Capitalise webinar – the rest of the questions

Thank you to all those who listened in to the Capitalise webinar. I’ll add a link here once they put it up on line for those who were unable to attend the live version.

There were a few questions sent through after the event which I thought I could answer here.

Q1. Hi, I am a one woman practice, offering all kinds of services at the moment (I set up my practice 1.5 years ago). How do you make accounts production as automated as you can? A lot of clients dont even know what information they need to keep, send statements in pdf, some numbers in excel spreadsheets, etc – way which are really time consuming for me at the moment.

A1. Hello, I know exactly the feeling. No matter how much you train clients some of them still don’t get it. Don’t be afraid to be firm with your clients and to help them to help themselves. Ultimately you need to decide if these are the kinds of clients that you want to be working with. But before you reach that stage here are a few things that we found useful with different clients:

  • have a standard list of what you expect to receive from clients when you chase them soon after their year end
  • chasing clients is not a technical task and can be done by a virtual PA for about £15ph which will free you up to do the technical work
  • we started the bookkeeping and the Xero workshops to show clients how to keep their records properly. This was free to clients as we saved the time/money by having better records at the year end
  • PDF statements are a pain. We used an online tool which converted PDF statements into CSV.
  • make friends with a good bookkeeper who can help your clients to keep proper records throughout the year.

Q2. Did you use data extraction software such as AutoEntry or Receipt Bank? If so did you think it improved productivity?

A2. Yes, we used Receipt Bank for clients that were big enough to justify the cost. We found that we broke even at 16 invoices/receipts per month compared to the cost of manual data entry by a junior, even assuming no keying errors. You can then get the client to do the RB entry for you by putting the app on their phone (even older clients know how to take a photo of their grandchildren) and forwarding electronic invoices to their ‘special’ email address. This keeps the paperwork out of your office and save s the client postage or a visit.

See my answer to the first question above for how we used to convert PDF statements to CSV. Obviously use common sense for when it is more efficient to type a small statement manually into Excel

Q3. For engagement letters and sorting out all admin related things (such as AntiMoney Laundering regs), do you know if there is anything to make it more automated? Signing, chasing for AML docs, etc

A3. There is some great automation software out there for all these sorts of things. We used Signable for online signatures which were usually same day turnaround. I believe that Accountancy Manager can do the automatic chasing for you as can some other practice management packages.

See my answer to the first question above and remember that this admin task can easily be outsourced to a virtual PA.

How do I set my prices?

When you first start up it is often hard to know where to pitch your prices

There are three main ways of setting your prices and a number of variations on each

Hourly billing

The traditional model is 1/salary, 1/3 overhead contribution and 1/3 profit. This should be a minimum if you want a sustainable and saleable business. If you are self-employed with no staff then you should still charge a comparable amounts as you are doing the work as well as running the business. You should also allow for your non-chargeable admin and marketing time.  If you want to grow in future you will need to cover employee wages plus a profit margin for yourself without changing your prices too much.

Fixed pricing

Fixed pricing is more normal these days although, for bookkeeping, you may want to offer three months on an hourly rate before fixing. This means that you have more time to cover any teething problems or initial backlog plus you get to work out your likely ongoing hours. 

Once clients are on fixed rate you can use repeating monthly invoices and they can pay you on standing order so you will save admin and credit control time as well as improving cashflow. Most clients also prefer regular outgoings.

The price can be fixed using on a cost plus model based on estimated hours or on value pricing.

Value pricing

This is often confused with fixed pricing but it is based on the value to the client irrespective of the cost.

I once wrote a single letter to HMRC which took no particular research and saved a client £2,400 in tax. The admin that I had to complete, in line with ICAEW guidelines, in order to take on the client actually took longer than writing the letter.

So what do you think I should have charged?

  1. £100 as the notional cost of my time to write the letter
  2. £300 as the cost of my time to speak to the client, carry out all the necessary new client admin including money laundering checks for HMRC and then the time to write the actual letter (this was a one-off piece of work)
  3. £800 as the client would still be better off by £1,600 if the appeal was successful
  4. Not a fixed fee but 50% of any tax saving

There’s a whole chapter on pricing in my book and even that is just the tip of the iceberg.

How to handle the endless Summer

When we were kids the Summer holidays were something to look forward to but, as a working parent, they can be a mixed blessing.

We all make different choices on how much time we want/need to spend with our kids vs how much time we want/need to spend working. That can be anything from finding full time childcare so that important work is uninterrupted to arranging your work to spend the whole 6+ weeks with your kids.

If you are employed then you have the right to request flexible working. If you provide a foolproof plan for how you and your business owner can cover the necessary work then it is more likely to be accepted. If you run your own business then the responsibility lies with you anyway.

As well as professional childcare and holiday clubs the options include:

  1. working from home so that you can supervise your kids yourself. While this is great for some of the time it doesn’t provide quality time with your family or you may find small children too distracting.
  2. working evenings/weekends while the other parent, or somebody else, is available for childcare. This allows you to spend quality time with your kids but it can be harder to communicate with a team working conventional hours and it may be important to you for the whole family to spend time together.
  3. postponing non-urgent work or doing extra before the holidays. This can free up time during the holidays but there is additional pressure on you before and after your time off
  4. take on less work over the holiday period. There may be a natural lull in your business when fewer clients are around working themselves. This is easiest to do if you work for yourself. The downside is that this may also reduce your income so you will need to ensure that you have sufficient savings to cover the break.
  5. arranging reciprocal playdates for your kids with other parents trying to juggle the holidays. This gives your kids a change of scene and may keep them away from screens. If you have more than one child this can require pretty complex coordination.
  6. Holiday clubs can be useful for ad hoc childcare but they are often much shorter than a normal working day. Some clubs just supervise your kids whilst they are watching DVDs or playing on computer games so you’re paying for somebody else to let a screen babysit your darlings. Sports clubs can be good for older children but not everyone enjoys these.
  7. Electronic babysitters can be okay so don’t beat yourself up if you use them sometimes. Just try and mix in a bit of quality time with humans and some fresh air and exercise.

In practice you may choose a mixture of these and other methods.

You may well feel that you’re not working or parenting well enough over this period but just keeping the plates spinning is enough for now.

Please drop me a line with any other suggestions