This system, used by all employees to record what they do for each of their clients/projects, should integrate to the payroll system before creating a paycheck. Through this app, you can create profitability reports by customer or project, allowing for an objective way to measure the financial effectiveness of each employee’s time spent on revenue-generating activities.

You can also observe how all staff members enter information into the accounting system, including estimates, items and pricelists, invoices, and bills. This allows you to see if there are opportunities to enter the information faster, more accurately optimize the staff members’ time, and reduce losses due to errors or inaccuracies. Similarly, you can assess whether the Internal Controls in place protect the bottom line, looking at risk theft, embezzlement from staff members, or paper losses related to not collecting sales or paying expenses several times due to processing errors. Ultimately, improved processes and workflows should reduce operating expenses, while also maintaining or increasing output.

#3: Key Performance Indicator Analysis

How cool would it be to implement a reporting system tied to your client’s accounting system to provide a combination of financial and non-financial key metrics? These metrics can be translated into easy-to-understand results in real time, providing the small business owner or manager immediate feedback on how the business is performing.

Key Performance Indictors (KPIs) summarize large amounts of data into simple numbers, or percentages, for Month-to-date Actual vs. Budgeted Expenses, for example. Here, management can determine if, by the 15th of the month, the business is above 50% of budget, making sure the business is on track to spend more than its budget. Having this information enables the business owner or manager to make on-the-fly adjustments on their expenditures in order to prevent blowing the budget early on.

There are also some great KPIs you can build, such as Return on Equity (profit as a proportion to the value of the business) and Quick Ratio (indicates current assets minus inventory vs. current liabilities). And, active decision-making based on KPIs can help reduce operating expense. One of my favorite KPI tools is Fathom (integrates to QuickBooks Online).

KPI

Of course, I realize that your clients, and really any business owner, should never rule out the practitioner who only provides compliance-only services, such as tax preparation. If you’re that person, you can help increase your client’s bottom line by avoiding penalties and interest! So, as much as I champion Advisory Services as the best path to help small businesses increase their profitability, I recognize that other traditional services are very important to protect those profits as well.