Making the Most of the Busy Season

By the Editors of The CPA Journal

The dreaded busy season is looming up ahead; long hours, unreasonable due dates, failed client promises about being prepared and ready, bad weather, and a host of other unpleasant things are about to gang up on you as you attempt to satisfy the needs of calendar year-end clients.

During this demanding period, it is tempting to focus on the immediate needs and demands of clients, charge full speed ahead--sometimes without much thoughtful preparation--and put aside anything that isn't due tomorrow or the next day. "Get the work done at all costs" frequently results in "wheel spinning" and inefficiencies. One consequence of this approach‹opportunities can get overlooked.

But being busy is not an end in its self. The time is right to reap additional benefits and rewards. Busy season should be productive with maximum profitability and a time to recognize and identify client needs that can be satisfied during a more convenient time.

Our recommended approach to busy season is based upon the well-thought out strategy that the firm comes first. The accompanying actions begin in quieter times but extend to and continue during the full heat of battle. It takes commitment and understanding that transcend time charges to any specific engagement. The firm, office, or practice unit must be looked upon as one, not as individual engagements. It requires understanding and acceptance to not allow staff to sit unproductively in the office when planning and preparation work could be done, perhaps less efficiently and resulting in additional charges to some engagements.

For ease of presentation regarding the suggested strategies, we categorize or divide them into two phases: prior to busy season and during busy season.

It's Never Too Early

"Prior to" work can begin at any time after the end of last year's busy season. For most firms it begins after Labor Day, perhaps at the point that new entry-level staff come on board. If your efforts to date don't quite match up to those recommended, a promise for next year's earlier effort and some note taking during the upcoming busy season would be in order. In many cases it is never too late to start; while in some cases, if you do fail in the early-bird effort, you may not be able to properly finish what you are committed to do.

Before the Busy Season

Plan Every Engagement. Every engagement‹audit, review, compilation, and tax return‹requires planning, and probably before the end of the year. The best planning requires client contact, even if only a phone call. Planning accomplishes many things, among them it‹

* identifies changed conditions‹your client may have changed from the last time you were in the field. If you have had ongoing contact throughout the year, there should be few surprises. But sometimes what may be important to you goes unnoticed by your client. There may be a new audit consideration, either increased or diminished, tax law changes, or new accounting principles to be factored into the work.

* brings client expectations and your ability to deliver the final product, the financial statement or tax return, into sync. Your client may have a special need, perhaps because of an overpayment of taxes or an expected loss carryback, for the tax return to be filed earlier this year.

* promotes efficiency. Planning can result in greater use of technology, the right level people working on the engagement at the job at the right time, and the elimination of unnecessary procedures.

* leads to a better work product and a happier client. Proper planning results in met deadlines, no surprises, and an improved client relationship.

Two specific outputs from the planning process that are particularly effective are‹

* a tax plan for each 1040 client. This includes a final look at estimated tax payments and the timing and amounts of before year-end tax payments, charitable contributions, bonuses, and distributions to stockholders.

* a letter to client controllers or bookkeepers listing information necessary for tax returns and financial statements. The list should be complete and specific to each client.

Review the Prior Year's Action List. Every engagement, every department, and every office should develop and maintain a list of things to do next year to increase efficiency and productivity. Prior to this year's busy season--if they involve major changes to how work is accomplished, perhaps soon after the end of last year's busy season--the action lists should be reviewed and plans set in motion to see that suggestions can be implemented. At the engagement level, this will normally be dealt with during this year's (hopefully early) planning activities.

Dump Unprofitable Clients. Focus on clients who demonstrate respect for the work you do for them by paying your bills promptly. Direct marketing efforts to prospective or existing clients who are a better fit for your firm's skill sets. Why spend time chasing and dunning those who can't or won't pay? Drop them. Time spent serving poor-paying clients can be channeled to profitable clients who may be in need of more, better quality service.

Review Clients of Long Standing for Changes in Their Risk Profile. If you recently made your formal acceptance procedures more stringent in response to various risk factors, do old clients meet the current criteria? Should you consider eliminating some of these clients before investing significant time in this year's engagements?

Upgrade to More Efficient Technology. Technology continues to become more affordable. If you haven't been able to determine the benefits of moving up to another level of hardware or software before this busy season, be sure to evaluate the results of your information system immediately after the dust settles this year. Upgrading software alone may drop more profit to the bottom line without an increase in billing rates. And even better, greater use of technology may justify an increase in rates of those using the technology to help pay for the cost of technology.

Plan the Work Flow to Minimize Peaks and Valleys. Planning of this nature is done at the firm, office, or practice-unit level, again keeping the big picture in mind. Less profitable work should have a lower priority for completion in the heart of the busy season. Do more work prior to year end, even though it may be less efficient. You may run up more nonbillable hours off season but require fewer people and smaller salary expense during busy season. Educate clients that "going on extension" does not increase the likelihood of an audit or challenge to a tax return position‹allowing you to do the work in the summer.

