PracticeConsultingPractice management: Billing for time or value?

Practice management: Billing for time or value?

Let there be no misunderstanding - timesheet, time-records, WIP etc are parts of an internal costing system.

Of course, we need to know how much each job or client is making (or losing), BUT using our costs as the major contribution to arriving at a fee note detracts from the most fundamental concepts of billing – value for money.

Value for money is ONLY seen in the eye of the beholder. What we, as accountants, see is value for money is not necessarioy value for money in the clients eyes.

A recent survey showed that over 40% of clients thought accountants gave poor value. That, unfortunately, does not mean that the remaining 60% think we give good value – and so – with such a high percentage rating the profession in the way what can we do.

We can ignore it – but if we did and our competitors did not, who would win ultimately? There is plenty of evidence to suggest that many accountants are ignoring this problem, but I put it to you that if you were to address this problem you would be light years ahead – your market share would rise, dramatically as clients and other intermediaries (such as bankers and solicitors) would recommend your firm to non clients.

The first practical step to take is to pass the billing as far down the organisation as you can. Ideally the person who did the work should give the narrative and the fee AND should be able to discuss it with the client directly if necessary.

The second practical step is to agree the fee structure with the client BEFORE commencing work. THIS IS THE MOST IMPORTANT PART.

When negotiating fees, “value for money” has to be sold to them, not after. Never forget that this is often a two way process the client supplies information in an agreed format and at the right time – we use that information to advise. Any deviation from the agreed timetable should immediately trigger a re-negotiation of the fee, again, selling “value for money”.

It is all too easy to shy away from discussing fees in the hope that it will all pass through without having to talk about fees. All that does is make the client more upset when the “time-bomb” does eventually arrive.

The third step to consider is when doing the bills, only look at the number of hours taken and the work done in that context only. This is a stepping stone to applying the full principle of only billing based on the work done irrespective of the hours taken.

Finally, if you decide to ignore the three steps above, all is not lost. If you genuinely understand the importance of value for money billing – because if you really appreciate the importance of this, you will find your own way of implementing value for money bills in your firm.

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