With the diverse array of technology and services available in 2022, there’s no reason you should watch your clients make money while your revenue stream stays flat. Whether you use white label accounting services, discover ways your clients can save money, or rebuild their entire financial structure, there are plenty of ways to improve profitability in 2022.
Strategically Use White Label Accounting Services
The mind of an accountant is a powerful money-making machine, but not if it’s preoccupied with tasks that don’t generate a lot of revenue. For many accountants, white labeling certain services enables them to free up time and energy to focus on services that bring in more cash.
White labeling is straightforward: You choose which tasks you want an experienced, professional white labeling firm to handle and let them take care of it. You then “label” the services as your own. In this way, the professionalism, experience, knowledge, and expertise of the white label service become part of your brand. At the same time, you can redirect the rest of your energy towards accountant advisory services and other offerings that can make you more money.
With white label bookkeeping services, for example, you can outsource some or all of the financial statement production work of your clients to the white label firm. You can then invest your time discovering ways to add value to your clients’ businesses—and earning more money while doing so.
Discover Ways Clients Can Negotiate with Suppliers
If you use white label accounting services, you may be able to free up time to take a close look at your clients’ expenses and find ways they can save money on supplies. For many clients, they purchase so many materials they’re in a good position to negotiate better rates. They’ve just never thought to ask. You can find ways that they can save and even write the pitch for them, making it easy for them to present to the supplier.
For example, suppose you have a client that manufactures recreational vehicles. They purchase several thousand tires every year, and looking at their expense reports, you notice the price has climbed steadily over the past few years. Given the amount they purchase, you realize they’re in a good position to negotiate a lower price, perhaps what they were paying three years prior. In this way, you can reduce the overhead associated with every vehicle they make, improving their bottom line.
Restructure Your Clients’ Financing
One thing 2022 is going to be great for is low interest rates. This is a huge opportunity for your accounting firm: All debt should be on the table for restructuring. In many situations, your clients may have loans that stretch back several years—even 10 or more years. Given 2022’s interest rate climate, there are sure to be opportunities for substantial monthly savings.
For instance, it’s not uncommon for commercial real estate loans to be between 3.5% to 5% in 2022. If your client bought their property 15 years ago, there’s very little chance they’re paying anything in that range. You can restructure this and other debt for big savings—and charge your clients accordingly.
Review Your Labor Costs
It’s not uncommon for accounting firms to over-invest in labor—not necessarily in having too many people, but in employing valuable human resources and then under-utilizing them.
For example, if you’re paying an in-house staff member $48,000 a year to handle bookkeeping, yet they’re only managing $52,000 worth of business, you may want to consider white label bookkeeping. This allows you to give that employee tasks that generate more income. Moreover, by reviewing the COGS of your bookkeeping service, you may discover that the white label bookkeeping services significantly reduce your bookkeeping service overhead.
Re-examine Your Pricing Structure
Just because your pricing structure is keeping you solvent doesn’t mean there isn’t room for improvement. Take a hard, careful look at what you charge, how much it costs you, and what it’s worth to your clients. Don’t be afraid to sit down with another firm’s executive over a cup of coffee or another beverage and ask what they charge for different services. Then reconsider the prices of all of your services.
Transition Services to a Value-Based Pricing Model
Value-based pricing involves charging based on the value of the service to the client as opposed to by the hour. Granted, it’s best to use value-based pricing in conjunction with an hourly rate—particularly if you have to take into consideration newly discovered figures, documents, or adjustments—but value-based pricing is often fairer to you and your clients.
Another advantage of value-based pricing is you can use it to prevent penalizing your company for being fast. For example, if you charge $150 an hour, and you uncover a way to save a $2.5 million company 2% a year after 2 hours of work, you definitely deserve more than $300. You just saved them $50,000. It would be fairer to charge a percentage of what you saved them, such as 8%. You could also charge a flat fee, such as $6,000, reasoning that the savings will continue to be realized year-after-year-after-year, giving your client an excellent ROI on their money.
Use PABS White Label Accounting Services and Boost Profitability in 2022
With PABS white label accounting services, you can outsource time-consuming, yet low-profit tasks and focus on those that bring in more revenue. You can rely on PABS’ experienced team of accounting experts to improve your firm’s brand image with excellent service. Learn how by connecting with PABS today.