Are You a Big Firm with Small Firm Problems?

As an accounting firm, you might sometimes find yourself wondering whether your challenges are typical of a small or medium-sized practice. It’s a common concern, especially when it feels like your firm is facing issues that don’t seem to match its size. This uncertainty is amplified by the natural tendency in the industry to maintain confidentiality. Even the most transparent practitioners may shy away from sharing their internal struggles, fearing it could erode their competitive edge.

After thorough research into the operational challenges of various-sized firms, one thing became clear, both small and mid-sized practices encounter unique issues that a robust Practice Management system can alleviate. While each firm has its own set of frustrations, often driven by the skills of its staff and the management style of its partners, understanding these issues is the first step toward improvement.

In larger firms, specific roles are assigned to dedicated personnel in areas like marketing, operations, HR, and IT. In smaller practices, these responsibilities tend to fall on fewer people, creating a bottleneck that impacts efficiency. Recognising where your firm stands in terms of these challenges is crucial to addressing them effectively.

In smaller firms, it’s common for practitioners to handle the bulk of the workload, with little delegation to staff. Clerical staff may lack the skills to manage the firm's administration, and work often arrives in waves, driven by the pressure of deadlines. Delegating client issues becomes difficult either because there’s no one available or because the staff lack the necessary expertise. Special client requests, though often inefficient and disruptive, are hard to turn down due to the personal relationship with the client. Personal matters or illness on the part of the practitioner can disrupt the entire team, further straining operations.

Workload distribution becomes a challenge, with partners often responsible for managing personnel, a task that detracts from focusing on the firm’s growth and client needs. Smaller firms tend to rely on local service providers who lack accounting-specific knowledge, making it difficult to resolve technical issues efficiently. The focus in these practices is generally on tax, bookkeeping, and business consulting, each of which comes with its own set of management challenges.

Medium-sized firms face a different but equally complex set of issues. While they have the scale to address more standard processes and workflow matters, staffing becomes a significant challenge. Recruiting and retaining employees with the right skills can be difficult. Scheduling engagements and managing extensive projects that span long periods require careful oversight. The work itself becomes more complex, necessitating more advanced management techniques. With multiple partners, each bringing unique skills to the firm, determining fair compensation can be tricky, particularly if the firm uses a "book of business" approach rather than a unified corporate structure.

Growing the practice also demands more time, as marketing and advertising efforts become more critical. Poorly defined processes can create unnecessary work, reducing efficiency and increasing frustration for everyone involved. Without clear roles and responsibilities, important tasks can easily be overlooked, leading to errors. Outdated or missing process documentation makes training new staff difficult, and a lack of visibility into project status complicates task management. Without standardised processes, data from workflow systems becomes unreliable. At this stage, firms often start to explore audit and assurance work, client advisory services, wealth management, and other areas that are more profitable and in demand.

One critical aspect often overlooked by firms of all sizes is how they utilise their Practice Management software. Many firms fail to harness the full potential of these systems, treating them as basic tools for administrative tasks rather than leveraging them for comprehensive practice management. The difference between operational efficiency and ongoing challenges often comes down to how well the software is integrated into your processes. 

Is your Practice Management system merely a tool for invoicing, or are you using it to streamline workflows, enhance client service, and improve overall practice efficiency? 

Being open to adapting your current processes to make the most of your software can be a game-changer for your firm's success.