Practice Management

The Defining Categories of Accounting Firm Practice Management

Written by Ian Vacin

Over the past decade, practice management for accounting firms has evolved dramatically. There is perhaps no better illustration of this than by considering how the term itself — practice management — is defined quite differently by legacy venders like Wolters Kluwer or Thomson Reuters, compared with modern players like Karbon. Major changes in the profession — including the introduction of cloud accounting (SaaS), increasing demands for client collaboration, and further commoditization of tax and bookkeeping services — have ushered in a new set of requirements and a new definition of practice management for the accounting profession. Practice management is no longer considered a nice to have, but a differentiator for improving client service and increasing profit margins.

The simplest way of defining modern practice management is to break it down across eight categories:

  1. Customer Relationship Management (CRM)
  2. Billing & engagement management
  3. Staff & time (capacity planning)
  4. Workflow & processes
  5. Project & task management
  6. Timeline & history (communications & collaboration)
  7. Document management
  8. Practice Intelligence

Practice Management

Each of these categories has a set of needs and requirements that are quite unique to accounting firms, and can vary greatly between different firms. For instance, with CRM, accountancies need to track the multiple representations of a client. A client might be an individual tax client, non-profit client, and a small business client — with each contact record having a different email and address. This particular requirement becomes a problem for many non-industry specific (horizontal) solutions in the marketplace.

Depending on your firm’s size, clients, and technology-savviness, you may require all eight categories in a practice management solution, or just a subset. As I stated in my last article, you should consider whether you need a single, private ecosystem solution or a best-of-breed approach. Where it makes sense, you want to limit the complexity, and save time and money. For a list of the players that span the practice management category, check out the Accountex Technology Ecosystem landscape from Accountex.

Here is a breakdown of each practice management category, with what to consider and available solutions.

Customer Relationship Management (CRM)

Your relationship with your clients is vital for your firm’s survival and growth. Most accounting firms don’t need a full CRM, but rather a contact-management system — a system that can track clients, associated contact details, accounting/tax details, and internal notes. In addition, your firm may want the ability to track custom information like birthdays and client preferences. Something that is critical for your firm is an ability to track the multiple representations of your clients.

If you are a larger firm, you might want to choose a CRM solution that can also handle or integrate with a marketing automation system (like Marketo, HubSpot, Mailchimp, or Constant Contact). While horizontal options exist (like Salesforce, Insightly, Pipedrive, Accelo, Zoho, or Infusionsoft), most firms choose to rely on an accounting-specific lightweight contact management system (e.g., QuickBooks Online Accountant, Xero HQ, SageLive) or a full accounting practice management solution that includes a CRM component (like Karbon, Office Tools, Thomson Reuters, or Wolters Kluwer).

Billing & Engagement Management

While clients might be the center of everything, your firm thrives on the revenue generated from the services provided to those clients. This makes client billing (invoicing and payments) a critical component. Fortunately, every firm has a billing solution already at their fingertips. Whether you prefer to use Intuit, Xero, Sage, or MYOB as your general ledger vendor, this can be used internally for managing your own books and for billing your clients. In addition to that, you may want to consider using an engagement management solution like GoProposal or Practice Ignition as well.

With a product like GoProposal, you can also manage and automate your pricing, proposals, letters of engagement, e-signing, enable the billing and collections processes, and integrate to your workflow. Using an engagement management solution will increase your proposal acceptance rate, reduce the average time of acceptance, ensure you get paid on-time, eliminate the collections chase, and automatically spawn the work within your accounting workflow management system.

Staff & Time (Capacity Planning)

Speaking of billing, time billing is a required component for many firms. TSheets by QuickBooks, Deputy, Chrometa, BigTime, and BQE Core make it easy to track and report time, invoice, and/or integrate to your general ledger. If you have shifted to value-pricing or fixed-fee billing, your requirements are less about time billing and more about capacity planning and resource scheduling. Having visibility across work within your firm and an understanding of who has, or will have, free capacity is critical when bringing on new engagements, promising delivering dates in the sales process, managing scope creep, and preparing for season spikes.

