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You Can't Afford Accounting

3/17/2018

 
TOO MUCH TIME
Most Architects can’t afford to do accounting

The reason is simple. Most architectural firms have less that 10 people.
By most, I mean 80%.

And architects can’t afford it because it takes at least 20 hours per week of someone’s time - on average. Just for accounting functions.

​
​Let’s look at a nine-person firm. You are probably smaller, but that just means the analysis is worse for you.

Somewhere around 2/3 is the ideal fraction of your firm’s time that should be billable. I have seen similar fractions for my entire career. 2/3 is actually pretty hard to meet. You will see why in a minute.

The 1/3 of your time that isn’t billable is spent doing lots of things to run the business. One of them is recording financial transactions, and in my experience you need to devote 20 hours a week, every week on average.

I get 1,000 hours a year.

1/3 of your nine-person firm’s time per year is 9 x 2080 x 1/3. Or 6,240 hours. 

That 1,000 hours doesn’t look too bad. Yet.

What else comes out of your 6,240 hour allowance?
  • Meetings / Clerical / Record-keeping / Breaks / Mail / Timekeeping - Say 1.5 hours per day per person on average 
  • Paid Time Off - 2.5 weeks vacation on average plus holidays and sick days 
  • Business Development - Say 2 days per week on average 
  • Software Management / Acquisition / Deployment / Training - Say an hour per person per week on average 
  • Financial planning / Banking / Insurance / Bonuses / Tax preparation - Say two weeks per year 
That’s everything I can think of that my firm spent our non-billable time on. 

So where do we stand?
TOO MUCH TIME
I started with an allowance of 6,240 hours.

I get 6,592 hours for all these demands on your non-billable time. That is an overrun of 352 hours. I told you meeting the 2/3 target for billable hours is a challenge. 

Not included in the calculation are the time you might spend on Special Projects, Facility and Housekeeping Issues, Computer Management,  Professional Development / Continuing Ed.    Are you starting to see why you have to spend all those evenings and weekends working to keep up?

That '1,000 hours a year' needs to go.

At least until you can spread it out over twice as many people. Unfortunately the 1,000 hours doesn’t decrease by much with fewer people.

So what is the answer?

You can’t afford accounting, but you can afford bookkeeping.

Bookkeeping is keeping a record of all your transactions. When you need accounting, you hire an accountant. Give them your records and let them prepare your taxes or financial statements. You are probably doing most of that work for them now. It is costing you 1,000 hours. Instead, spend an extra 4 to 8 hours worth of your accountant’s time. ​
​
The goal is 120 hours per year.

​MyCorbu is working toward the goal of getting your accounting time down to 120 hours of bookkeeping time a year. Can you imagine 'no more Quickbooks'? (Or whatever you use now.)
​
MyCorbu is on its way to becoming the bookkeeping tool designed specifically for you so you can get out of the accounting business.
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