Why do accounting firms fail to meet client deadlines? Indeed, failure to meet deadlines is a common issue with most accounting firms, especially the smaller ones with limited staff. Failure to meet deadlines can have serious consequences for the clients.
It could invite the imposition of tax penalties and even legal penalties. Indeed, delays can lead to serious loss of business. An accounting firm that sets a reputation for being late all the time is unlikely to survive for long in this business. So what are the reasons for accounting firms to delay work? Let’s find out.
Reason #1: Lack of capital
Many small accounting firms struggle with lack of capital. They just don’t have the funding needed to provide for the monthly expenses of running a business. Many fail to pay their bills on time. These accounting firms have too many distractions and cannot focus on the job at hand. This can have serious consequences and is one of the most important reasons for delays in getting the clients’ work done on time.
Reason #2: Inaccurate Projection of Cash Flow
This follows up from the earlier point. Many accounting firms are unable to project their cash flow accurately. So they end up having to pay an office rent of, say, $15,000 per month, when they earn not more than $11,000 per month. This results in them taking on more work than they can handle in order to make up for the difference in financial projections, which creates a lot of pressure on everyone at the firm.
Reason #3: Changing Business Partners and High Staff Turnover
Small accounting firms change business partners on a frequent basis, and there is often a high staff turnover at such firms. This leads to delays as it takes time for the new business partners or new team members to settle in and get up to speed with the requirements of the firm. New team members will need to be acquainted with the various client accounts and the related files, which does take up a lot of time.
Reason #4: Lack of Experience
Experience is very valuable in accounting as it is one of the most traditional occupations around. But new accounting firms cannot afford to hire experienced accountants or CPAs and are forced to hire those who are fresh out of college. The lack of experience leads to costly errors. Accounting is a tough profession and a highly demanding one with a sharp learning curve. Lack of experience can lead to mistakes that can have serious consequences and result in endless delays. Ideally, accounting firms should have a mix of youth and experience.
New accounting firms deal with a number of challenges such as lack of capital, inaccurate projection of cash flow, high staff turnover and inexperienced staff. It is not easy for new firms to find their footing when they get started, which leads to endless delays. One of the best ways to avoid delays and to meet deadlines on time is to switch to cloud accounting services such as QuickBooks hosting. Cloud accounting allows for an anytime, anywhere access and provides for better communication with clients, which solves many of the problems that we talked about.