Finding an accountant in North America that feels like they get paid what they’re worth by their clients is like finding a unicorn in your backyard – a rare find. The reality is that most accounting firms I’ve worked or spoken with feel that they are underpaid regularly. Face it, members who work in industry must face their employers on an annual basis with respect to remuneration. As public practitioners, you must do it on a daily basis. For many practitioners, one look at their billings, WIP, recovery or receivables usually shows that they’ve been turning a blind eye to what all this is doing to their cash flow.
In this article, I will share with you some very specific things you can do to get paid what you are truly worth.
How do you know what you are worth?
Asking yourself this question is a great place for a practitioner to start. The answer is that you are worth different amounts to different people and different amounts to the same people, for different projects.
One of the best and most accurate methods to measure your true worth is to compare your fees to what larger firms in your area are charging for similar work. As you know, the largest firms in the market often charge two or three times what you charge but may deliver much less service.
Another solid measure of your worth is to honestly answer this question for yourself, “What do I feel I am worth?” Don’t fall into the trap of looking at what people pay you; think in terms of what you feel you are worth or would like to be worth. It is interesting to note that every accountant that I have coached to build their business has undervalued themselves. When I had them increase their rates by 10%, 20%, 30% or even as high as 40%, most of them panicked. They thought it was impossible to ask this of their clients because the accountants believed that they were not worth it. It is fascinating but in each case, most of their clients went along with the increases (because the client actually valued the accountant more than what they were being charged) and they experienced an overall increase to revenues.
The best measure of what you are worth is to ask your clients. Now, it is tough to ask them what you are worth. It is easier to ask them the “value” they receive from you. For example, one accounting firm I work with was hesitant to increase their rates and their recovery on their WIP too. What they started to do was ask their clients, after the year-end was completed, the value the client felt they received from this accounting firm. A scale of 1 – 10 was used, with 10 representing excellent results. Here are how the responses were interpreted:
· Lower that seven meant there was an opportunity to do a better job · Seven to eight meant right on track · More than an eight meant the client received a greater value than they were charged This can quickly and easily be done via a Client Survey.
After surveying their top clients, it became quite clear that the firm consistently delivered a 9 out of 10 in value. In coming to this realization, it was much easier for the firm to increase their rates. It is interesting to note that when their rates are raised, most clients find the value received stays the same or even INCREASES. The more people pay for something, the more they tend to value it. Low rates can prove to be a liability.
Three Steps to Get Paid 100% of What You Are Worth 1. Bill 100% of Your Current Rate/WIP In the coaching programs that I facilitate for CGA-BC, I have seen inside many accounting practices. The almost guaranteed commonality is that firms do not bill 100% of their WIP. Doing work and not getting paid for it makes absolutely no sense to me. I have seen many firms give away $20,000, $50,000, $100,000, and even as much as $300,000 per year just because of their failure to charge for all work done. Billing 100% of your WIP is a simple way to dramatically increase the health, bottom line, and pride of most firms. It may be simple but initially is difficult to do. Having helped many firms move towards 100% recovery (95% I believe is a good rule of thumb), I know it can be a bit of work but the rewards are tremendous.
2. Increase the Value of What you Deliver to Your Clients By surveying your clients and understanding what they value most (and least) from you, your firm will be able to provide work of more value to your clients. One PSC participant found that one of their clients needed someone to help them brainstorm about business strategies. They booked regular meetings with this client at a rate higher than the year end work. The client attached great value to this and therefore gladly paid more, both in the hourly rate and the total dollars charged. Most client’s value work that makes them or saves them money. They rarely value compliance reporting.
3. Communication, Communication, Communication One of the critical mistakes many accountants make is not discussing fees in advance with their clients. When the client gets a bill after the year-end is done and it is 25% more than last year or at least more than what was expected, they get upset. Most accountants interpret this as fee resistance by the client. This is not the case. It is merely a sign that the accountant has been an inconsiderate businessperson. No one likes surprises when bills arrive. In many cases, if clients are expecting to be invoiced more this year they are willing to pay up, providing they perceive good value received in exchange for increased costs. One of the easiest ways to mitigate surprises is to institute a value billing system in the firm. The client’s are billed on a monthly basis and they receive more value.
So, the moral of this story: Be upfront with your client about fees. And, if you over-run the estimate, do what the car dealership does when they discover your car needs more work than originally estimated: Let the client know what you ran into and get their okay before going any further. Most of the time they are glad you kept them informed and will agree to a higher billing than originally planned.
In summary, getting paid what you’re worth as a firm is something attainable for any firm willing to change and/or implement a few systems in their practice. Most firms are undercharging for their work. They have many opportunities to boost their outlook on the value of that work and ultimately augment their bottom line. You are worth more to your clients than you think.
Getting Paid What You Are Really Worth as an Accounting Firm - To learn more about this author, visit Kevin Lawrence's Website.
Like this article? Share it with your friends
|
|
|
![[Get Copyright Permissions]](http://license.icopyright.net/images/icopy-w.gif){kind=small}
This is hard to believe, but according to a new study, most American executives say they believe they are overpaid.
Have you ever recommended a doctor?
On what basis?
