Unpacking the Most Common CPA Practice Management Roadblocks

CPAs and accountants are busy serving their clients’ interests…so busy that they often sabotage their own success. It is important to balance client needs with good CPA Practice Management and firm administration.

We observe hard working accountants that fail to bill time simply because they are too busy with client tasks. It comes to our attention when they call to complain they aren’t making enough money, but don’t know who and how much to invoice.  Or, they use a software program that can’t provide the information they need. Practices that fix-fee bill clients may be reluctant to track time but, nevertheless, need to know how much time is spent delivering services.

On more than one occasion, an accountant calls us to complain about a penalty received for late filing of tax returns. Using spreadsheets to track deadlines for firms with more than 100 clients is not a good practice. But it is understandable why accountants would be reluctant to leave a technology that they understand. I recall in the 1980’s spreadsheets were viewed with skepticism – or, the 1970’s when Texas Instrument calculators that computed amortization were rejected in favor of the more traditional 10-key adding machine or the mainframe amortization schedule.

User-Friendly Practice Management Software

This reluctance is not always unmerited. New technology and practices should not be embraced impetuously without due diligence. Let’s face it, many software programs are not designed with the user’s needs, but rather the technical misconceptions of the out-of-touch ‘geek’ developer.  The Inmates Are Running the Asylum, published in 1999, uses the author’s experiences in corporate America to illustrate how talented people continuously design bad software-based products and why we need technology to work the way average people think. Nevertheless, this should not stop the accountant from moving forward and embracing new technology. Change is inevitable.

Over the 20 years serving the accounting industry, we have observed self-defeating practices that are common among CPA and accounting firms and result in poor CPA practice management. Some of these behaviors may or may not be conscious.  We thought it beneficial to point out obvious practices that are self-defeating as a basis for discussion and improved awareness.

Common CPA Practice Management Failures

  1. Self-defeating practice management behaviors involving resistance to change:
  • A common question we get: “the boss likes to keep things the same way, can your software meet his requirements?”
  • “We use a 20-year old software program and are comfortable with it, but the operating system is outdated and malfunctioning? Can your software do the same things as our existing program? Otherwise, we will keep using the older product, because we know it works.”
  1. Delegation failures, impetuous decision making, lack of internal controls and follow through:
  • A surprising number of our customers make duplicate payments for our annual support invoices. Of course, we refund the payment. However, this makes us wonder how many of their clients they overlook when preparing invoices?
  • “I think we’ll go ahead with your software product” – before establishing a consensus among the people that are responsible for implementing it. Oftentimes, CPA and accounting firms fail to achieve consensus among key staff when moving forward with new initiatives. For example, a bad outcome results when the owner purchases new software the staff is reluctant to implement.
  • Employee turnover is a common problem. We encounter new employees – not necessarily qualified – expected to learn time and billing software without assistance from management or focused training. It is unrealistic to expects new staff to maximize the implementation and effectiveness of software without training or additional assistance. The long-term benefit of training more than offsets the initial cost: improved information, less turnover and costly changes in software.
  • Changing software to solve a problem that more realistically involves an implementation failure on the part of management. Make sure before you switch, that the change is for the right reason rather than masking a failure of effort on the part of management to properly implement software and support employees involved in that implementation.
  • Failure to implement software features that utilize staff time more effectively. For example, not using permission settings which would hide confidential and sensitive information from staff members to enable staff to enter their own time and expenses.  This frees up the time of administrative personal and puts the accountability on the staff for recording their own work.
  1. Poor IT assistance 
  • The “IT” faker. It is deeply concerning to see the number of CPA firms blindly relying on an information technology person that is simply not qualified.  Spend more effort vetting the ‘IT’ person’s credentials before moving forward. Badly designed and maintained networks cost thousands of dollars in unnecessary fees.

Has the fog lifted? Making it your goal to ensure that things stay comfortable and don’t change does not insulate your firm against uncertainties and unfortunate circumstances.  Staying ‘safe’ with what you have almost guarantees the opposite: a more insecure and disruptive result in the long run. To improve CPA practice management, firms need to embrace change, establish consensus and bi-directional ‘non-disruptive’ communication between staff and owners. Perform self-audits to ensure that your firm follows the same basic strategies and internal controls recommended to clients.

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