Scoping with Scrutinize

Scoping is only one portion of the client discovery and onboarding process, but it’s the first big place where you make or lose money on new client engagements. Particularly for firms that offer fixed-fee pricing, under-scoping clients represents a huge risk to your bottom line.

There are three main reasons clients become unprofitable:
  1. Understanding the work required
  2. Finding significant complications in transactions or client communication
  3. Translating transaction volume to labor hours
Let’s take a quick look at each of these to see how we can effectively scope new clients.
As a quick aside, there is a lot of debate around what elements of the onboarding process should be charged to the client – diagnosing the books, cleaning up past books, bringing the client onto your systems, etc. For each of these, you’ll need to determine on your own whether to charge your prospective client. If you do plan to charge, we recommend having a plan in place and a clear summary of the work involved in each step so that you can share the value of the process with your prospect.

1. Understanding the work required

Properly anticipating the work and time needed to manage a client’s books requires a healthy amount of experience in the niche and community. However, many times we don’t have the luxury of prior knowledge, and like much of life, 80% of the result comes from 20% of the experience. Having a process in place for determining the size, complexity, and transaction volume of a client’s books will go a long way towards improving the accuracy of your scope. This element of onboarding and scoping is commonly covered elsewhere, so we’ll share this great article by Titan Web Agency. Here are a few of their best points:

Ask about the technical details:

Ask questions about their business that give you insights into the health and robustness of their systems, management style, and finances.

Ask questions around their decision to find a new bookkeeping firm:

2. Finding significant complications in transactions or client communication

The most frustrating client relationships form from poor communication or unconventional requests. Remediation of these issues often requires some hard conversations that most firms prefer to avoid. To get insight into these potential issues we recommend a three-step process:

  1. Using Scrutinize, review prior periods in the prospect’s books for a significant number anomalies like missing checks, missing invoices, duplicate expenses, or other signs of unconventional or disorganized books.
  2. Using QBO, check the prospect’s prior books for proper source documents on past transactions. If transactions are frequently missing documentation, is there any indication as to why?
  3. Check prior books for any other signs of bookkeeping challenges - things such as unreconciled bank transactions, improperly balances on accounts, high monthly variance in the financials, etc. You can quickly see these types of issues inside Scrutinize, but use what ever system works best for you.

3. Translating transaction volume to labor hours

Scrutinize makes it easy to translate transaction volume into labor hours. Once you run a report, head to the transactions insights report to find the volume of each type of transaction and other data you can use to assess the scope of the work required. Take that data and put it into our scoping template, and you're ready to go! Here's a video walking you through the process.
Download Scoping Template
As with most systems inside a bookkeeping firm, a well thought out process with clear documentation will guide you through future growth. Remember that the client scoping process is just one part of client onboarding, and it's good to have a plan for the entire customer journey. Finally, be sure to update your guidelines regularly as you gain more experience as a firm.
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