Promote Interdepartmental Exchanges of People. For example have tax people assist on financial statement work in January and accounting types work in the tax department in March. The benefits are obvious. Smoothing the workload can improve staff efficiency and effectiveness.

Create a Complete Scheduling Program. Prepare a staff-assignment schedule for the entire busy season that is uncomplicated, reasonable, practical, and‹where possible‹based on experience. Having too few or too many people can turn a potentially profitable busy season into a disaster. Have you considered the possibilities of part-timers, retired employees and partners, ex-employees, winter interns, or allowing your people to work from their own satellite offices, their homes? The last suggestion may require a greater investment in technology in the form of computers and communication devices, but it may be worth it.

Assess the Firm's Abilities and Establish Performance Benchmarks. Doing things "the same old way" is an easy habit to acquire, but shaking the habit is usually essential to becoming more productive and profitable. Reasonable work standards help keep staff motivated and productive. Unreasonable goals can create stress leading to unsatisfactory performance.

Train the Administrative Staff to Handle Increased Performance Levels or Needs. Administrative staff can contribute more directly to the bottom line‹

* by inputting tax information into the tax preparation software programs, or

* by interacting with clients and others in a professional, courteous, and yet expeditious way. The first line of client contact‹reception and telephone operators‹should be trained how to handle the high volume of traffic that comes with the busy season. There is no faster turnoff to a client or important contact than an unanswered or mishandled call or a discourteous or disinterested greeting by a receptionist.

During the Busy Season

Once the rubber hits the road and busy season begins, a strong sense of discipline must permeate the organization. Clients become demanding, and it is easy to respond to the loudest voice no matter how unreasonable or undeserving. Remember, there will be a tomorrow. There will be a time when staff will not be fully productive and you will wish you had taken the time to explore possible additional services for existing clients or to continue practice development activities.

During the busy season‹

Finish One Job Before Starting Another. Easy to say but not easy to do‹it is very tempting to juggle client demands by getting a portion of the work done to show good intentions. Inefficiencies resulting from having to resume a project after starting another are obvious.

Finish Work in Field. This is a natural extension of finishing one job before starting another. The staff needs to complete all significant engagement work before leaving a client's premises. Even work traditionally done back at the office can be done to advantage in the field. This includes workpaper review at every level, including the partner or sole proprietor. Too often, engagement teams do the work that must be done in the field and then rush back to the comfort and safety of the office to add the finishing touches and turn the work over for manager and partner review. Avoid this approach. First for efficiency‹workpaper review often raises questions and requires additional work. If staff are in the field, additional work can be done by the persons who did the initial work. If the review is done back in the office, the person who did the work may have been released to another job, resulting in more of a hassle.

Second for visibility‹doing as much as is possible in the field also visibly demonstrates to the client the amount of time required to do the job. This is important when it comes to billing, collecting, and maintaining a desirable realization rate. The client is less apt to complain about fees when he or she sees the effort being expended.

Third for opportunity‹among the more important and least recognized reasons for finishing workpaper review in-the-field is the opportunity it presents‹

* to establish a relationship of trust and confidence with the client by demonstrating knowledge of the client's operations and overall business operations, and

* to learn of client needs for additional services. The workpaper review, discussions with staff, and the whole process of wrapping up the engagement should provide a number of ideas for ways to help the client that can be discussed on the spot. Some may lead to additional work; some may just build a stronger and healthier client relationship.

Use Technology. It's amazing that some firms still don't use computers in the field. Trial balance programs are available from several sources. Accountant's Trial Balance from the AICPA has become almost the standard for such programs. These programs start with a preliminary trial balance, handle adjusting and reclassifying entries, and lead to draft financial statements.

Electronic spreadsheet programs should be used for all analysis type work. Since most clients of any size also use computer spreadsheets, any "prepared by client work" should be requested in disk format. This will simplify testing footings, etc. Word processing programs should be used for memos and correspondence work. The goal should be to eliminate all hand prepared work from the papers.

Computers being used in the field should be equipped with modems for faxing and communication with the office and online services. There is a wealth of information on the Internet. The AICPA's bulletin board, Accountants' Forum, is available through CompuServe. State CPA societies are also going online--some as part of the AICPA's bulletin board and others, such as the New York State Society of CPAs with its Luca Online^TM, have developed their own. These online services are maturing and ultimately will be a comprehensive source of information. Databases, such as those operated by Dunn & Bradstreet can be accessed for analytical review purposes. The November issue of The CPA Journal contains an article, "The Internet as a Practical Tool," that details many materials now available on the Internet that may be helpful to accountants.

Use Practice Aids and Checklists. A major development over the last decade has been the availability of effective practice aids from commercial vendors. Practitioners Publishing Company is perhaps the best known, but there are others, including the AICPA and McGladrey-Pullen. For a reasonable price, these vendors provide a complete package of checklists and other forms that virtually walk the accountant through the engagement, whether an audit, review, or compilation. For the practice unit that has neither the interest nor resources to develop its own materials, theses aids can help provide a framework for efficiently conducting work and complying with professional standards. (These materials are "peer reviewed.")

