Practice Management Technology Issues
September 18, 2001
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Practice management technology (time and billing systems) is as common an application in accounting firms as tax preparation software. Interestingly, however, almost every firm seems to be dissatisfied with the information generated from the application of these systems, and many firms report significant problems making these systems operate in a reliable, efficient manner. This presentation addresses the current issues that relate to using technology tools to manage a practice.
You can read the complete transcript of this workshop.
- What’s at stake
- Higher profits
- Better client service
- Improved efficiency, better leverage of time
Description of the current practice management and time and billing environment:
- Information access
- Links to other applications
Problems firms face using these applications:
- Data integrity
- Poor quality, slow information
- Resistance to use by high-level firm members
What you want from a Practice Management/Time and Billing application
Available applications and what firms have to say about them.
- Traditional Vendors
- CPA Software
- Creative Solutions
- CPA Software
- New Players
- Time Matters
How to improve the use of practice management technology
- Determine information use and requirements
- Emphasize on-screen, contemporaneous use of information
- Promote total-firm use of maintenance and use of applications
- Move to a project approach to practice
September 18, 2001 Session Sponsored by: Knowledge Concepts, Inc.
Session Moderator: I would like to thank you all for joining us today. Let's begin.
This session will address the current issues that relate to using technology tools to manage a practice. I would like to Welcome Mr. Tom Davis, president of Knowledge Concepts and managing partner of Davis, Nichols & Associates LLP. Mr. Davis has an extensive background in technology consulting. His consulting practice has reached over 2,000 accounting firms in the last 16 years of practice.
Knowledge Concepts, Inc., founded in 1996, is the developer of the FirmWorks' software application. FirmWorks's software provides Customer Relationship Management, Professional Service Automation, and Sales Force Automation functionality for accounting and professional services firms.
I would like to thank Knowledge Concepts for sponsoring this session today. Tom, the floor is yours, welcome!
Tom Davis: Welcome everyone. Thanks for attending this workshop on Practice Management Technology Issues. Time and billing systems are found in every accounting firm. However, almost every firm seems to be dissatisfied with the information generated from its application, and many are reporting significant problems making them operate in a reliable, efficient manner. This presentation looks at the current issues in using technology tools to manage a practice.
Our discussions are going to fall into two main categories software and processes. However, I want to emphasize that the best approach to using technology tools is to start at the end: What do you want to do? What is the end product supposed to be? When there are clear answers to these questions, it is much simpler to choose the appropriate software and to develop the process for using the application to get the needed results.
Following this approach, let's define what we expect to get from our practice management technology.
First of all, we will use the time and billing system to bill a client for the services we provide. This means capturing information about the resources expended to provide client service, creating a bill from this information, and tracking the unpaid invoice until payment is received. All of us do this, so we will be looking for ways to do this more efficiently.
Next, CPAs need to run their practices like a business. We need "metrics" about how we are doing. It is important to know the condition of the firm's WIP and accounts receivable assets. Identifying profitable (and the inverse, unprofitable) clients, services, and firm members will allow a firm to make changes in a timely, effective manner.
Okay, lets form a description of the current practice management and time and billing environment. What you want from a PM/T&B application? Lets form a description of the current practice management and time and billing environment.
Typically, I find that firms use their time and billing systems in much the same manner as they did 20 years ago:
Time and expense information is entered into a time sheet (although this is now done on-screen in most firms). In most instances, there is an emphasis to have the time sheet completed by the end of the day or by a specific day of the week. Time and expense information is reviewed by a system administrator for completeness and is posted or released cyclically.
Billing is done on a once or twice a month cycle and is usually "paper based". Billing sheets are printed, billers decide who to bill, write down to be included in the bill, and indicate the amount of the bill. An administrative person keys all this into the T&B system and the completed bills are reviewed and sent to clients.
Information is reported via paper reports, produced cyclically. Very little information is accessed in a real time, on-demand manner.
