Practice Management

CPA firms are businesses, and, consequently, need to be managed. So, we’re not just completing tax returns and performing audits. We bill clients and management our collections. Firms borrow money and meet their obligations in a timely manner. CPA firms manage their cash flow so their vendors and employees can get paid. We purchase insurance to protect our employees, customers, and the business. And we build or rent enough space that our employees and clients can work and meet. I could go on, but you get the picture.

Leadership in a CPA Firm

A main component of practice management is leadership. The managing partner and partner group need vision and passion. Without these, the firm can atrophy over time and die. But knowing where you’re going and how you’re going to get their is critical to the success of your CPA firm.

So practice management is not just the paperwork of running a firm, it’s understanding what can make a firm successful, developing a plan to move forward, monitoring the results, and motivating your team to take appropriate actions.

CPA Firm Opportunities

If a firm early identifies opportunities and exploits those before its competition, it is more likely to capture greater market share and perform work with higher profit margins. As in any business, it’s all about supply and demand.

If your firm just provides basic services like every other firm, your profit margins will suffer. When supply of a service is low (and not many firms know how to provide a particular type of service), there is opportunity to generate revenues with higher profit margins. Identifying and moving into these areas is the glamorous part of running a CPA firm, and can be quite exciting.

Practice Management Basics

Nevertheless, the less sexy parts of practice management are important as well, such as billing and collecting. CPA firms can spend so much time generating billable work that they forget to pause and assess the business itself. We need to generate income, but we also need to manage the business. That means we need a calendar that specifies when we will pause and evaluate. It also means we generate reports that are provided to the ownership group so there is accountability.

Practice Management Transparency

Creating transparency in practice management might be the most important thing you will do. Why? Transparency creates accountability. No partner wants to be they guy or girl that drags the partnership down by not addressing their responsibilities.

Successful Firm Practices

It’s wise for CPA firms to pay attention to what successful firms are doing in terms of practice management. By doing so, you can leverage those ideas to benefit your firm.