No one knows better than accountants that profit margins are what’s left when your salaries and costs (like rent and software subscriptions) are deducted from revenue. So, how can accountants protect or grow their accounting firm’s profit margin?

Alongside many other professional service disciplines, customers are increasingly keen to drive down costs – often based on a belief that technology has made the services they receive cheaper for the firms to deliver. For many years it was hoped that advisory services would protect accounting firms’ profit margins, but the new skills, stiff competition and risks involved in backing that strategy are high. It is much easier, and the benefits are guaranteed, to protect and grow an accounting firm’s profit margin if a strategy to standardise data in the cloud is adopted or improvements in this area can be made.

So, what can accountancy firms do to adjust to the reality of declining fees, while maintaining or ideally growing profit margins?

One often overlooked yet powerful way to achieve this goal is the strategic use of standardised data. In this blog, we’ll explain the aim for data standardisation and explore its significance in accountancy before exploring how it can unlock greater profitability.

What is your accounting firm aiming for?

In the context of an accounting firm, standardised data means taking different data formats (chart of accounts) and then harmonising them into a single Chart of Accounts. This means that across all your clients, no matter what bookkeeping system they’re using, or what sector they’re from, the data is stored in a consistent format.  

It’s even better if the storage and standardisation occurs in the cloud as this delivers real-time access and removes the risk of duplicating work as all team members will access the latest data.

Stored and standardised in this way means that anyone in your firm can run data queries across every client because of the uniform way their financial data is represented. In the age of Automation and AI, this also makes what is possible greater and significantly reduces the effort required to achieve it.

Key Benefits and Profit Upsides Associated with Data Standardisation

The power of standardised data delivers value in four key ways;

1.   Improved accuracy

Standardised data will significantly improve the accuracy and precision of your firm’s financial reporting. It delivers uniformity in data entry, processing and carrying over which reduces errors and saves considerable amounts of time.

Add onto your standardised data automation and even AI to spot anomalies and you’ve unlocked considerable efficiency savings – with even greater accuracy.

In both these cases, profit margins are given a boost as low-level data checking tasks are reduced, if not removed, and the need for senior (also more expensive) members of the team to review and solve data errors goes straight to the bottom line.

“The review time with managers is much quicker. Things don’t get stuck creating a bottleneck at the top any more.”
Rosie Cooper, Director, PM+M

It’s worth not forgetting the added boost that using the cloud here also provides. With all your firm’s employees accessing real-time data in the cloud, the risk of working on out-of-date figures or duplicated work is effectively removed – while also supporting remote working and reducing fixed costs such as office space. Plus, more accurate data means more reliable financial statements and happier customers – all of which are good for accounting firm profit margins.

2.   Streamlining processes

Another significant advantage of a consistent and easily accessible data strategy is the speed gains to complete core tasks and the resource savings that streamlined accounting processes deliver.

From year-end prep to financial analysis, standardised data formats are a great foundation for improving collaboration across different functions or optimising workflows. Both of these will save time and the amount of resources needed to complete core accounting functions like accounts production or corporation tax submissions.

“Silverfin has reduced the time required to submit a set of accounts from 15-30 minutes with our previous package to 5 to 10 minutes at most.”
Martin Bugg, Digital Partner, Larking Gowen

3.   Improved decision-making

Reliable and standardised data, which is also ideally accessed in real-time via the cloud, will give you and everyone in your firm the ideal foundation for accurate decision-making. A system that has uniform data across different periods, subsidiaries of businesses or different internal approaches at your customers creates a significantly richer set of inputs for accountants to review, compare and offer advice concerning.

Based on this expanded and accurate data, accountants can offer valuable insights to clients in a consultative and advisory capacity, which more often than not attracts a higher profit margin.

“The value and the quality of service that we’re giving clients now has increased exponentially. We wouldn’t be able to do what we do today if we didn’t have Silverfin.“
Jo Gibson, Outsource Business Partner, Hurst

This gets even more efficient and profitable when smart and secure AI is introduced to spot anomalies and offer common solutions. For more on how Silverfin has developed and used AI this way for the last two years read more about Silverfin Assistant here.

4.   Enhanced compliance

Adherence to regulatory requirements is a critical aspect of accountancy. Consistent data practices built on standardised data facilitate compliance by improving accuracy which in turn ensures that all accounts meet the necessary standards and regulations.

If you use Silverfin software, regulatory updates are automatically rolled out to all users and accessible as part of your ongoing subscription. This will significantly improve the speed, accuracy and compliance for core post bookkeeping tasks such as working papers, accounts production, corporation tax filings and management accounts.

“We quickly realised Silverfin was just what we were looking for. It was a powerful platform that met our specific requirements and the Silverfin team was really responsive to our needs. The entire experience has been absolutely painless. I’ve been incredibly impressed.”
Lynne Walker, Partner and Head of Business Advisory, Johnston Carmichael

So, your accounting firm profit margins are protected from costly mistakes or fines and enhanced when you use software like Silverfin that automatically applies the latest adjustments automatically – increasing your firm’s capacity with the same headcount.

Conclusion

In accountancy accuracy and reliability are of paramount importance to customers and a firm’s reputation. Having standardised data and consistent, and ideally automated, data practices is a hygiene factor that can help you grow your firm and its profit margins.  Use it to streamline your processes, improve decision making, ensure compliance and delight customers. Standardised data is a fundamental step to take and the foundation on which further efficiencies and enhancements can be built – all of which will help grow the profit margins at your firm.