Growing an accounting practice is not just about winning more clients. It is about earning more from the right work, charging appropriately and building systems that reduce your dependence on day-to-day delivery.
How do you build a profitable, scalable accounting practice?
A profitable, scalable accounting practice starts with understanding which clients generate a worthwhile return. You then need to price services appropriately, choose the clients you want to serve, standardise recurring work and delegate effectively. The aim is to increase profitability without increasing your working hours at the same rate, while creating a business that can operate without constant owner involvement.
For many accounting practice owners, the problem is not a shortage of work. It is having too much work that delivers too little profit.
You might have a growing client list, a full diary and a steady flow of deadlines. Yet your income does not reflect the hours you put in.
During our September Fest, accountant and practice growth consultant Bev Flanagan explored why this happens and what practice owners can do differently.
Having built and sold her own cloud-based accounting practice in 2022, Bev drew on her experience of undercharging, accepting unsuitable clients and becoming the bottleneck in her business.
Her central message was straightforward: stop measuring success by how busy your practice is and start measuring how well it performs as a business.
1. Measure profit per client, not just total fees
One of the most useful starting points is understanding how much each client contributes to your practice.
A client paying a substantial annual fee is not necessarily your most profitable client. They might require extensive support, repeated chasing and additional work outside the original agreement.
Bev recommended examining the actual time spent on each client, including activities that are easily overlooked.
A simple calculation is:
Client profitability calculation
Client Profit = Fee - (Hours x Hourly Cost)
A practical contribution measure, before any additional costs not captured in the hourly rate.
For example, consider two hypothetical clients:
Despite paying a higher fee, Client B generates less estimated contribution and consumes three times as many hours.
This illustrates why turnover alone can be misleading.
Your next step: Review ten clients. Record their annual fees and estimate the total time spent servicing each one. Include emails, calls, chasing information and unexpected requests.
The results may challenge your assumptions about which clients are worth retaining.
2. Stop accepting every client who comes through the door
Many small practices grow by accepting almost every enquiry.
That approach can create a client base with inconsistent requirements, difficult working relationships and unpredictable workloads.
Bev encouraged practice owners to become more selective.
Start by identifying the clients you particularly enjoy working with. Consider their business type, communication habits, service needs and willingness to engage with your advice.
Then examine the clients who consistently create problems.
Warning signs might include repeated late submissions of information, excessive demands on your time, resistance to agreed fees or work that regularly extends beyond the agreed scope.
Bev suggested reviewing clients who demonstrate multiple warning signs and deciding whether to reprice the relationship or release the client.
This does not mean removing clients indiscriminately. It means making deliberate decisions about the type of practice you want to operate.
Your next step: Identify the characteristics shared by your most profitable, straightforward clients. Use them to assess future enquiries.
3. Build a pricing structure around value and scope
Undercharging is a recurring problem for practice owners, particularly those who have maintained historic fees while their clients' needs have changed.
Bev challenged the assumption that accountants must follow the prevailing local rate.
Competitors' prices do not necessarily reflect your operating costs, service quality or the complexity of your clients.
Instead, pricing decisions should consider the work involved, the resources required and the value of the service to the client.
One approach discussed in the webinar was offering three service packages.
Packages give clients a clearer choice while helping the practice define what each service includes.
They can also provide a route for clients to move into a different service level as their businesses develop.
However, packaging alone does not establish profitability. You still need to understand the time and cost involved in delivering each option.
Your next step: Review your existing services and identify which could be grouped into clearly defined packages.
4. Review existing fees rather than leaving them unchanged
Introducing new prices is often easier than changing existing client arrangements.
Practice owners may worry about losing clients, damaging relationships or facing difficult conversations.
Bev's advice was to approach repricing methodically rather than changing every client's fee at once.
Start by reviewing profitability, workload and the scope of each engagement.
Where fees need to change, explain the services being provided and communicate clearly before the revised arrangement begins.
It is also important to review fees regularly.
In the webinar, Bev discussed different review intervals for different service types, including more frequent reviews for recurring bookkeeping, payroll and CIS work.
The appropriate schedule will depend on your practice's contracts, services and workload.
Your next step: Identify a manageable group of client engagements for review. Compare their fees with the work actually delivered.
5. Standardise your processes before trying to scale
Winning more clients without improving your delivery processes can simply create more pressure.
If every client receives a completely different service, your team must repeatedly adapt its approach.
This makes work harder to schedule, delegate and review.
Bev recommended three connected actions:
- Standardise: Establish consistent service packages, deliverables and workflows where appropriate.
- Systemise: Document how recurring tasks should be completed, using written procedures or screen recordings.
- Delegate: Transfer clearly defined work to suitable team members or supported technology once the process is reliable.
For example, documenting a recurring bookkeeping workflow can help another team member understand what information to request, what checks to complete and when to escalate an issue.
Bev also discussed using tools such as Scribe to capture procedures while completing tasks.
The important point is not the particular software. It is making your processes repeatable and less dependent on one person's knowledge.
