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 where 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 the feast and famine type of scenarios should transition toward a year-round recurring revenue model, protecting their cash flow in the process.
Let’s examine three different strategies to help your practice turn this dream-like scenario into reality.
Strategy 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 who rely on you for your expert tax preparation services. Once you’ve built this trust, however, it’s time to go one step further by 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, and tax planning sessions, to 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, 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.
Strategy 2: Provide additional services beyond tax
Tax might be the bread and butter of accounting, but that’s not to say 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 of 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.
- 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.
- 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.
Strategy 3: Move to a monthly recurring billing model
Expanding the range of services you offer 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 will 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.
Moving toward a monthly recurring billing model should be a pretty easy sell. After all, it’s mutually beneficial for your practice and your clients alike.
One final word of advice
Making such 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 throughout the year. If you’re unsure about where to start, simply chat with 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, to transitioning toward a year-round recurring revenue model.
Editor’s note: This article was originally published by Practice Ignition.