Best Practices

Efficiency or Efficacy: What’s More Important in Accounting?

What should you prioritise: getting as much done as possible, or delivering high-quality work every time? Let’s debate the case for efficiency versus efficacy in accounting.

Overservicing your clients? You’re not alone. 

Countless accounting firms are guilty of regularly going above and beyond their clients' agreed scope of work — without the compensation to match.

Overservicing might involve sinking unexpected hours into correcting poor client accounting records or small projects that slowly grow into giants without anyone noticing. Or even just spending a lot of time on the phone advising a client. It all gradually adds up. 

Sometimes it’s necessary to overservice a high-value client to keep them happy. But consistent overservicing usually reflects poor time management, attempts to make up for past missed deadlines or low-quality work, fear of losing clients from an already small portfolio, or even a handful of difficult clients demanding more of your time.

Whatever the reason, overservicing erodes your profit margins, resources, team happiness, and productivity and even generates unrealistic future expectations for your clients (hello, downward spiral).

Ideally, accounting and bookkeeping firms could eliminate overservicing altogether, but all know that’s a long and arduous process. Instead, we can focus on minimising it by completing work quickly and to a high standard.

So, which of these is more important? Efficiency or efficacy?

The case for efficiency

Efficiency is all about minimising waste — completing the work using the least amount of time and resources possible. Efficient work generates the maximum profit for a particular task, creates space in your firm for new clients, and reduces your team’s working hours. All these are good news for your profit margin!

But efficient work is only good if it solves your clients’ problems: completing the wrong task quickly only leads to a complete redo, which is not so efficient. Rushing to get everything done might also lead to errors, which can have severe implications on a client’s financial information and your firm’s reputation.

Accounting firms often charge a fixed all-inclusive monthly fee for their services, but a client’s needs are not always linear over the year. December 31st is a popular date to end the financial year, leading to busy January and February months closing the books of multiple clients and drafting financial statements. Part of efficiency is planning for this, especially if these services fall within the scope of your fixed fee.

The case for efficacy

Effective work achieves its intended outcome and fulfils your client's needs. Naturally, it’s a prime goal of all accounting firms. Efficacy is great for your clients, but effective work is labour-intensive, and striving for ultimate effectiveness can drain hours of time and already-stretched resources.

Efficacy starts with identifying high-priority tasks and then allocating time and team members to see them through. This could be creating the most accurate set of accounts ever seen or calculating an error-free tax computation. Delivering accurate, high-quality, objective-meeting work keeps you in your high-profile client’s good books and could even lead to new client recommendations.

On the other hand, delivering ineffective work risks client dissatisfaction, loss of business, lower profits, and reputational damage. It might also harm your clients; they are unlikely to appreciate penalties for incorrect HMRC or Companies House filings and the resulting poor reflection on their company. Your coveted high-value clients won’t tolerate shoddy work: they’ll be snapped up by another firm in minutes.

How to balance the two

Ultimately, your firm wants to be as profitable as possible while delivering high-quality work. Striking the right efficiency-efficacy balance feels like an elusive goal, but it is possible!

Streamlining your processes to avoid wasting hours better used elsewhere is a great way to address an efficiency-efficacy mismatch. Although they are often seen as exclusive, maximising your firm’s efficiency will work wonders for your efficacy.

Optimising workflows

Workflows are how we get a job done; a series of steps ticked off one after the other to complete a task. Some are complex involving multiple processes and people, and some are fairly simple. One thing they have in common — they all take up valuable time. 

Existing workflows don’t necessarily need to be revolutionised, just optimised. Changing how you manage workflows could free up time to focus on more pressing work.

Here at Pixie, we have the perfect software to remove the hassle from workflows. Our dedicated accounting workflow management software offers efficiency and consistency using preset templates, automatic task creation, customisable workflow triggers, and automation of administrative tasks. You can access timely information on the progress of workflows and see who’s responsible for each step at the click of a button.

And eliminating human error from complex workflows makes them more effective too.

Automating admin tasks

Administrative tasks are necessary but time-consuming. By automating as many of these as possible, your team can dedicate more time to client management and key competencies, improving the quality of their work.

Automated emails reminding clients to provide information or to request their feedback reduce your administrative burden while moving processes forward. Email filing can be automated, as can creating recurring task lists and updating client records. Payroll, document creation, financial reports… The automation possibilities are endless.

Introducing SOPs

Standard operating procedures (SOPs) promote consistency in your accounting cycle. They help you focus on delivering superior client services by removing the inefficiencies caused by poor standardisation. Another excellent example of efficiency paving the way to better efficacy.

SOPs promote consistent (and excellent) service delivery, minimise communication breakdowns, help your firm meet its deadlines, and deal with many monotonous internal processes, such as invoice generation.

Using templates

Templates slot in nicely with optimised workflows and SOPs. Templates for contracts, invoices, information request lists, and engagement letters (the list goes on) remove the repetitive burden of creating these from scratch every time.

Whereas most firms will already have some traditional templates, email templates are a relatively new idea for many. Over a quarter of our working week is spent reading and answering emails. This is time begging to be reclaimed.

Efficiency or efficacy?

Overservicing is an occasional must to keep clients happy, but it shouldn’t be a tool for retaining clients in the event of past missed deadlines and error-prone work. Clients are unimpressed by late and poor-quality work; the key to avoiding these is striking the right balance between your firm's efficiency and efficacy.

So, what’s it to be: efficiency or efficacy? I believe can be both.

New call-to-action

Similar posts

Want to be the first to know about our latest features?

Join our announcement list and keep up to date with all of the great things coming to Pixie.