Rather than leaning on the flexibility of your hourly-based a la carte services, what if you could set up your practice in such a way that all your clients paid you steadily – month over month, year over year?
It’s called subscription accounting, and it may be the best way to boost your income along with your business valuation in 2017. As a CPA, you already help clients solve major pain points other than typical tax dilemmas, including lease negotiations, cash and treasury management, and ongoing cash reporting.
What’s more is that you know it takes more than a couple of drop-ins to your office each year to be able to manage these effectively. This is where a subscription-type service can solve a lot of problems.
While subscription models were once limited to magazines and gym memberships, now there’s a subscription service for just about anything and accounting is not one to be excluded. In fact, I’m not sure why it hasn’t already become the new norm for the industry.
I know that making a change to your business model can be daunting, and if it’s not broken then why fix it? However, as a small business owner who values my own relationship with my accountant, I challenge you to check the facts.
If you find yourself answering “yes” to these three questions, then offering a subscription accounting service is right for you:
1. Have your margins flat-lined despite years of onboarding new clients? The proof is in the profits. Without transitioning to a subscription-based service, you are never going to be able to create a margin big enough to actually grow your practice.
If done efficiently, the recurring work can be streamlined and a greater profit can be made. Yes, it involves setup, and yes, that means a bit more work in the first month to do the necessary planning and discovery.
However, I can assure you that the work following this initial push will be significantly less. And it will be more palatable for your clients, as well, because the upfront work will guide your success.
Billing services through hourly caps at a maximum rate can come with sticker shock. Regular, monthly fixed fees allow your clients the breathing room and flexibility they need to truly appreciate your service – and most importantly, keep them coming back for more.
2. Are your clients always in crisis mode? Most of the time, clients will approach their CPAs when they’re already in too deep and need help putting out a fire. Have you ever taken the time to think about why this might be?
To them, your relationship has been bought, not earned or formed over time. They’re afraid of calling you because they feel like every time they pick up the phone, they will be billed – so they wait until it’s only absolutely necessary.
A subscription-based monthly process allows you to have regular touch points with your client to address major problems before they arise and support a stronger advisor relationship overall.
Once your client is free of the worry of calling you, it will reduce the need for crisis control. If they have regular meetings with you, the seasonal spikes and crisis management will naturally disappear. Sounds pretty good, right?
3. Are you finding yourself bound by the billable hour? Too often, CPAs get wrapped up in the notion that if their clients aren’t paying them to do a specified task, they can’t spend their time doing it. Or, if they do something that doesn’t fall into their level of service or doesn’t have an immediate, positive effect, it’s not worth pursuing.
The problem is, this sets the CPA up to really be chasing their customers around, responding to requests, which makes for a very inefficient and confusing work environment. The benefit of the subscription model is that it allows the CPA some breathing room to give a little extra within a framework of things that happen monthly.
This “extra” positions you as a valued resource to your client and sets the stage for a more productive ongoing relationship. Your clients may be surprised to find how much value their CPA really holds.
Business Growth and Expansion
Ultimately, the best part of subscription services is that once a client signs up, the corresponding revenue can be projected for months – and potentially years. Clients tend to stick around longer in a subscription model because the relationship is regular and they know what to expect, which also affects cash flow.
Instead of chasing payments after every random check-in, your clients will pay regularly each month. All of this equates to growth in your practice and a stronger valuation over time.
The key to success with subscription accounting is to be sure you maintain your value and continue to impress clients with the resources and results they don’t just want, but need, to grow their business – and your own.