Evaluating Monthly Transaction Classification: Are We Charging Effectively?
When managing multiple client accounts, it’s crucial to gauge whether your transaction processing efforts align with your billing structure. We’ve been assessing the efficiency of our processes and trying to determine if our charges are on point. Here’s a glimpse into our monthly workload and pricing strategy.
Transaction Volume and Billing Overview
Every month, we manage the classification of approximately 22,000 transactions. This comprehensive service, which caters to the need for detailed general ledger and classification breakdowns, generates a revenue of about USD 23,000.
Despite leveraging automation wherever possible, the nature of our client’s requirements necessitates a significant amount of manual intervention. This involves two dedicated employees putting in around 250 hours each month to meet our service commitments.
Services Rendered
Our transaction classification encompasses a variety of meticulous financial tasks, including:
- Accounts Receivable Reconciliation: We ensure consistency and accuracy between our clients’ systems.
- Accounts Payable Management: Carefully managing outgoing transactions for optimal financial health.
- Asset Journaling and Depreciation: Accurately tracking and journaling asset values and their depreciation over time.
- Payroll Journaling: Ensuring payroll entries are logged correctly for precise financial reporting.
- Complete Asset and Liability Reconciliation: Aligning all asset and liability accounts for truthfulness in financial statements.
- Monthly Financial Review Meetings: We commit to a comprehensive financial meeting with each client every month to review performance and plan adjustments.
Are We Optimized?
Our review underscores the importance of continuously assessing both the efficiency and fairness of our pricing model. As financial service providers, keeping our processes lean while maintaining high standards is vital. This ensures our clients receive exceptional value and we, as a team, are compensated fairly for our expertise and effort.
Have you found an optimal balance in your transaction processing services? Share your insights and let’s explore best practices together.
One response
Determining efficiency and appropriate billing for your transaction processing and Accounting services involves considering various factors, including labor, industry standards, and the complexity of tasks involved. Let’s explore a structured approach to evaluating your current setup and explore opportunities for improvement.
Benchmarking Against Industry Standards: While 22,000 transactions a month is substantial, industry standards suggest that billing should align with the complexity and labor intensity of the services provided. Consulting industry reports or engaging with professional Accounting forums might provide insight into average rates. Services such as A/R and A/P reconciliation, journaling, asset management, and monthly financial meetings are intensive and may command higher fees, depending on the sectors you serve.
Labor Costs Analysis: Considering you have two employees dedicated to these tasks for 250 hours monthly, your operational efficiency is crucial. Calculate your labor cost per transaction by dividing total monthly payroll costs by the number of transactions. This will give you a baseline to understand your profitability per transaction.
Service Complexity and Value: Each service you provide, such as journaling assets, payroll management, and conducting financial meetings, adds layers of complexity and value to your offering. Clients often appreciate the nuanced understanding and personalized service they receive from human oversight versus full automation. This can justify a higher rate, especially when high-quality, detailed breakdowns like GL classifications are necessary.
Automation Opportunities: While you mention there is a limit to automation due to necessary nuances, consider re-evaluating this periodically. Automation technology is constantly evolving, and staying updated can help you incorporate tools that handle more routine aspects efficiently, freeing your staff for more strategic tasks. Tools like AI-powered reconciliation software and advanced Accounting platforms can help streamline routine operations.
Consider Value-Based Pricing: Rather than billing solely based on the number of transactions, consider pricing based on the value your service brings to your clients. If your interventions significantly improve their financial operations or provide them with strategic insight, this should reflect in your pricing model. Engaging with clients to understand the impact of your services can support this approach.
Client Communication: Regularly communicating with clients about the value they receive can also ease pricing adjustments. You provide monthly financial meetings, which are great opportunities to showcase your value and possibly propose package adjustments or additional services.
Efficiency Improvements: Assess whether there are internal efficiencies to gain. Reviewing and optimizing your processes regularly will help in reducing overhead and may allow reallocating resources to