Accountants doing away with time-based fees
The Commonwealth Bank (CBA) has predicted a 12 per cent decline in the use of time-based fees by accountants over the next two years, as almost 90 per cent of firms attempt to diversify their service offering.
The latest Commonwealth Bank Accounting Market Pulse found that time-based billing would go from representing 62 per cent of overall firm billings to 50 per cent. At the same time, accountants were looking to grow the proportion of fixed fees, value-based fees and retainers over those two years.
At larger firms, time-based and fixed fees already almost accounted for the same portion of revenue on average, at 42 and 38 per cent respectively. The same firms forecast that, for them, time-based billing would represent just 28 per cent within two years.
CBA’s national manager of professional services, Marc Totaro said that the shift could benefit firms as there was demand for more transparent fee structures.
“Industry feedback suggests that a push among firms for greater fee transparency and predictability has been largely driven by clients, but it can also bring significant benefits to firms themselves,” he said.
“Through replacing time-based fee structures with other remuneration models, firms can harness efficiency and automation to sustainably enhance profitability, while continuing to deliver superior value to their clients.”
The report also found that accountants have confidence around future business conditions, with a net confidence reading of 51 per cent in 2018, up from 33 per cent last year. Firms expected conditions to improve within the next year before moderating the year after.
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