Accounting outsourcing services

Tips To Expand Your Margin With Client Accounting Service

With everything else, the field of accounting is evolving as well. According to research conducted by a financial information company, accounting and bookkeeping come under the top 10 most lucrative businesses in the year 2017.

Now, whether you own an accounting business or an individual CPA, if your focus is not the profit margins, then you are not doing complete justice to your profession as you restrict the amount of value you bring to your clients.

One of the vital elements of healthy financial management is understanding your profit margins. Especially for accounting businesses, knowing profit margins needs the ability to look at certain factors and parameters that are often intangible and qualitative. The whole idea here is to calculate whether your firm is making a decent Return on Investment (ROI) or not.

Here are our tips to expand your profit margins with client accounting services. Determine the actual time and cost of resources required/spent on the service

    • Roughly Calculate The Actual Time and Cost of Resources That are Needed to Spend For The Service

      When you are dealing with too many clients or too much work, it is pretty normal to overestimate or underestimate the cost or time to complete a specific task or even a whole project.

      Now, calculating the right time can be simplified by utilizing efficient time tracking software. When integrated with your existing project management apps, time tracking software can provide actionable insights and a rough estimate on how long it will take for you to perform certain tasks or provide specific services. In addition to this, you can effortlessly check the efficiency and productivity of your employees. Once you figure out how much time to allocate for certain services or tasks, it becomes easier for you to estimate a project cost.

    • Calculate Direct and Indirect Costs

Other than deducting your profit margin from the hourly rates of your employees, there are various other direct and indirect costs that you need to consider. For instance, the overhead costs for office space, like utility bills, rent, office stationery, etc.

As far as indirect costs are concerned, employee training, health insurance, and other employee perks. Checking all the expense categories will help in finding out the ones that are applicable to the profit margins for the services your firm offers.

    • Take The Experience of Employees into Your Account

Not all of your employees will have the same experience and expertise. For example, an accountant who has been working for you for more than five years will charge more than the recent one you hired a year ago. So you need to ensure that you consider all the subtle differences in hourly rates when you are assigning the job to a certain employee.

No doubt every employee’s contribution to the company varies on a daily basis, however, calculating an average hourly cost for them is essential. Now, figuring out this hourly rate would be indeed helpful especially when you want to calculate the overhead cost of a specific service or project.

    • Marketing and Advertising Expenses

Accounting is one of the extremely competitive industries. What separates you from your competitors is a good customer experience. Understanding what your client needs and business goals, and the part social media platforms play in today’s digital era makes professional marketing and personalized communication a basic requirement.

In addition to this, the administrative expenses such as getting your hands on project or particular service requirement specifications, sending invoices, and billing come in your overhead category costs and even those need to be calculated. In fact, every tangible and intangible parameter that integrates into the overall expenses of the service that are provided by your accounting firm has to be considered.