The Connected Accountant

Value Billing/Pricing

O.K, I am not sure if lawyers are the ones to follow here, but there does seem to be more traction for this in the legal community than among accountants.

A post on Jim Hasset's blog has a neat summation of all of the reasons why lawyers should at least look at this - and most of them apply to accountants too. 

Billing

Yup, billing.  The slow gains that the concept (and implementation) of value billing/pricing have been making over the last decade appeared (at least to some) to raise questions as to its viability.

Now, from our colleagues in the legal profession, comes news that the client community is moving towards a greater demand for a billing system other than the billable hour.  Tom Kane's excellent blog gives some great examples of the trend that he sees as corporations large and small demand a move away from the billable hour - driven at least partly by the current economy.

Within the legal profession it appears that the adoption of alternatives to the billable hour might be being led by smaller, boutique firms that can develop and deploy a nimble response to client demands that larger firms might not be able to.  Think of turning a supertanker around as opposed to a dinghy.

With IGAF Worldwide, perhaps 10 - 15% of firms use some form of billing other than billable hour on a regular basis - but few do it with all clients, all of the time.

We are likely going to add this as a tracking item in upcoming Practice Management surveys - to see if there really is a trend in accounting firms.

Value Billing - The background noise grows

No lesser an authority than 'The Economist' is now addressing the issue of hourly billing and potential replacements.  Although their article was focused on the situation present within law firms, the questions that it poses for accounting firms are almost the same.

Within IGAF Worldwide, we have seen a number of presentations from the gurus in this area such as Ron Baker, but it would be fair to say that the take-up among member firms has been minimal.  A couple of our members have adopted a 'blended system', with perhaps two firms going for almost total value billing and no longer selling blocks of time.

What selling blocks of time does is create a 'shift in uncertainty.'  The firm (assuming it can make its employees billable to targets) knows its likely income for any given period - It is the clients (collectively and individually) that have the uncertainty of the magnitude of their total bill.  A shift to value billing (or a hybrid) is a way of equalizing this uncertainty between the firm and client, and could be viewed as another way that the firm builds true cooperation with the client base.

With the apparent shift in the fortunes of the global economy, clients might be looking for that greater degree of certainty when it comes to the bills from their professional advisors - So is this a good time to again look at the concept of value billing?