T&B information is usually not linked to other applications. This means most firms have multiple databases used for tracking work, marketing and promotion, and to provide information for peer review, insurance, and other purposes.
Tom Davis: What do the participants want to add?
Bruce Woodard: Contact management
Tom Davis: Bruce, will you define contact management?
Bruce Woodard: Client information, history of billing and contacts.
Tom Davis: Okay, various "biographical", performance, and other information about the client. Right?
Bruce Woodard: Correct
Ken D'Amato: Ken D'Amato
Tom Davis: Keep adding items to your information wish list, we will discuss more of these.
Tom Davis: Lets talk about some problems firms have using T&B applications. As I consult with firms on time and billing and practice information systems, I hear several issues that recur over and over again. Firms tell me they have problems with T&B data integrity. With the packages that are available today, this is a technical issue and can be resolved. You should not be having "failures" with your time and bill system.
Are any of you having problems with your applications working properly? A much, much greater issue is the problem of poor-quality, slow information. It never ceases to amaze me that Dominos Pizza has significantly more information available about its customers than almost any CPA firm. One other issue is the resistance to use of the time and billing system by high-level firm members. In many firms, the management group (partners and managers) produces more than 1/2 of the fees. Any efforts to improve the use of the time and billing system must focus on the needs of this group. The success (or failure) of the information system will depend on the use of the system by this group.
What problems are you experiencing?
Lauren Schaefer: My problem is resistance and lack of flexibility from my Partners in conforming to the new T&B system.
Tom Davis: Why will they not use the new system?
Tom Davis: Lauren, this problem of old look and feel being required is experienced in every firm. Ask team members what they intend to do with the info and stay away from style and format.
Jamie Black: Also it is often difficult to use many of these systems to Manage the WIP through production, on time & on budget. For instance, I have to have custom reports made to look like the reports from the old system instead of using the new reports in their new format.
Tom Davis: Jamie, you can get on demand WIP reports, what other info do you need?
Jamie Black: Status of the job (% compete,) how well we are meeting the budget or if we can predict that budget will be exceeded.
Tom Davis: Jaime, you are looking for a work management system.
Tom Davis: Let's look at what is at stake here. Higher profits, better client service, improved efficiency, better leverage of time are the goals. We need processes and tools to help us achieve them.
What other benefits are your firms looking for? There are plenty of vendors that provide this type of software. Here are some of them as well as the comments from firms that use them.
CPA Software Visual Practice Management - Easy-to-use interface, database is reliable. CCH Practice Flexible billing, good project system, database issues from the PACS days are being resolved. Creative Solutions Practice Solutions for Windows. Reliability of application has improved for RIA users since CSI took over development and support and merged the Go Practice and Practice solutions products. UniLink - slow to move to Windows. TimeSlips applicable for small firms, not very CPA firm oriented.
CaseWare - still not hearing much from US firms using the CaseWare time application. Elite - very capable, large firm application that costs a lot. Time Matters - Law firm product that can be "re-configured" into CPA package. It has some interesting professional service automation features for automating repetitive tasks (engagement letters, client notifications, etc. Regarding Web-based applications, there are some web based time keeping tools, but as of yet, no full blown T&B Systems.
Matthew Amihude: Are any of these products Web based so that I can access from multiple locations?
Bruce Woodard: Web based for multi office setups -
Tom Davis: Intacct has just announced their T&B capabilities, but I have not reviewed the product yet. The solution I see most often used is a Citrix solution for Billing, information entry and editing, and reporting, with a web-based time entry capability.
Tom Davis: Are any of you using another tool for a multi-office scenario?
Matthew Amihude: isn't that a little pricey?
Tom Davis: You can use a limited Citrix access (10 - 20 users) and the cost is not too bad (less than $10,000). Plus you have other benefits.
Remember that only a few firm members will be simultaneously billing, printing reports, and adding and editing information while we are on the web-based topic, make sure that any application you get has "disconnected" capabilities.
