As we embark on the New Year, it is essential to address the most critical issue for every accounting and CPA firm – Capacity Challenge. While the year on the calendar changes and we continue to adopt newer technology, better accounting processes, and new-age AI tools, capacity challenge continues to be a pressing issue in the accounting industry.
In this article, Finsmart Accounting – trusted globally for outsourced bookkeeping services – will share everything about capacity planning in 2024. Before we get into the details of capacity planning in 2024, let us understand a few things.
The “Human” Aspect of Capacity:
In Accounting, MELT is a “human” concept, which means that each person’s individual capacity matters. These are the human components often described through M- Mind, E-Emotions, L- Location, and T-Time. Let us decode what it means.
The world is changing and employers and leaders have a role to play in how we help shape the next generation of the workforce. At Finsmart Accounting, we recently had a weekend trip, where I specifically talked about being empathetic as managers/leaders. Because that is how we can materialize the family values, most firms keep talking about.
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Capacity Planning
The American politician, diplomat, lawyer, and the sixth President of the US once said, “From the experience of the past, we derive instructive lessons of the future”. That is exactly what we should be doing for capacity planning. Before the actual planning, this is what we need to do:
1. Reflect on the past performance: Look at the timesheets for each client and the time taken by the team for every deliverable. Look at the efficiency of team members and make a comparison of the efficiency index of team members for the same or similar activities to arrive at standard efficiency parameters.
2. Anticipate the seasonal workload: The accounting industry has a certain time of the year when the rush is more. Your pipeline of current and expected clients can help you analyze and prepare for the peak seasons. Year-endings and tax seasons are some of such critical times. It is important to allocate or prepare resources to manage the surge. In case you do not have a year’s worth of such tasks, it might be wise to consider contractual employees or outsourcing partners.
3. Integrate technology: The one thing you will not regret is integrating automation into your work DNA. As the world moves faster and technology-focused, integrating new technology relieves you of the pressure to hire people for jobs that can be automated. Your core team gets to focus on jobs that add value, improving overall capacity.
4. Right expectation setting: This is one of the key areas where we tend to falter. Incomplete, unclear conversations almost always lead to over or under-capacity. It is ideal to have an open discussion with your clients on the volume of work that you can expect throughout the year, which, in turn, helps in effective capacity planning.
5. Outsourcing tasks: For tasks that are voluminous or require specialized skills, especially during peak hours, it might be wise to outsource them. More often than not, the outsourcing partner will be equipped to handle large volumes of work, surprise tasks that might come at the last moment, and a team of experts who specialize in a variety of tasks. Outsourcing also releases you of the undue commitment of paying employees even when the workflow is negligible. This is a critical component of capacity planning in 2024!
6. Prevent employee burnout: Employee burnout, especially during the peak seasons, is one of the top reasons for the high attrition rate. As leaders, we must understand, analyze, and utilize forecasts for the proper distribution of workload. Each firm is unique and so are their needs. However, understanding what works for your team and firm can go a long way in reducing the attrition rate. Be extra mindful of the peak seasons as that is the time when teams feel extra stressed.
For most accounting and financial professionals, certain peak seasons can pose a lot of stress. But a little help can go a long way in making things easier for the teams. At Finsmart Accounting, our clients are our priority. But especially during the peak season, we are extra cautious as to how our teams are feeling and what we can do to make them feel better.
With that note, I wish you all the success in 2024. If you would love to further this discussion on capacity planning, do not hesitate to reach out to me by replying to this email. To talk about outsourcing accounting, write to us at connect@finsmartaccounting.com.
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Director Growth Strategy & Alliance
Maanoj Shah is a finance and outsourcing expert with strong Business Strategy and Scaling-up experience. Over the last 20 years, he has incubated multiple businesses and helped build global enterprises in verticals as diversified as hospitality, technology, and healthcare.