Because of the overlap with CRM, workflow, and project management capabilities, only the complete practice management products (e.g., Thomson Reuters, Wolters Kluwer, or Karbon) can deliver this to accounting professionals. If you prefer a standalone option, you might want to consider a horizontal solution like Anaplan.

Workflow & Processes

When most accountants think of practice management, they think of workflow and processes. If you don’t have a solution today, start the process by documenting your existing processes. Not only will this help prepare you for when you adopt a workflow management solution, you can start to enjoy the benefits of repeatable processes that include reduced time spent per process, increased client satisfaction, and improved quality of your service delivery.

Key things to consider with a workflow management product are its ease-of-use when creating checklists and tasks, automation through workflow templates, and scheduling & assignment of tasks to colleagues (and clients). If you are just starting out or a small firm, options such as QuickBooks Online Practice Management, Aero Workflow, Jetpack Workflow, or Pascal Workflow will likely meet your requirements. If you are a medium or larger firm, consider products like Karbon, Office Tools, XCM, Thomson Reuters, or Wolters Kluwer.

Project & Task Management

While capacity planning assists with your future, project & task management deals with your present (and the short-term). Many firms rely on horizontal solutions such as Asana, Accelo, 17hats, Basecamp, Smartsheet, Trello, and Wrike for this. Some products leverage the traditional Gantt chart view used by Microsoft Project, while others use a Kanban view to enable quick viewing and easy modification through a card on a board.

Ideally, you want to have both the project & task management contained within the same product so that the long-term projects with their checklists of tasks (and one-off tasks) are easily managed together. Industry-specific options are contained in the previously listed accounting practice management players.

Timeline & History (Communications & Collaboration)

Since accounting practices are service-based, project-based, and client-first firms, the combination of CRM, project management, and workflow creates a necessary practice management category — client history and related communication timelines. Accountants need a single place to see whoever, whatever, whenever something — both internal and external to the firm — was said about a particular client or project (think Facebook timelines).

Consider when a client calls or when a staff member has time available to jump on a project: the staff member needs to get up to speed instantly to take the correct appropriate action. Because of this interdependence on other practice management categories, this category is being solved by the more progressive CRM, workflow, and project management vendors previously listed.

Document Management

In an accounting firm, there is a large amount of documentation that is exchanged between the firm and its clients, including proposals, statements of work, tax documentation, bookkeeping records, legal documents, and more. Outside of the basic requirements of document management handled by the likes of Box, Dropbox, Google Drive, and Microsoft OneDrive, accounting firms need additional capabilities like client document portals, client tasks, e-signature, user permissions, and related automation and workflow.

Industry-specific solutions beyond the larger practice management products include eFileCabinet, SmartVault, and ShareFile.

Practice Intelligence

The last category, and one that relies on all the data collected across the other seven categories, is practice intelligence. Just as you use the available data from your actions with your small business clients to provide virtual CFO and tax advisory services, practice intelligence relies on the information collected from what and how you have managed your clients and work across your practice. Because of the unique nature of accounting firms and the integrations required, industry-specific solutions are your best option here, such as Spotlight Reporting and Fathom.

Bottom Line

The bottom line is that every accounting firm operates in its own way, which presents very unique needs. The only way to determine the best solutions that will enable your firm to run at its most efficient level, is to consider your requirements and options across each of the eight categories of practice management. If you need help picking the right set of technologies for your firm, be sure to read my next article, which will outline the nine steps to find and select the ideal technology solution for your accounting practice.

About the author

Ian Vacin

Ian Vacin is Co-founder, VP Education & Partnerships, Karbon. With over 25 years of experience in technology and over 15 years of leadership experience in the accounting industry at Karbon, Xero and Intuit, Ian is passionate about helping accounting professionals be as successful as possible in order to positively impact the small businesses that they serve. In 2016, he was named 'Top 20 under 40' by CPA Practice Advisor. Ian can be reached at LinkedIn and Twitter.


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