Matthew Amihude: What about ongoing time entry and status reports on projects, etc?
Tom Davis: It is very beneficial to be able to work offline.
Matthew Amihude: Why would you say that?
Tom Davis: In a disconnected scenario, time entry occurs contemporaneously and is then uploaded periodically. Disconnected features would let you enter time, access client profile info, from the field even when there is no Internet connection.
Tom Davis: What Applications are you using and what comments (positive and negative) do you have? Lets look at some ways to improve the use of practice management technology. These recommendations can increase realizations and billings substantially. It is very typical to see these metrics improve by 5% to 12% with these changes.
Determine information use and requirements. This is critically important. You can develop (purchase) any application without having a clear understanding of what it is going to do for your practice. If you cannot get this clear definition, do not buy the application or make any changes.
I feel that firms are very deficient in this planning area. Any comments? These requirements and expectations must be written down and they should be periodically reviewed to determine if the firm's goals have been met.
In your technology planning, do you ever evaluate the results?
Emphasize on-screen, contemporaneous use of information paper needs to disappear from 99% of the use of the time and billing application. On-screen information is current, and in many cases the user can configure output to meet their particular style or need. I hear a lot of talk from firms about going paperless. Do you think your firm could survive without paper if that decision was made tomorrow? Time entry should be on screen and it should be "contemporaneous". As work is done, the information should be entered in the time and billing system. This approach will result in much more accurate information, and it will also make information available sooner for reports and for billing purposes.
How many of you require daily timesheets? What do you do to enforce this rule?
Lauren Schaefer: That's what I was referring to earlier. Our new T&B system is on screen. But the Partners have a hard time conforming to that format. They are not able to make the change from paper to on screen.
Tom Davis: Lauren, this is a "habit" thing. They will have to use the system in order to develop the skills and the comfort level.
Tom Davis: Lets throw out another question. Do we need timesheets in firms? Why? Regarding the "do we need timesheets" question, do any of you use the time system as a "costing" system? Most firms look at it as a tool to set a "value" for work. On screen billing provides much more information for the biller and is much faster than paper-based billing. Onscreen billing, combined with contemporaneous time entry will make it possible for firms to adopt an "event-based" billing approach. The last step in providing the service to the client will be to bill the client for the service.
If you change to billing by the service, as soon as it is completed, you will see a substantial increase in realization. Don't be like a utility company (they bill for a commodity on a cycle). Billing by the service increases the value in the eyes of both the client and the biller.
Tom Davis: Back to my cost question. All system have features for recording a cost per staff hour. If you use them, you will have better information about the actual cost of providing services to the client.
Promote total-firm use of the practice information system. All firm members have knowledge about the work they do for clients and for the firm. The problem is that any one-team member's knowledge, while accurate, is typically incomplete. If all firm members contribute to and use the firm's time and billing application, information will be more complete, more accessible, and more valuable.
It is important that the partners and managers contribute to the information system. In most firms this group produces more than 50% of the fees.
This next suggestion is a biggie.
Move to a project approach to practice. Every time and billing system has a concept that relates to a service. In the CPAS, CCH, and UniLink it is called "Projects". In CSI Practice Solution a service is an "Event/Tickler". Here is what you will get from using these project capabilities.
Time and expense information will be tracked more accurately. Since projects are specific to a client, it is much easier to understand the service concept than it is to accurately use the firms numerous work codes. Also, most applications have control features that allow the restriction of time entry to projects that have been completed or marked inactive. Responsibility for providing the service can be assigned to specific firm members. Additionally, the "status" of the project can be indicated. This "perpetual work inventory" will provide valuable staffing and scheduling information and it will improve client service.
Billing in a project-oriented environment is much simpler than in a system based on work codes. A project system makes billing easy even when multiple, similar projects are in process for a client. Faster billing results in better client perception of the value of the service (benefits vs. costs) and it is easier for the accountant as compared to waiting until the end of some cycle that may not match work flow.
