Accountants Round Up

"In the Real World, Debits Don’t Equal Credits"

By Ron Baker: A lot of rules have been added since the Venetian monk Luca Pacioli published the first accounting textbook in 1494, introducing double-entry bookkeeping.

Unfortunately, one could also make the argument that it was the last revolutionary idea to come from the accounting profession.

Read complete article In the Real World, Debits Don't Equal Credits
Source: AccountingWEB, 4 February 2008. Copyright © 2008 AccountingWEB, Inc. All rights reserved.

"Talk About Pricing with Purpose - Why You Need to Have a Young CVO"

By Ed Kless: Ron Baker has advocated for years that a Chief Value Officer needs to be LACEY - exhibit leadership, attitude, commitment, experimental, and above all youth.

Why?

Let me illustrate it with a story sent via email to me by John Shaver of Aries Technology. John writes:

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Source: VeraSage, 11 January 2008. 2006 © Verasage Institute.

"Project Management Trumps Time, Again!"

By Ed Kless: A recent article by Roger Russell (November 5, 2007) in Accounting Today and also appearing on the webcpa site proves that just a focus on project management, rather than time, is sufficient to increase effectiveness, no matter how you price. 

A quote from Mark Robinson of KAF Financial Group really summarizes it quite nicely, “We also became a project-based firm,” he said.

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Source: VeraSage, 18 December 2007. 2006 © Verasage Institute.

"How Much Are You Leaving on the Table Because of Mediocre Pricing?"

By Ron Baker: One of the most frustrating aspects of teaching Value Pricing to professionals is their tendency to believe that customers have to be part of the change process.

This is demonstrably false.  Customers may have to be convinced of a firm’s value in order to accept it’s price, but customers should not be expected to be participants in changing a profession’s (or industry’s) pricing strategies, any more than they should be expected to innovate new products and services.

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Source: VeraSage, 5 December 2007. © 2006 VeraSage Institute.

"Stop the Talk and Just Do It!"

By Ron Baker: BDO Stoy Hayward in the UK recently issued a report I read several weeks ago, which has been annoying me ever since.  It’s titled:  Stop the clock?:  A research report on fees and value in legal services.

There are some interesting nuggets in this report. There’s also an enormous amount of nonsense, which would take literally a book to refute.

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Source: VeraSage, 6 December 2007. ©2006 VeraSage Institute.

"Advertising Age Editorial Understands Where Profit Comes From"

By Ron Baker: An amazing editorial was published on November 12, 2007 in Advertising Age titled “Agency Community Needs to Look at Risk Differently.” [I’d like to thank Tim Williams for pointing me to this editorial. We do not know who actually wrote it].

The tone of the article is excellent, and it’s main point is absolutely correct. We love to ask audiences around the world where profits come from? This is after demonstrating how income is earned from the three economic factors of production: land earns rents, labor earns wages, and capital earns interest, dividends and capital gains.

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Source: VeraSage, 20 November 2007. © 2006 VeraSage Institute. All rights reserved.

"Gary Boomer on Pricing for Value"

By Michelle Golden: I've got to hand it to Gary. He wrote a brief but meaty article that appears in the Oct 8 Accounting Today (on-line at WebCPA "Pricing for Value") about intellectual capital and firms innovating to price on value captured for clients, and not efforts.

In his article, Gary writes: 

People create intellectual capital, yet many firms allow that intellectual capital to leave when people leave.

Read complete post Gary Boomer on Pricing for Value
Source: Golden Practices, 12 October 2007.

"Monkeys Do Timesheets Too"

By Ron Baker: I'd like to thank Mark Bailey for sending me this. I don't know who wrote it, so the attribution will have to be "anonymous."

Start with a cage containing five monkeys. Inside the cage, hang a banana on a string and place a set of stairs under it. Before long, a monkey will go to the stairs and start to climb towards the banana. As soon as he touches the stairs, spray all of the other monkeys with cold water.

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Source: VeraSage, 24 September 2007. 2006 © Verasage Institute.

"More Misunderstanding About Value Pricing"

By Dennis Howlett: I’m grateful to Ron Baker for pointing me to this piece by Rob Lewis (for some reason, Google Reader had not picked it up.) Rob is defending the billable hour but fails on all counts. Here’s his opening position:

The value-pricing argument isn’t a hard one to understand. Instead of billing by hourly charge out rates, you guesstimate how much your service is worth to the client, and add or subtract an amount proportionate to your imagined risk.

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Source: AccMan, 9 September 2007. © 2006-7 AccMan.

"No Timesheets vs. Utopia"

By Ron Baker: Imagine your house is on fire. You were able to get your family out in time, even grabbing some precious pictures along the way. Now your distraught family unit is standing in the middle of the street watching your American Dream go up in a fiery blaze.

The fire department arrives, they get out the hoses and just as they are about to attempt to extinguish the inferno, you run up to the lead firefighter and scream: "WAIT! WAIT! WHAT ARE YOU GOING TO REPLACE IT WITH?"

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Source: VeraSage, 2 September 2007. 2006 © Verasage Institute.