Moving your practice to year-round recurring revenue
Three strategies for turning the dream into a reality from Josh Lance, CPA
Josh Lance is Head of Accounting (US) for Practice Ignition and the Managing Director of Lance CPA Group.
GENERALLY speaking, tax season — the four-month-long period where tax professionals diligently set about collecting their clients’ financial figures, making sense of everything, and submitting timely, accurate returns — is when accounting practices tend to make the majority of their yearly revenue.
But what if there were a better way to run your firm?
As it happens, there is. Practices looking to avoid feast and famine type of scenarios should transition towards a year-round recurring revenue model, protecting their cash flow in the process.
This post will examine three different strategies to help your practice turn this dream-like scenario into reality.
1. Expand your tax-related services.
To be honest, this one’s a bit of a no-brainer. You’ve already cultivated a solid roster of clients that rely on you for your expert tax preparation services. Once you’ve built this trust, however, it’s time to go one step further, identifying ways to provide your clients with even more value.
In other words, you need to branch out by expanding the tax services you provide.
These services can range from quarterly reviews and estimates, tax planning sessions, or providing unlimited tax guidance throughout the year. If you notice a problem that you can solve, or an area where your clients would benefit from further assistance/advice, don’t be afraid to package this up into its own service and upsell your clients.
Not only will you make their lives easier, but you’ll also change the relationship you have with these clients. They’ve previously come to you for your one-off tax preparation services — now, however, you’ll build an ongoing, proactive relationship.
But that’s not all. By working in close tandem with your clients throughout the year, you can also easily identify issues that might cause problems further down the line, rectifying these errors before they turn into a fully fledged tax nightmare.
2. Provide additional services beyond tax.
Tax might be the bread and butter of accounting, but that’s not to say that it’s the only thing that matters. Far from it. Therefore, it’s worth considering if there are additional services where you can provide value to your clients’ lives.
You might for example consider offering client accounting services, advisory services, human resources consulting, and/or wealth management services. By providing these additional services on a recurring basis throughout the year, you’re doing three things for your firm:
- You’ll quickly become a one-stop-shop. Rather than having your clients complete their tax preparation with your firm, and bookkeeping and advisory services with another firm, you can instead consolidate all your clients’ needs under one roof. This will further strengthen your relationship. You’ll increase your knowledge of their business and their particular needs—helping you be more effective and valuable moving forward.
- Secondly, you’ll also greatly reduce your practice’s concentration risk in one type of service. Offering a wide variety of services based on year-round revenue means that if something were to happen to one of your services — for example, if you made a high-profile error when preparing a client’s taxes — your firm wouldn’t crumble as a result.
- Last but not least, you’ll be able to increase your rates as you become increasingly invaluable to your clients. Regardless of your pricing model or client roster, your increased utility and value means you’ll be able to command a premium price for your all-around range of services. Clients crave convenience — so when you go out of your way to make their lives easier, they’ll reward you out of their own pocket.
This is especially true if you focus on a particular industry niche. By building a profound level of expertise in a single niche, you’ll set yourself apart from the competition and maximize the value you bring to your clients’ businesses.
3. Move to a monthly recurring billing model
Most importantly, expanding the range of services you offer (whether tax-related or not) will allow you to transition away from your existing billing model. Instead of simply billing when a tax return is completed, you can now price and bill on a monthly recurring basis.
This change of billing model will provide your firm with a consistent cash flow throughout the year. What’s more, it’ll reinforce to your clients that you’re working with them on an ongoing basis throughout the year instead of just at tax time.
Your clients will also gain additional clarity, gaining a firm grasp over exactly what they need to pay and being able to spread this cost out throughout the entire year. No longer will they have to stump up large one-off payments around tax time, or deal with unexpected, ad hoc, hourly bills that they didn’t plan for.
Moving towards a monthly recurring billing model should be a pretty easy sell. After all, it’s mutually beneficial for both your practice and your clients alike.
Want to find out more about moving toward a year-round service model for your tax clients? Click here for webinars and essential reading from Practice Ignition.
One final word of advice
Making such wholesale changes might seem a little daunting at first. However, don’t be put off by the scale of the project — take them one step at a time and remember that your efforts will ultimately result in your firm bringing in more revenue throughout the year, more consistently than before.
Take the stress out of tax season and show your customers that you’re there by their side year-round. If you’re unsure about where to start, simply get chatting to your clients and ask them what they’re struggling with, what they need, and where you can help.
Their feedback will provide the insights you need to begin changing your practice for the better, moving away from providing one-off, once-a-year services, and instead transitioning towards a year-round recurring revenue model.
Josh Lance is Head of Accounting (US) for Practice Ignition and the Managing Director of Lance CPA Group. Want to find out more about moving toward a year-round service model for your tax clients? Click here for webinars and essential reading from Practice Ignition.