Professional Services Firms Also Need Assistance

Good day! 

Welcome to this update on ESS BIZTOOLS ADVISORY SERVICES NEWS.

PROFESSIONAL SERVICES FIRMS ALSO NEED ASSISTANCE

The last four editions of ADVISORY SERVICES NEWS have highlighted services that could be provided to various segments of Small Medium Enterprise operations in Australia, including:

• Delivering Advisory Services for Tradies – Issue 35 – click here
• SMEs Need Accounting Support – Issue 36 – click here
• SMEs Need a “Guide” Not a “Historian” – Issue 37 – click here
• Absolute Gold – I Love the ESS BIZTOOLS Trades Charge Out Rate Calculator – Amanda Gascoigne, Accounting Coach and Mentor – Issue 38 – click here

In this edition, we are pleased to advise that ESS BIZTOOLS also has a calculator to assist accountants and bookkeepers in advising professional service firms on charge-out rates. Subject to the productivity of team members achieving the target and overhead expenses being within the budget, the professional services firm should achieve its profitability target for the year.

There are thousands of professional services firms in Australia, including solicitors, barristers, valuers, engineers, town planners, chiropractors, physiotherapists, and others.

The first step is to establish the profitability target, which could be an amount selected by the owner or partners in the firm, or it could be based on the valuation of the business expressed at an agreed rate of return. That amount then becomes the profitability target for the year.

All of this is part of developing the financial forecasts for the year to assist the professional practice in planning the achievement of its targets.

ESS BIZTOOLS has developed a complete product package known as the PROFESSIONAL SERVICE FIRMS CHARGE OUT RATE CALCULATOR, which works through key areas:

• Labour On-Costs Calculation
• Labour Cost Budget including individual productivity and targeted chargeable hours
• Profitability Target
• Overhead Expenses
• The targeted income from the sale of labour can then be determined – being the total of:
• Labour on-costs
• Labour budget
• Overhead expenses
• Profitability target
• The determination of charge-out rates will then be calculated by the Calculator.

A Proof of Charge-Out Rates Report is produced, which shows that if the professional services firm functions in accordance with the budget targets, the targeted profit will be earned.

Our suggestion is to prepare a list of the professional service firms that are your clients and have a conversation with them about you undertaking the determination of their charge-out rates utilizing this approach.

Another key component of this strategy is that financial accounts are prepared on a monthly basis, including Key Performance Indicators, with a comparison made to the budget estimates—both financial and performance — so that adjustments can be made to charge-out rates if it is found that certain key targets are not being achieved, for example, individual productivity or components of overhead expenses.

You can access the recording of the PROFESSIONAL SERVICES FIRMS CHARGE OUT RATE CALCULATOR webinar by clicking here.

Would you like to know more about the ESS BIZTOOLS systems to assist you in delivering a broader range of professional services to your professional services clients and all of your other business clients?

If so, please visit www.essbiztools.com.au or, if you would like to have a one-on-one Zoom meeting, please send us an email at , and we will arrange a meeting at a time suitable for you.

A reminder that our OLYMPICS SPECIAL DISCOUNTS are available until 31 August 2024. You can find details at www.essbiztools.com.au and then click on "Packages and Pricing."

The PROFESSIONAL SERVICES FIRM CHARGE OUT RATE CALCULATOR is part of the BUSINESS ADVISORY SERVICES STARTER PACKAGE, which is available at the discounted subscription rate of an upfront payment of $1,782 (including GST), or you could pay in 12 installments of $178 per month (including GST).