There are nine categories of waste in CPA firms - defects, overproduction, waiting, not utilizing people's talents, transportation, inventory, motion, excess processing and attitude. These categories are referred to as DOWNTIME + A. Why? Because the more waste in your processes, the more downtime you have - which increases the amount of time it takes to deliver your end product.
One of the more common wastes observed in many CPA firms is overproduction. While it is important to identify and remedy all of these wastes, overproduction can really wreak havoc on undisciplined processes.
Overproduction is apparent in processes when work is not properly prioritized. Said another way, it is doing more in the short-term than what is truly needed.
There are a few key reasons you may overproduce. First and foremost, you may actually be encouraging this behavior by focusing on chargeable hours. If your staff members, including seniors and managers, believe they are employed to get chargeable hours, they'll deliver charge hours. Unfortunately, this mindset causes additional problems including:
If these problems are prevalent in your firm, you need to change the mindset. Instead, empower your people to work as effectively as possible to deliver superior client service and work product the first time.
Overproduction also occurs as a result of utilizing an undisciplined approach to assigning and starting client projects like tax returns, audits and special consulting projects. Left to the forces of nature, work is not prioritized and individuals work as individuals, not as a disciplined team of experts. When the going gets tough it's much easier to set aside the current client project and pick up something new. This leads to delays in finishing, poor client service and extra charge hours that you will probably have to write-off.
There are two common ways you may be overproducing. First, do you spend the heart of busy season working primarily on time sensitive returns and not those that end up going on extension every year? And do you proactively manage the number of client projects in process at any given time in your work pipeline?
If you didn't answer yes to either question, then your processes are ripe with overproduction. The good news is that these, and all overproduction areas, can be fixed by: