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Learn why traditional practice management isn't working

January 4, 2023 min read

Traditional practice management isn’t working

Darren Root

Chief Strategist, Rootworks

A holistic approach is what’s needed to run a modern accounting firm today. Getting it right is like building a puzzle. Clients expect a cohesive and simple experience. Your team needs the tools to better serve customers without friction, and you need information that measures what matters. 

Data is the key driver that will lead your firm from being only a reactive compliance firm to a proactive firm that holistically serves clients.

Your tech stack should include:

Practice managementContact management, time and billing, and workflow tracking with, at a minimum, these features: 

  • Organization of contacts by client
  • Workflow hierarchy of engagements, projects and tasks
  • Time and billing with options to accommodate various billing strategies, fixed fee, hourly and expense reimbursement
  • Allocating time across projects and tasks to arrive at accurate realization and production reporting

Customer relationship management (CRM)Firms use a CRM system to track prospective clients and nurture them through the process of becoming a client.  

Client portal solution—This is the tool for collaborating with clients, so you can: 

  • Send and receive documents 
  • Get e-signatures 
  • Receive payments 
  • Collaborate on tasks and questions 

Customer service software—A centralized customer service ticketing system (Zendesk is a good example) with which you can: 

  • Standardize and manage communication across the firm
  • Get reporting on how effectively your team communicates with clients
  • Develop omnichannel methods to communicate

Engagement letter and payment solution—Streamline the engagement letter process and automate billing and payment for the services provided.

Client intelligence solution—Collect and consolidate all the data about your clients that currently live in various silos…including your head, and the heads of your team members. I like to think of client data in these categories: 

  • Financial data, which probably lives in QuickBooks® or QuickBooks Online (QBO).
  • Technology data, which is the data that informs you which technologies your client(s) use.
  • Business data, which encompasses all the various data points about a client that empowers you to proactively advise them.

Accounting software—This one is self-explanatory because you’re probably using some form of QuickBooks as your firm’s accounting software.

It’s no wonder firms are frustrated with their current state of Practice Management; everything is so fragmented. Above is a good list of the functionalities a modern firm should consider.

Additional considerations

Today, no single solution does everything I just listed, although there are a few that include several of the items. When evaluating multiple solutions, consider the following:

  • Integrations—No one wants to manage multiple databases. So, what does the word “integration” include? At a minimum, I think it’s the syncing of core demographic data, names, addresses and emails.
  • Costs—Purchasing multiple solutions will drive up your cost.
  • Client experience—It’s critical to map it out from end to end to support: 
    • Document exchange
    • Document signing
    • Booking appointments
    • Paying the firm’s invoice
    • Collaborating on a to-do list
    • Submitting a support ticket
    • Onboarding
      An important consideration: Should an individual tax client have the same experience as your SMB client?
  • Reporting—Measure what matters…and make sure the tools you select can do exactly those things.

Which solutions should be included?

Creating a practice management system really is like a puzzle—but the difference is, it’s not one where every single piece must be included to create the final picture. With this puzzle, some pieces will be used, and others will be left out. Plus, there are trade-offs that need to be considered.

  1. Are you trying to grow your practice by adding several new clients each year? If yes, then you need to add a CRM to the puzzle. If not, then you can delete that solution from the list.
  2. Do you want to standardize how clients email your team, plus add more communication transparency across the company? If yes, then you need to add a customer service solution to the puzzle. If not, then you can drop this one as well.
  3. Do you want to standardize the engagement letter and payment process with your clients? If yes, add the engagement letter and payment solution to the stack. If not, then cross this off your list, too.

But at a minimum, we’re going to include traditional practice management, client portal, client intelligence and accounting software. 

My thought progression

  1. Accounting software first. I’m going to assume QuickBooks Online as our starting point, as it’s the tool most widely used, and it has the most integrations from other tools.
  2. Client experience. What experience do you want? Which type of solution functionality do you want? You can’t expect clients to use multiple logins. Most solution providers have their own portal login. 
  3. Practice management is the next key piece of the puzzle. It’s important that the solution you select integrates with QBO. The reasons: one database and rich accounting data. Don’t build in silos.
  4. Layer in the remaining pieces. The key considerations for each piece are:  
    • Does it integrate with other solutions selected?
    • How does it affect the client experience?
  5. Don’t forget to consider your tax software. How much integration is needed to not have another database?

In summary

This is not an easy puzzle to solve. It requires a lot of discussion, decision-making and implementation that will require process changes. But if you want to be a modern firm, there’s no better time than a brand-new year to start thinking like a modern business.