Lets discuss some of these points. Do any of you use the project features in your time and billing package? How do you "inventory work" or track tax returns?
Lauren Schaefer: We use Lacerte for 1040's. TABS for other due dates.
Tom Davis: Lauren, how are you scheduling your staff?
Lauren Schaefer: Excel spreadsheets.
Jamie Black: Management issues (due dates, physical location tracking, status, staff schedules) are often overlooked in many T&B systems or are very difficult to access
Tom Davis: Do any of you have periodic staff meetings for assigning work? How do you keep the info up to date? The project features in T&B systems can help in this area, but you will need to develop your own reports for tracking work.
Lauren Schaefer: The partners and managers meet twice a month and go over scheduling. This information is put on an excel spreadsheet. It's been difficult getting people to change old habits.
Tom Davis: We have a system in place that links CCH Practice info to our groupware application this gives us real time info about staff resources and work loads. It is so simple to use that even a partner in an accounting firm can make it work. Another issue we have is that we have so many team members providing services to the same client; it is getting hard to get the whole picture. Do any of you have this same problem?
Bruce Woodard: What groupware application do you use?
Tom Davis: Bruce, we use Lotus Notes, but Exchange can also be used.
Bruce Woodard: Thanks.
To summarize, I think firms greatly under utilize PM applications. However, I also think that vendors have done a poor job building applications that provide high quality, abundant info, quickly.
Part of the reason for this is that firms do not seem to value this information. Thanks everyone for participating in this workshop. If I can be of any other assistance to you, please contact me at 229.247.9801, at email@example.com, or visit our web site at www.knowledge.org and at tcdcpa.com
Bruce Woodard: Thank you
Session Moderator: I would like to thank everyone for joining us today. Tom, thank you for this informative session.
Tom C. Davis, president of Knowledge Concepts and managing partner of Davis, Nichols & Associates LLP, has an extensive background in technology consulting. His consulting practice has reached over 2,000 accounting firms in the last 16 years of practice.
Knowledge Concepts, Inc., founded in 1996, is the developer of the FirmWorks™ software application. FirmWorks™ software provides Customer Relationship Management, Professional Service Automation, and Sales Force Automation functionality for accounting and professional services firms. FirmWorks™ links to legacy accounting time and billing applications, office automation software, and groupware tools to provide a single view information approach to professional data use. Knowledge Concepts, Inc. has taken untraditional steps in the deployment of the FirmWorks™ practice information application.
Mr. Davis’s specialty in consulting with accounting firms on the implementation of computer technology has led to a national presence that includes regular contributions for Accounting Today and Accounting Technology magazines. He also serves on the Editorial Advisory Board for the CPA Technology Internet Advisor. Mr. Davis has written various articles on practice management, tax preparation and planning, workpaper software, accounting firm write-up software, the Internet, and other technology topics. He currently serves on AICPA’s AAA National and Top Ten Technology Committees, as well as the Best Practices Task Force. He has served on the Georgia Society of CPA’s Management of an Accounting Practice Committee, the GSCPA’s Information Technology Committee, and on advisory boards for Harcourt Brace, Practitioner’s Publishing Company, CCH Practice, and the Associated Regional Accounting Firms (ARAF). In 1998 he was named as one of the top ten computer technology experts in the accounting firm field by Accounting Technology magazine.
Mr. Davis’s work has gone beyond the grass-roots level to the accounting software and hardware vendors. He has developed and presented training for CPA Systems, CCH, Network Systems, Futurus Team, Peer Software, Prentice Hall Professional Software, Microsoft, Symantec, and LAN Aces. On a consultation level, Mr. Davis has worked with various software vendors including PACS, Network Systems, CCH, Intuit, Navision, and CYMA in bringing product to market bearing tools that are necessary for technology gains.
Mr. Davis has made presentations for the American Institute of Certified Public Accountants and the Georgia, Florida, Louisiana, and Washington, D.C. Societies of CPAs. He is a regular speaker at various national technology conferences.