Commonly Asked Questions about Firm Management Software

More than ever, technology plays a huge part in a firm’s success. Because it touches all parts of your firm, firm management software in particular can set the tone for a firm’s technology culture. The right system can improve everything from client intake, the billing/invoicing process, performance management and succession planning. The wrong system can create chaos in your firm. The following commonly asked questions can help you choose the right system.

What features are included in a firm management system?

Different firms have different needs, and definitions of firm management software can vary. So, it can sometimes be difficult to know if you’re comparing apples to apples. This category of tools evolved out of basic time and billing software, but a true firm management system should include much more than time capture and invoice creation. In addition to time and expense entry, a firm management system should include tools for onscreen billing, invoice creation and editing, accounts receivable and reporting. Many systems also include or work closely with CRM/marketing tools as well as workflow and project management features.

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Which KPIs Should We Be Tracking and Reporting On?

Because firm management software includes detailed billing and AR information, it makes sense that firms have come to rely on these systems for detailed analysis and reporting. Tracking the right key performance indicators can help partners and managers identify areas for improvement. They can also uncover potential for growth. In order to do so, however, firms must have the right tools to monitor performance in real time.

Budget-to-actual reporting is a popular metric that can help firms uncover bottlenecks and other potential problems. Realization is a metric that firms are using less and less, because it can create incentives for unproductive work. Instead, many firms are turning to lead time and cycle time to measure how quickly projects move through the firm. Faster cycle time can help the firm’s bottom line and make clients feel like they are getting quicker service.

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How can I get staff to enter time more accurately?

Time entry is a necessary evil for most firms. Even firms that have switched to value billing often need to track time to stay on top of how much time their staff is spending on different clients or projects. The best way to ensure your staff is entering time accurately is to make it simple and quick. That means time entry should be as automated as possible. The time entry screen should be easily accessible from within the software your team is already using. With automatic timers and reminders, keeping track of to time becomes almost invisible. For staff in the field, mobile time entry makes it easier to enter time from wherever they are.

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How often should I bill my clients?

How often you should bill your clients depends on a number of factors including your firm’s pricing model as well as client expectations. More and more firms are moving to contract billing, charging clients a flat monthly fee for all services that fall under the terms of the agreement. For firms that bill by project, whether based on hours or a flat-fee, billing as soon as the project is complete can often result in getting paid faster. Over time, a client’s memory of the service they received may start to fade. The longer you wait to send the bill, the more likely a client is to question the value of the service. Billing hours at the end of the month is still a popular model, but it’s not always in the best interest of the firm or the client.

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Should my firm switch to value billing?

There are many reasons to consider switching to value billing. Technology continues to automate some of the most time-consuming parts of the profession. That’s why firms need to find ways to earn compensation for the value they provide and the expertise they’ve developed. Your clients don’t want to pay you for your data entry skills or your ability to manage a stack of paper. Charging clients for the time it takes to do those tasks is not a true measure of the value you provide. Whether your firm makes the switch to value billing or not, it’s clear that today’s clients demand a full understanding of the value you bring to the relationship. At the very least, you’ll need to transition your work away from clerical and administrative tasks to more expertise-based services.

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What kind of training is available?

If you’ve recently switched to a new firm management system or are thinking of doing so, you can’t afford to overlook training. A comprehensive training program will help you understand the full features of your software. Many firms find that a train-use-train model works best. That means, your employees complete an initial set of training at the time of implementation, with follow-up training scheduled for after they’ve had a chance to use the software for a while. This model ensures firms get the most out of their software investment and achieve ROI faster.

After implementation, your firm should have a plan for ongoing new-hire training to onboard new employees as needed. Oftentimes an existing staff member trains the new employees. This method is very cost effective, but it can create stress for employees who have to train new staff while completing everyday work. Web-based training can help relieve some of the pressure, especially during busier times of year.

Lastly, don’t forget about refresher training for existing staff. With the seasonal nature of tax work, many employees may need a refresher on how to most effectively use the software. They may also need training on new features that weren’t part of the initial implementation. And since best practices are always evolving, best practices consulting can help your firm stay on top of the most recent trends.

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How can I get a better understanding of my client?

Many firms are using their firm management software as their database of record for collecting and analyzing client data. The rise of digital platforms means that your client data is often spread out across many different systems. Designating your firm management system as the single source of truth about your clients can help you break down data silos and get a better picture of your client relationships. Whenever possible, make sure your other software can pull client information from this system. Ideally, a centralized common client database can provide client information to most of the other systems in your firm.

Of course, having somewhere to store data won’t help if you don’t have processes to collect and manage that data. Your new client onboarding process should include guidelines about what client information to gather. In addition to simple items like name and address, consider tracking line of business, product/service type and referral source. You also need clear procedures for how information is updated and maintained. This includes defining who is responsible for maintaining the information and how often you update it.

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How can a firm management system help me identify growth opportunities?

Because your firm management system has so much information in it, it can be a goldmine for your firm. Business development is often a weak spot for accountants. However, with the right tools, firms can achieve high growth. Although many accountants shy away from what they consider sales, shifting to a service mindset can help. Matching clients to the right services doesn’t have to feel like selling.

Tracking referral sources can help you identify your best business generators, whether they are other clients or staff. With this information, you can create incentives to encourage and reward referral activity. Similarly, this information can help you identify your most effective marketing channels and techniques.

Tracking line of business or product types can help you uncover hidden niches that your firm could develop into more lucrative business opportunities. Clients like to feel comfortable that you understand the nuances of their businesses. Focusing on a specific niche is a great way to grow your expertise and serve clients better.


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Aimee Hall

Product Marketing Manager at Wolters Kluwer Tax & Accounting

All stories by: Aimee Hall