How Can Write Offs be Better Managed?
As part of our recent June Benchmarking Survey, write off averages seemingly suggested an improvement for the 2017 financial year, with ten of the seventeen regions reporting a better result. That said, we continue to see some pretty significant results within a number of firms individually leading us to ponder what is causing such outcomes and how can improvements be achieved?

In reality, write offs can really be a moving feast. It all depends on the accuracy of recorded time, the timing of when a firm will actually acknowledge or write off time, and in part, an unwillingness of practices to actually bill the recorded time. In many ways, firms are their own worst enemies.

No doubt some of those who now value bill or operate based on fixed fees will be feeling more comfortable as many of those firms suggest that they do not experience write offs. That said, some may say, if time isn’t recorded, how is it possible to ascertain whether such a firm experiences write offs or recoups the cost of performing the work. I recall one practitioner expressing to me once that rarely do any firms truly have no write offs. So perhaps part of the debate starts with the realistic recording and assessment of such KPI’s?

But rather than get locked in that debate, let’s perhaps address some potential solutions for those firms who are experiencing 15% or 20%+ write offs. Once you have perhaps reviewed the recording and billing factors, other areas for review include:

Charge rates compared to market. Is your firm competitive and realistic?
Typical fees for services compared to peers. Are you charging enough for these services?
Seniority of personnel performing the work – are the best suited staff completing this work?
Appropriate delegation of work completion – this is a common issue within firms with some personnel believing that they can complete the work better or faster only to wear a write off on the job.
Methods of improving efficiencies
Options to assist in the reduction of costs
Obviously two recent approaches that some firms are utilising to improve efficiencies, and therefore write offs, are the implementation of cloud computing, both within their firms as well as within their clients, and outsourcing. Now some firms may feel rather strongly about this latter suggestion, but in some instances, it is definitely making a difference for some firms.

Ultimately however, if your firm is unable to recoup a reasonable return on the performance of clients’ work, it either reflects a need to become more efficient, increase charges to ensure a better profit margin or find a way to billing those fees that are currently being written off.

Many firms now run dual pricing for cloud versus non-cloud based clients to reflect the additional work in servicing those not in the cloud. Does your firm do this?

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