|
From: Accounting Today
August Aquila, director of practice management consulting for The Growth Partnership, Inc. ([email protected]), says a conflict of interest is inherent when firms bill by the hour because clients are interested in value only, while CPAs are more interested in time. Most other professionals (lawyers excluded) don’t bill hourly. To effect a change to a value billing system, CPAs must:
- Learn and internalize the negatives of hourly billing. Hourly billing:
- Creates inefficiency
- Emphasizes revenue rather than profit
- Inhibits delegation
- Distracts CPAs from thinking about what client need
- Inhibits teamwork
- Understand which services command premium billings. When CPAs are engaged for their experience or unique abilities, higher rates should be charged.
- Understand why clients engage them. If a client has a need but little or no awareness of it, premium rates are hard to get. When clients become aware that a problem is threatening or critical, service is perceived as more valuable.
To begin the process of implementing a value billing system, firm members should ask themselves some questions:
- What services provided add value and may command premium prices?
- What percentage of the firm’s services does the above represent?
- The firm’s services may be categorized as commodities, or they may be related to brand identity, experience, or unique ability in some field. The latter two are more likely to command premium prices. What percentage of the firm’s work:
- Would be classified as commodity services?
- Is based on brand identity?
- Is based on experience?
- Is based on unique abilities?
Source: Accounting Today, September 26 - October 9, 2005, p. 8. For the complete article, click on the following link: http://www.webcpa.com/article.cfm?articleid=14618&;pg=acctoday. |
