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Time-based billing hitting firms' bottom line

Value-based billing is having a noticeable impact on the profitability of accounting firms compared with the traditional time-based model, according to an accounting software provider.

Time-based billing hitting firms' bottom line
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Managing director of Intuit Australia Nicolette Maury said Intuit conducted research, in collaboration with Mark Wickersham from Added Value Solutions, analysing the use of time-based billing versus value based billing across accounting firms.

“There was evidence that using value-based billing not only created a better outcome for the client, but also increased the firm’s profitability dramatically,” said Ms Maury.

“This makes a lot of sense, because if you’re billing by the hour and you’re completing a task in ten minutes versus the hour that it used to take you and charging the same, [this means] you’re able to increase the value-added services you provide with the rest of that hour and continue to make profit in that time.”

Ms Maury said using value-based billing in place of time-based billing means the accountant is no longer incentivised to spend hours on lower value data entry type work.

“So it’s a fantastic way for accountants to be able to make the most of the time they’re able to spend with their clients and really leverage the knowledge and the expertise that they can provide,” said Ms Maury.

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