According to a recent poll conducted by AccountantsDaily, 70 per cent of accountants are rethinking their fee structures as a result of evolving technology, prompting Mr Smith to warn firms they need to be careful when considering changes to billing structures.
Mr Smith told AccountantsDaily that accountancy firms should take advantage of the efficiencies created by improving technology to develop their client relationships so they evolve into a more advice-focused practice. This shift in service offering will enable the firm to more easily restructure billing, he said.
“Because cloud accounting gives you the opportunity to have real-time access to clients' data, that should drive opportunity for the firm to do more advice work because they’re able to look at what’s happening in the client's business today rather than what happened in their client's business six months ago.”
“The technology theoretically should be enabling firms to provide better advice, more up-to-date advice, which clients will value more and be more willing to pay for.”
While some firms are experimenting with new fee structures as a result of this shift, Mr Smith said many are also facing problems in doing so.
“A lot of firms are actually in a half-way house, and what I mean by that is they are essentially charging a fixed price estimate - what they estimate to be the fee for the year - and then at the end of the year they’ll have a catch-up for any extras.
“Where firms are getting this wrong is that they don’t control the scope of work well enough and they don’t put in writing what they are going to do within a fixed fee and they get caught by 'scope creep'.”
“What you need to do is, in agreeing the engagement with the client, you have to be quite clear about what you are going to provide and then make sure the client knows that anything outside of that scope is subject to an extra fee,” Mr Smith said.