Prepare Management Letter Points in the Field. Completing the engagement in the field should extend to matters not necessarily required by the report date‹such as the management letter. Preparation in the field at that point avoids the need to go back to the client's office to answer a reviewer's question or clarify a matter in the writer's mind. And it is a good time to let the client see the issues being raised. Misunderstandings can be resolved and irritating inconsequential matters eliminated.

Management letters should go beyond listing internal control problems. They should include matters that come to the engagement team's attention that would improve the client's operations and bottom line. These ideas, along with proposed solutions, can be discussed with the client during the review of the draft letter in busy season and then followed up with the delivery of the letter, in person, by the engagement partner at a later date. And again, the management letter provides an opportunity to identify client needs that can perhaps be formalized in the future as a paid engagement.

Keep Track of Time in the Field. Detailed time records should be kept in the field‹on a daily basis‹by budget category and who performed the work. The time should be summarized at least weekly and compared against the budget. If your time and billing package is unable to do this, the information can be developed using an electronic spreadsheet. On larger engagements, you will want to determine the time needed to complete the engagement based on the time expended to date and the remaining work to be done.

The reasons for any significant budget overruns should be determined as part of this process. If any reasons are beyond the control of the engagement team, the client should be advised immediately. This will avoid surprises and complaints when the client is billed.

Progress Bill. Don't wait until the job is finished to invoice the client. Busy season should not be used as an excuse for late billings. Bill as the work progresses, using estimates if necessary. Clients have short memories. Smaller more frequent bills go down more easily than larger bills sent long after the work has been completed.

If you are following our suggestions‹doing the work where the client can see it and be a part of it‹do not be afraid to ask for payment of the latest progress bill to hand carry back to the office. By informing the client when you will be leaving and how pleased you would be to take a check with you, you are in a position to reap an added benefit, especially if the client tends to be a slow payer.

Many firms have adopted the practice of sending a bill for individual tax return preparation work along with the completed return. In some cases, their regular time system being used can accommodate this practice. Where this is not the case, one approach is to include a log sheet that travels with the return as it is being processed. Each person working on the return records the time spent. Before the return is delivered, a bill is prepared based on the log sheet. This procedure takes some faith and a lot of discipline that all time spent is entered on the log.

Manage the Practice on a Macro Basis. Time spent managing practice and people may be more important to the bottom line than the personal chargeable time of the managing partner, office manager, or sole practitioner. Decisions about how to deploy the staff and resources of the firm should be made with an understanding of all the consequences. What appears as an urgent need today may be an unjustified major disruption, severely affecting the smooth running of the total organization.

Manage the Busy Season as if It Will End Tomorrow. You can't wait until the busy season is over to begin thinking about what you and your staff will be doing then. Seeds to be planted and cultivated include‹

* considering leasing staff to other organizations, at discount rates, perhaps avoiding both downtime and downsizing, and

* looking for tax planning and personal financial issues while preparing or reviewing individual tax returns. One firm has a routing sheet with each tax return that includes a space for the preparers or reviewers to make a financial planning suggestion for the taxpayer based upon the tax return. The return preparation process is not considered complete until the suggestion portion of the form is filled in.

Maintain a List of Suggestions for Improvement of Next Year's Busy Season. As mistakes are discovered or better approaches for next season are thought of, put them in writing. These lists should be maintained for each engagement, each department or function, and the whole office. A word of caution‹the list at the engagement level should not be of things required to satisfy professional standards but were overlooked. Those deficiencies cannot wait for next year, but must be corrected immediately.

These lists, if carefully prepared, become the starting point in next year's planning.

Act Professionally. Clients will pay professional rates if work is done professionally. This means being prepared. It also means avoiding the use of the telephone on client premises to conduct business with the office or other clients. Interestingly, this discourteous type of behavior can be seen in complaints about billings among professionals in the AICPA's peer review program. A typical complaint by firms being reviewed is, "He comes in and spends most of the day on the phone with his clients and then charges me for the time."

Do It Right the First Time

The editors are strong believers of an underlying philosophy that should govern all the work of accounting practitioners, whether it be slow or busy, calm or frenetic‹do it right the first time. That means that projects and work must be planned, assigned to the right level of person (who is given at least the minimum level of time to complete the assignment), properly supervised, and promptly and carefully reviewed. The results of work done wrong are not inconsequential matters:

* The need for rework, perhaps by someone unfamiliar with the job, and with a higher billing rate.

* Blown budgets, time schedules, and commitments to clients.

* Disgruntled employees, both those that did it wrong and those that had to fix it.

* Disruption to a well-planned approach to a successful busy season.

Put It All together

The busy season is a make or break period. To make the most of it requires discipline and teamwork. And above all, it requires planning with the big picture in mind. We know you can do it. *

DECEMBER 1995 / THE CPA JOURNAL