Practice Management systems have evolved quite a bit since the early days of accounting firm software. Recently in Accounting Today, writer Ted Needleman interviewed executives from several accounting firm software vendors about this topic. In the article, Jim McGinnis, executive vice president and general manager for medium and large firms at Wolters Kluwer Tax & Accounting North America provided insights into practice management systems now and in the future.
Components of a practice management system
According to McGinnis, firms need to consider the big picture to achieve success with a practice management system. The software is just a tool. The true measure of success is how firms use it. He told Accounting Today, “A true practice management system is not just the given time & billing/AR that we’ve historically thought about. The policies, procedures and culture of the firm that surround the system will determine its success in the firm. Practice management is not a single piece of software. In addition, workflow should not be separated. Or at least the system must allow for direct integration of the two products.”
He also emphasized the need for an open system that can easily connect to other systems in the firm. He said, “It simply does not make sense in today’s world to have an isolated system at a firm.”
The transition to value billing
The article also discussed value billing, always a hot topic. McGinnis explains how value billing can help firms move up the value chain. He told Needleman, “Hourly billing is a structure that can lead to commoditization of the profession, whereas value billing illustrates the cultural shift from technical accountants to trusted advisors. Value billing accelerates the rapid progression of the profession. Time entry is not simply about billing anymore, but opportunity for a firm to provide staff coaching and mentoring. This value-billing model signals a true partnership, with transparent guidelines documented in the contract for the benefit of the client and firm. Tools that automate the invoice process based on the amount and terms of a contract will be important to accelerate adoption of this model.”
To CRM or not to CRM
One area of controversy in any discussion about practice management systems is whether firms need a full Client Relationship Management (CRM) system. The Accounting Today interview touched on this topic as well. But the answer is not simple. In fact, according to McGinnis, “The components of a practice management system depend on the firm’s size and customer base. It is not just about a single product. A specialized CRM system is necessary for firms with a professional sales staff who monitor sales funnels, lead generation and close time. Workflow should be tightly integrated with firm management systems and will often be a part of a single application. Regardless, a management system must allow for API/service-level integration to flow information from the workflow into the CRM.”
Demand for business intelligence and analytics
Accounting firms are no longer satisfied with the status quo. Needleman asked McGinnis what practice management features Wolters Kluwer customers are requesting. Of course, the response was no surprise. “Our customers are also asking for actionable intelligence about their business: dashboards that show heat maps for staffing, peaks and valleys in cash flow, all at a glance.”
Transforming the profession
The Accounting Today article set out to discuss the future of Practice Management systems, and it didn’t disappoint. McGinnis explained how firms’ focus is steadily changing. Instead of simply gathering and entering data, firms are creating intelligence and using the data in more valuable ways.
He told Needleman, “Firm management systems are often regarded as a single source of truth, but only recently have firms begun to live that. The single biggest change has been moving from entering data (time in, bills done, AR posted) to leveraging the data.”
McGinnis added, “We’re moving to an era where the management of the firm is just as crucial as the work the firm does. We’ll continue to see highly qualified experts demanding tools to do their job more effectively and efficiently.”