You know it’s time for a change, but don’t know how to get started. Here’s a hint. To fix your workflow, you have to know your workflow.
You already know the definition of insanity and Dr. Phil’s tag line, “How’s that working out for you?” So if last tax season made you feel like the last guy bailing water when the Titanic sank, maybe it’s time for a change. Maybe you know it’s time for a change, but don’t know how to get started. Here’s a hint. To fix your workflow, you have to know your workflow.
The first step in fixing your workflow is defining what you have now. You already have a workflow management system, whether you know it or not. When a client calls about the status of a return, your associated workflow step could be as simple as running down the hall waving your arms yelling, “What godforsaken idiot has his file?” Hopefully not.
Defining your current workflow is simple and the only way you can make progress fixing it. The primary obstacle in fixing your current workflow situation is owning up to it.
The first step in defining your current workflow is to make a list of all the services you provide. You will compile a list of services like compiled financial statements, corporate tax returns, individual tax returns, etc. Each type of service is a project type. Each project type will have an associated workflow distinctly separate from the others.
Next, select one of the project types, and create an Excel spreadsheet with the following columns:
- Task performed
You will then list each of the tasks involved in performing this service. You could go crazy creating tasks like “walking the return down the hall to preparer.” However, that’s probably a bit too granular. You are trying to strike a balance between enough information and slavery to your workflow system. I suggest asking the question, “Would I ever want to know which returns are in this stage?” If the answer is yes, you have a task. If no, skip it.
The best way to define the tasks / steps is to actually log the processing of a real live tax return. Let’s use personal income tax prep as an example. This could be your log.
- Client brings in documents for meeting.
- Documents sent to admin for scanning. (Assuming up front scanning)
- Admin sends e-mail to partner that documents have been scanned and are ready for preparation. You could always use an alternative for document scanning, finding document scanning near me can be a challenge but it depends on local resources.
- Partner reviews scanned file for completeness and obvious return issues and makes notes for preparer in Word.
- Partner sends e-mail to preparer that return can be started.
- Preparer enters information in tax software.
- Preparer compiles questions list and notifies partner that questions are ready to be sent to client.
- Partner reviews and sends questions to client by e-mail or phone.
- Client answers questions. (such a simple description of such an emotionally charged process.)
- Partner reviews client answers for completeness.
- Are the answers complete?
If yes, partner forwards them to the preparer.
If no, partner follows up with client for answers.
- Client forwards final answers after a week of brow beating and begging.
- Preparer completes return and notifies partner return is ready for review.
- Partner reviews return.
If no changes necessary, partner forwards to admin for final production..
If changes necessary, return to step #13.
- Admin prints final version of return and notifies partner return is ready for pickup.
- Partner calls client to determine if client wants meeting to review return.
If meeting desired, partner schedules it.
If no, partner sends return to admin where client will pick up.
- Client either picks up return or meets with partner.
If picked up, client signs 8879 for admin and pays bill. (Sure that will happen. You can bet he forgot his checkbook and you don’t accept credit cards.)
If meeting with partner, client signs 8879 and pays bill. (Payment is even less likely as partners hate to grovel for money.)
- Admin e-files returns.
- Admin checks for e-file acceptances.
If accepted, client gets e-mail notification.
If not accepted, admin contacts partner for resolution.
Wow – 19 steps and I wasn’t even really trying. No wonder it’s so damn hard to make money in this business. Do I think this is a good workflow process? Definitely not! But it certainly resembles the actual process in many if not most firms.
Now that we have the current workflow defined, it’s time to improve it.
An efficient workflow has two primary tenets. First, tasks should be performed by the least expensive staff capable of performing the task. Second, tasks must either deliver value to a client or be required for regulatory purposes.
Now that you have defined your workflow, the next step in the improvement process is to mark which staff performs each task in your workflow. You can start out with the actual names. Then come back and substitute position, such as admin, tax preparer, reviewer, or partner, for each step. We do this to de-personalize our analysis. This isn’t about individual people, it’s about finding the right level person for each task.
For instance, many firms have preparers scan their own documents before beginning the tax preparation process. Is there anything inherent in scanning that requires a $50K per year person? Absolutely not. While I’m certain an expensive tax preparer will likely do a great job scanning, that’s not what you need them for. They should be preparing returns. Scanning should be done by a less expensive clerical employee. This is how you cut cost from a process.
Final production of a tax return is similar. If you have preparers either printing (God forbid at this point in the 21st century) or e-delivering tax returns directly to clients, you are wasting money. Yes, this is a bit more difficult than scanning, but it’s still within the capabilities of an admin person with a little training and a good process in place.
Another great task for admin staff is e-filing and tracking acceptances and rejections. No they can’t fix the rejections, but they can notify the return preparer when a rejection happens and follow up to see that it is resolved.
Successfully delegating tasks down the firm structure requires: training and standardized processes. If you build complexity into a task definition, you will not be able to delegate it down to the appropriate level. Let’s look at delegating scanning as an example.
The key to making scanning an admin task is removing complexity. You cannot ask admin staff to make judgment decisions about what should be scanned and what should not. You have to define it for them since they don’t know what documents matter and which are junk. Have them err on the side of scanning everything unless clearly inconsequential. Preparers can easily ignore the pages they don’t need.
The second tenet of an effective workflow strategy is tasks must either deliver value to a client or be required for regulatory purposes.
Go through the workflow you defined and write next to each step whether the step delivers value to clients or is required for regulatory reasons. If a step delivers value to a client, write down the value it delivers. If required for regulatory reasons, write down why it’s required. If you are laboring to determine if a step delivers client value or is required, you have a good candidate for a step to be eliminated.
If you have a step such as a client meeting to kick off the tax prep process, consider whether a client meeting is really the first step, or if the first step is really more generic such as simply receiving documents by some means from a client.
The final piece to reengineering your workflow is to determine which steps you want to track. In other words, when a project is at a particular step, do you care? For instance, a tax preparer might go through stages of entering first wages and then interest and then dividends. These stages are not good workflow steps as you probably don’t care when the preparer is entering wages versus dividends. It is all just initial prep. So initial prep is your workflow step. Here’s an example from our workflow with some notes.
Note how many tasks are performed by admin. Also, the person in charge is potentially involved for just three tasks: asking questions, reviewing a return, and posting the draft. Two of the three involve critical client contact.
Hopefully, you can see that improving your workflow isn’t that difficult. the three steps:
- Define your current workflow.
- Push tasks down to the lowest staff level that can complete the task.
- Eliminate tasks that deliver no value to clients or aren’t required by regulation.
About the Author
Frank Stitely, CPA, CVA, Clarity Practice Management
Frank is a Certified Public Accountant with 26 years tax experience and a Certified Valuation analyst with 12 years’ experience in business valuation. His speaking engagement topics have included the following:
- Business Valuation
- Buying and Selling Businesses
- Preventing Fraud in Small Businesses
- Income Taxes for Small Businesses and Individuals Effective Accounting Software for Small Businesses
Interviewed regularly by industry publications in the areas of:
- Practice Management
- Accounting Software and Industry Trends
- Income Tax Preparation