I have a special occasion coming up and want to buy a new suit to wear. The truth of the matter is that I do not need a new suit. I bought two new suits three years ago and probably wore each of them two or three times. Also, during the past 16 months I haven’t even worn a sports jacket and no ties at all, yet I want to get a new suit to mark my special occasion.
Sometimes things need to be freshened up, renamed or dressed a little differently. That is what is happening somewhat in accounting. I see a lot of the “old” things being revived in different suits. Here are some examples.
- Client accounting services (CAS): This is the performance of outsourced accounting and bookkeeping services for clients. We’ve always done this. For many clients it makes no sense to have these functions inhouse as it pulls energy away from their core mission. This is not a new concept, but larger accounting firms have awakened to this, and some smart digital and robotic providers of support are promoting it intelligently. My father did this when he started 91 years ago. He called it “trying to make a living.”
- Bundling services: This is a new term for what almost every small accounting firm has been offering forever. Bundling services is where everything a client needs is packaged together and there is a single agreed upon price for the year. Bundling also includes unlimited phone calls and the typical consulting or advisory services such clients need. By the way, out of the 46,000 United States accounting firms, 45,000 could easily be classified as small with 20 or fewer people in the practice.
- Subscription model: Fancy name for getting paid a monthly fee automatically. Been there, done that, and still doing it. It just never had a name.
Choice pricing models: This is where a prospective client is offered a choice of three or more levels of service. Early on, maybe three levels weren’t offered, but there have always been at least two. A basic and a premium level, but they weren’t given those names. Clients were presented with a proposal to coincide with their expressed needs and then given an added choice of a stepped up service that included everything the client really needed. Occasionally a third level was provided, which included some unlikely services with a higher price that guaranteed the client would not be charged at the prevailing rates for such services, such as a tax audit that might occur … or might not.
- Value pricing: This is a model where the client and accountant discuss the services the client needs and the value of those services to the client and a price is decided upon. This sounds like every negotiated fee for every client since time immemorial. A hindrance to this is something called competition and the fact that a half dozen other accountants within a 10-mile radius would likely offer the same services for a similar fee, without the added feature of the “value to the client.” There are some situations where one accountant might be able to provide a superior benefit and a value price should be charged, but most of the services for deliverables are pretty much standardized. Don’t think I am suggesting that all accountants are providing the same service, because they do not. There should be a premium for experience and the ability to apply that to the client’s situation. Exposure to out of the ordinary or complicated transactions should result in a “value price” that is outside the normal range of the professional relationship. Also, in my case there is the “Ed Mendlowitz” factor, and that creates added value.
Advisory services: This is the new word used for the hand-holding smaller accounting firms routinely provide to their clients. There are some outside-the-box advisory services some accounting firms perform that command premium prices and provide superior value and these are rightfully classified as advisory services. However, from what I’ve seen, these are not offered by many firms and, except for some smaller firms that have a high concentration and expertise in an industry or niche, the true advisory services are probably limited to the top 100 or 150 firms. Further, the smaller accounting firms with boots on the ground are hands on with their clients. They are usually the ones clients turn to when there is a problem and these likely fall under the umbrella of the bundled package.
- Millennials are different: They might be, but not in the usual context. Millennials who want to be accountants are no different than whatever entry level accountants were called when Luca Pacioli gave us his rules of double entry bookkeeping. The blame placed on a lack of performance or responsiveness on new accountants is a poor excuse for inadequate, improper, careless and thoughtless staff management and training. Get over it and make the necessary investment your staff needs to get revved up.
- Tax season workload compression: This is a real issue but is continually mismanaged by firms. I’ve seen this mismanagement accelerate ever since I started. I’ve posted some remedies that could relieve some of the stress and pressure, but the feedback I get is that firms are “too busy” to make any changes. Duh? You can search this site for my postings on this. You can also email me at
GoodiesfromEd@withum.com for reprints of columns on reducing working compression. Just put workload compression as the subject. No messages necessary.
There are more, and it is likely some readers will disagree with some of what I just wrote. Good! Get mad at me and tell me I do not know what I am talking about. But email me your phone number and I would be glad to discuss this with you. Getting mad shows you have some passion, which I think is sorely lacking in many firms that keep repeating what doesn’t work and who look for excuses, fancy names and sometimes buy a new suit to make themselves think that represents a change forward.
Do not hesitate to contact me at
Edward Mendlowitz, CPA, is partner at
