Accounting firms are generally good at finding ways to maximize their returns on investments without selling more, and they do this through a variety of tactics.
If you are looking to generate more return on your accounting firm’s investments, you could implement some of these tips.
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.
However, this often means that the work is charged after completion and this 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.
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.
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.
If you are an accounting firm looking to raise ROI, or in another industry looking to increase your ROI, then consider the three tips mentioned above as ways to boost profits.
How do you improve ROI? What is your top tip to improve profits in your business?
Let us know in the comments below.