Magazine article The CPA Journal

MYP | How ValueBased Billing Helps Firm Culture

Magazine article The CPA Journal

MYP | How ValueBased Billing Helps Firm Culture

Article excerpt

Tax season has long been a rite of passage for staff and management alike. Staff must put in the billable hours to prove to the boss that they are deserving of their jobs. The author's firm, however, is trying to turn this concept of hours and time on its head, focusing instead on the amount of work that can be done.

Productivity and billable time are not the same; in fact, they are quite the opposite. The traditional practice described above encourages staff to be unproductive and bill as many hours to the client as possible. This has caused a requirement during tax season to work a certain number of hours to meet some madeup goal that supposedly proves the accountant is a hard worker. The author's firm has gotten rid of time sheets and focused on what really matters-profitability and client satisfaction. A side product of this strategy is greater team member satisfaction and less onerous work schedules during tax season.

Getting Rid of Time Sheets

One of the first big improvements of abandoning billable time was client satisfaction. Not only did the client know what the fee would be up front (because they were quoted a fixed price), but the work began to get done faster. With no time sheets or mandatory hours, the team completed the work faster because they weren't worried about how many hours they had to spend on a project. The new system also removed the problem of not starting a project because mandatory hours hadn't officially begun in the office. The firm also became more productive because less time was spent on keeping track of time. In addition, invoices became simplified-just one line containing the price.

Profitability also increased, because the firm can charge what the service is worth to the client-how much value the client places upon it-not how much time it takes to complete it. Imagine going to a nice restaurant and ordering a steak. No one takes a bite of that steak and says, "Man, this tastes great-I'd like to pay based upon the amount of time it took for the chef to prepare it." People value goods and services based upon the quality of what they receive. A master chef can prepare a worldclass dish in a few minutes, whereas it might take a young, inexperienced chef four times as long to create a dish only one-quarter as good. …

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