Recent research has shown the accounting industry is currently feeling the effects of the recession. The percentage rates are slipping in various areas such as revenues, gross fees billed at standard billing rates, profit margins, and receivables balances. Our main focus is billing rates and chargeable hours. Billing rates are down 32% from 2002. This is how accountants make their money and there has been a significant drop. Even before the recession we believed that CPAs are overworked and underpaid. It is believed that they are calculating their chargeable hours incorrectly. Now we have attempted to make some recommendations on how accountants can earn the money they deserve. This is mainly focused towards small CPA firms.
The purpose of our report is to encourage small CPA firms to incorporate new ways of billing clients and calculating chargeable hours correctly. We need to raise billing rates back up gradually so as not to scare off clients. The drop in chargeable hours means accountants are working less. Since we are in a recession they really have no choice but to continue working hard and recruiting new clients as they go along to build clientele back up. The more clients, the more hours worked.
Below are some definitions to help clear up any discrepancies.
Hourly labor rates: these are based on a wide range of personnel availability and consider all factors including expertise, education, and present location.
Hourly bill rates: these rates are computed from the hourly labor rate. A markup percentage on the hourly labor rate equals the billable rate. Markup percentages include all payroll taxes, holiday, vacation bonuses, Workman's compensation, liability insurance, and unemployment compensation. They also include Corporate Operating expenses such as accounting, recruiting, and administration.
Per Diem: when an assignment is more than fifty miles from their permanent residence, personnel are paid a daily per diem.
