A large majority of CPA firms are using time and billing software tools from Creative Solutions (Practice Solutions) and CCH (PACS and VPM) that would have to be considered “elderly”.  Significant new enhancements and features have been few and far between over the past few years.  From a product life cycle perspective, the end is getting near: Creative Solutions has released its new practice management solution, Practice CS.  CCH is developing its Next Generation time and billing product scheduled for release in 2009.  So it’s time to begin planning for succession. However, before you make decisions as to system you will move to, there are some things consider. 

First of all, if you plan to use the new T&B application in the same manner as your current system, don’t make a change.  The perception is that when the vendors introduce their new applications, the end of support for the old software is near.  The reality is much different:  the move to new time and billing systems has historically been very slow in firms. 

Most firms are using time and billing applications today in almost exactly the same manner as they did twenty years ago.   The biggest benefit you will get from a change to a new system will be to change processes and procedures to collect more information, manage more efficiently and to bill faster and more frequently.  The time to start this re-engineering process is before you implement a new system. 

The easiest “new” process to implement is “event-based” billing.  This simply means that the last step in providing a service to a client is to bill the client.  Try to deliver the bill and the service at the same time.  My experience has been that clients understand the bill better and seem to be more satisfied than with a “cycle” billing approach.  Your firm’s cash flow cycle will improve and surprisingly, you will increase you overall fees if you bill in this manner (4% - 8% are the improvements I see in firms). 

To make this event based billing approach work, two things have to be done.  First, you have to make sure firm members are entering their time “contemporaneously”:  they perform a task and they record their time on completion.  Next day, weekly, monthly or any other time entry process will not work.  You do something, your time gets entered.  If the time is not in the system, it may impact the billing decision.  However, remember that the majority of the bills that firms issue for recurring services are “fixed fee” in nature.  So in many cases, the time is not the gauge for the value of the service.  

The second thing that has to be done in an event based billing environment is to train the billers to bill on screen.  All of the current time and billing packages and certainly the new ones that will evolve are easy to use for billing.  This is not a clerical task.  Most bills have short billing descriptions and do not require any significant typing.  Typically, I spend less than a minute creating the bill.  This approach is much more productive compared to dictating the bill, sending it to a clerical person for typing and then reviewing the end product. 

Another billing opportunity is to push billing down to the team members responsible for providing the client service.  This means that you can have tax preparers creating bills for the returns they prepare.  This trains firm members in the importance of efficiently performing a service that the client will pay for.  Combing this billing approach with your staff compensation scheme will result in substantial increases in fees. 

Service management is another aspect of time and billing software that most firms ignore.  All time and billing products have features for specifically identifying services performed to a client and for monitoring their current status, important dates, and the team members responsible for providing the service.  This means that you can have firm-wide on-demand inventories of work to be done for every department in the firm.  The legacy tools that most of us are using do not do the best job of providing easy to access reports of this information, so you have to use custom and third-party reporting tools to do the job.   

You should expect these features to improve in the new systems, but you will have to make firm-wide decisions about the information that is needed and the processes for creating and maintaining it.  Different departments and different team members will require different information so ”one size” will not fit all users. 

The big area that current time and billing systems do not address is in the area of CRM.  Client Relationship management has long been in the hands of each team member.  Most firms do not have a centralized process for collecting the wide array of information about the clients, prospects, centers of influence, and vendors the firm does business with.  So the information exists in many places in a firm and is not shared, is typically not up-to-date, and does not provide the benefit that it has the potential for.   

To start to prepare for CRM capabilities, the firm decision makers should begin to document the information that they feel is important to have about a client and very importantly, how they will use it.  Here are some examples; 

Communication 

Current phone and fax numbers – some practice information systems will have the ability to integrate with phone systems to “pop” information on screen based on the incoming phone number and to automate the dialing process. 

Email addresses – the ability to efficiently email a client and to save information that has been communicated via email is currently hampered by the fragmented information approach most firms use.  At a minimum, a practice information system will offer a centralized repository of contact information that can be accessed by all firm members. 

Mailings – look for CRM features that will make it easy to use an entity’s address in a letter or in a mail merge mass mailing or email communication.  CRM features that identify important client info such as birth dates, industries, types of services provided, size, areas of interest, and other types of information and then let you easily communicate based on this information will improve client satisfaction and retention, and will result in more new business for your firm.   

Sales of New Services 

In most firms, the sales of new services fall under the responsibility of the partners/owners.  This makes sense from the perspective of landing new clients, but it does not take advantage of opportunities to sell increased services to existing clients. 

CRM features that let you identify specific opportunities for both prospects and clients will promote a selling culture in firms that most of us do not currently have.  These tools let you indentify the service opportunity, the team member(s) who have responsibility for selling the service, and the current status of the efforts.  When these features are linked to CRM tools for recording interactions and for documenting a selling workflow process, the results will be more high-quality new business with less effort. 

The big picture benefit of a system that provides extensive practice information for CRM, Service Management, Resource Management, and Sales Support is improved accountability and better goal setting and monitoring.  When firms have tools that provide almost a three dimensional ‘cube’ of information that is available at any time and will automatically report when exceptions exist, it is easier to hold team members accountable to the goals that have been set for them.  

This does not mean that implementing new systems will remove the need for active firm management by owners and their assistants.  These new tools will require a lot of effort to install and use.  Increased accountability is seldom welcomed by those that are being held accountable.  Additionally, since many of the features discussed here are new to firms, there will be some false starts and tweaking required for getting the correct mix of information and process in place.  Finally, these new tools will require team members to change the way they do things and change is almost always resisted.  However, the potential is huge for better client satisfaction, more efficient use of valuable firm resources, and the resulting improvement in firm profitability.  The effort will be worth it in the end. 

Part II: Implementing Tomorrows Tools and Billing Applications-Work Codes

Part III: Implementing Tomorrows Tools and Billing Applications-The Art of the Bill

Tom Davis is owner of Tom C. Davis, CPA, LLC and President of Knowledge Concepts, Inc., the developer of FirmWorks, in Valdosta, GA.  Contact him at tdavis@tcdcpa.com and at 229.247.9801.

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