Your next step: Choose one recurring task that currently depends on you. Document its stages and identify which parts someone else could perform.
6. Build a practice that can operate without you
A profitable practice is not necessarily a scalable one.
If every client decision, technical query and operational problem requires the owner's involvement, growth remains constrained by that person's availability.
Bev's experience of selling her own practice informed a broader point about business value.
A potential buyer will need to consider whether the practice can continue operating after its current owner leaves.
But this principle matters even if you have no immediate plans to sell.
Reducing owner dependency can give you more flexibility to take holidays, focus on higher-value work or manage the practice without constant operational interruptions.
That requires more than delegating individual tasks. It means creating clear responsibilities, reliable procedures and appropriate oversight.
Your next step: List the decisions and tasks that cannot currently proceed without you. Identify one that could be delegated with suitable training and controls.
What should you do first?
You do not need to redesign your entire practice immediately.
Start by gathering information about the business you already have.
Bev's webinar emphasised understanding client profitability before making wider changes.
A useful first review is to:
- Calculate estimated profitability for ten clients.
- Identify clients whose workload no longer matches their fees.
- Review whether your pricing reflects the services delivered.
- Select one recurring process to document.
- Consider where your involvement creates unnecessary delays.
These actions provide a clearer basis for deciding what to change.
The aim is not necessarily to build a larger practice. It is to build one that delivers the income, working arrangements and future options you want.
Frequently asked questions about accounting practice profitability
1. How can a small accounting practice become more profitable?
A small accounting practice can improve profitability by reviewing client fees, understanding delivery costs and reducing time spent on unprofitable work.
Start by calculating the estimated contribution from individual clients rather than relying solely on total turnover. Include time spent answering questions, chasing information and completing work outside the original scope.
Once you understand where your time goes, review your fees, clarify service boundaries and identify opportunities to improve recurring processes.
A small practice does not necessarily need more clients to become more profitable. Improving the return from existing work may be a more useful starting point.
2. How do you calculate profit per client in an accounting firm?
To estimate client profitability, subtract the cost of servicing a client from the fees received.
A practical starting formula is:
Client profit = Client fee − (Hours worked × Hourly delivery cost)
Include time spent on meetings, emails, administration and unexpected requests, not just the main accounting work.
For a more complete profitability assessment, consider software costs, other direct expenses and an appropriate allocation of overheads.
Comparing client profitability helps identify which relationships deliver a worthwhile return and which may require a pricing or service review.
3. How often should an accounting practice increase its fees?
Accounting practices should review fees regularly and when the scope or complexity of client work changes.
In her webinar, Bev Flanagan recommended reviewing fees at least annually, with more frequent reviews for certain recurring services.
A fee review does not automatically mean every client requires an increase. The decision should reflect delivery costs, workload, service scope and the commercial relationship.
Where an increase is necessary, communicate the reasons clearly, explain the services covered and follow the relevant engagement terms.
4. Should an accounting practice offer fixed-price service packages?
Fixed-price packages can help accounting practices communicate their services clearly and manage client expectations.
Bev discussed offering three service levels so clients can select support appropriate to their needs.
Each package should specify its deliverables, service boundaries and pricing. Additional work should be addressed through clear scope and variation arrangements.
Packages can also make recurring work easier to standardise.
However, fixed pricing requires careful monitoring. If the time spent delivering a package regularly exceeds expectations, the practice may need to review its pricing or delivery process.
5. How can an accounting practice grow without hiring more staff?
An accounting practice may be able to increase its capacity by improving how existing work is delivered.
Start by identifying repetitive activities, inconsistent workflows and tasks that depend unnecessarily on the owner.
Document recurring processes, standardise suitable services and assess where software can reduce manual administration.
Delegation and automation should be supported by appropriate quality controls and professional judgement.
These changes may create additional capacity, although hiring could still be necessary as client numbers and service requirements increase.
The objective is to understand and improve existing capacity before committing to additional work.
6. What makes an accounting practice attractive to a potential buyer?
A prospective buyer may consider an accounting practice's profitability, client relationships, recurring income, operational processes and dependence on its owner.
A practice that relies heavily on one person to manage clients and deliver services may present additional continuity risks.
Bev Flanagan emphasised the importance of building a business that can function without constant owner involvement.
Documented procedures, clear responsibilities and reliable financial information can support that objective.
These improvements can also benefit owners who do not intend to sell, by making their practices easier to manage and giving them greater operational flexibility.
Final thoughts: build a business, not another full-time job
A busy accounting practice is not automatically a profitable one.
The difference often comes down to understanding client profitability, pricing services appropriately and creating repeatable ways of working.
Bev Flanagan's advice is particularly relevant to sole practitioners and small-firm owners who find themselves working longer hours without seeing a corresponding financial return.
Start with your client profitability figures. They can help you make more informed decisions about pricing, capacity and the future direction of your practice.
The contents of this article are meant as a guide only and are not a substitute for professional advice. The author/s accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article. The information at the time of publishing was accurate and could be subject to final changes.
