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Why the Capacity Problem is Not a People Problem


A key part of managing the CPA firm of today is automating certain tasks to free up more time for CPAs to offer more value to clients. In this article, Will Baker reflects on his time at the Digital CPA conference, where a major takeaway was the need to solve the "capacity problem" by examining its root cause. 

Jan 4th 2022
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At the recent Digital CPA conference I had the pleasure of sitting in Jennifer Wilson’s session, “Solving the Capacity Problem.” This is an issue that hamstrings public accounting firms, and I think defining it clearly is important. The problem is that there is too much work and not enough people.

Jennifer began the session by asking the audience how they have tried to solve the capacity problem. Responses ranged from investing in recruiting to developmental strategies for young professionals to outsourcing work. These were interesting perspectives, and all of these practitioners seemed to be on the same page as to the solution: more people. However, I found this answer unsatisfying, as I feel it will not truly solve our problem.

More people makes sense if you think of the capacity problem as a balancing act: the way to tip the scales would be to add more people. However, I think that the key element we miss in discussing the capacity problem is the cause of it.

Because the cause of the problem is neither an issue with clients nor an issue with the types of projects that are taken (and, in my opinion, it’s not an issue with the people we have), the capacity problem is rooted in the way that work is being handled and a failure to innovate processes.

When you examine the capacity problem’s cause, you realize that solving it by adding more people is insufficient and unrealistic. The growing trend across higher education of deferred enrollment is leading to smaller hiring pools each year, and the more acute problem in public accounting is younger professionals leaving the profession altogether. If you’re looking for more people, the reality is that they are not coming.

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By Alison Ball
Feb 7th 2022 12:22 EST

Great article Ford!

One the best ways to look at Capacity in a firm is to flow out each step in a client engagement (lets say a Tax Return, as example), then assign a "Time to Complete" number in minutes. For every step in the process, assign the TTC and then see what tasks are not only repetitive, but that are taking valuable time away from other, higher-level work. Firm leaders can also use this exercise to see "who" is doing each stage of the work. It might make sense to offload that part of the job to a more junior person, to create leverage for the more senior staff's time.

At Liscio, we think about this all the time. But because most firms will begin the above exercise once all the client documents are gathered, and the tax return work can actually BEGIN, they miss a trick. And that's the amount of time it can take just to get the document set together for each client.

It turns out there is a TON of wasted time that each staff member has to put in to request, gather, and search for, client documents and information needed to complete the return? Firms who solve this find that SIGNIFICANT capacity can be freed up. It hinges on simply making it drop-dead easy for clients to interact digitally with your firm. To do that you have to recognize that clients are on the go all day - they cannot deal with an email that contains a long list of documents and a link to the portal, with instructions to upload the documents by "x" date. And firms know this because they typically have to chase clients for documents, or, help them to log in to their non-user-friendly portal each year. AccountingWeb published a stat in May 2021 that stated that Accountants and Bookkeepers typically spend 40% of their time just gathering client documents. That's a CRAZY amount of time. What if your staff suddenly had 30%+ more time? You wouldn't need to hire anyone new.

So I think you are on the absolute right track here!! Automate the work for sure (and I think you've got some amazing tech that would help in that area) AND ensure you have a drop-dead easy way for clients to respond quickly to your staff and send crystal clear PDFs using their mobile phone or browser. All boats rise when you make it easy! (and this is where Liscio stands ready to help).

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