Opportunity knocks but most accountants aren’t at home….
As fees for compliance work become more commoditised and clients get fussier about what exactly you are doing to “earn” your fee because their best friend is paying half as much as they are for “the same” work, you can feel somewhat deflated and begin to wonder if there is a future for you in accountancy.
Opportunity abounds out there for those accountants willing to move out of their comfort zone and consider upskilling whereby they can earn higher fees with less client badgering over those size of those fees.
One area that has tremendous potential is advisory work, but what kind of advice should you consider to move into dispensing?
Merger & acquisition (M&A) is a field that most accountants only find out about because one of their biggest fees and largest clients is leaving them due to be being acquired. Unfortunately the accountant has been largely cut out of the process from an earnings standpoint because the client simply didn’t think that the accountant “cut the mustard” beyond compliance.
M & A is often related closely to “corporate finance” and is a busy and crowded field but a lucrative one for accountants who put in the time and energy to focus and grow their expertise locally, regionally or beyond.
It takes on many formats, from grooming firms for sale to acting for buyers, either performing due diligence, searching for acquisitions or assisting with raising finance for deals.
A skilled negotiator can make a name for themselves, especially if they build up expertise in a particular sector where it can be easier for one’s name to spread.
It’s not easy money and it can take time to get your feet under the table but it does generate large fees that clients don’t’ quibble over, because they have a feeling of gratitude to you for assisting them in their achievement as opposed to simply knocking out statutory accounts that adds little value to their lives.
A good starting point is online networking on a platform such as LinkedIn or approaching brokers and agents who may be looking work hand In hand with a firm of accountants to boost their offerings, whether it is number crunching or driving business their way.
Some accountants join a business-builder-cum mentoring type of network or franchise that will give them training as well as exposure to firms that are growing and/or seeking an exit route.
A word of caution. Income can be uncertain and lumpy especially in the early years so don’t give up your day job yet, but build it up as an adjunct to your current practice. Do it right and perhaps you’ll end up selling your own practice to concentrate on the lucrative advisory business you have built up.
The big questions on value pricing ... answered!
Gordon Gilchrist, speaker and writer at 2020 Innovation Training was presenting in Manchester recently and a number of delegates approached him on the subject of value pricing, questioning how best to value price coud based services with their clients...
If you review accountancy firms’ websites and see how cloud-based services are being priced, you will see a number of firms are fixing a Bronze, Silver and Gold tiered service level at varying prices.
What is interesting is that, from a clients’ perspective, the service range looks very similar although the price range is incredible! Prices go from as low as £42 per month up to £8,000 per month, for what appears to be the same service.
This suggests that the client will more likely accept the price that an accountant quotes because the client trusts accountants more than any other professional adviser.
Because accountants have always behaved with the utmost integrity and honesty, we know that clients do accept their analysis and estimate of the fee.
Monthly subscription
The smartest firms seem to be those that are not fixing a fee from the outset for their cloud-based services (whether Bronze, Silver or Gold) but are inviting clients to run the service for three or four months and after that period, there is a monthly subscription quote that is transparent and acceptable to all parties.
Once the process has been run with individual clients for three or four months, the price will vary depending on the clients’ ability to capture data, organise their bookkeeping etc.
More and more firms are now taking their pricing models for their cloud based services off their websites. This is because it is almost impossible to adopt a fixed fee “one price to suit all” pricing policy for this type of service.
2020 have written a Value Pricing Guide to help educate and train accountants on this important subject.
Find out what 2020 has to offer and the benefits of membership
2020 Innovation provides innovative training and marketing solutions for progressive accountants and tax professionals. Members receive support in Business Advisory, Practice Development, marketing, Making Tax Digital, and new technologies, plus comprehensive CPD training in audit, accounts and tax related subjects. 2020’s priority is to help firms grow their client base, expand their service offerings and prosper in the changing environment.
Implementing the AE contribution increases
Back in April 2018, all employers were required to increase minimum contributions for auto enrolment. This is known as ‘phasing’, and up until April 2018, employer contributions were 1%, as were employees’, making a total minimum contribution of 2%. But then the employer’s minimum contributions increased to 2% and the employees’ increased to 3% for a total of 5%. To complicate things further, (which the Pension Regulator never normally do) during the next phasing in April 2019 the employer’s minimum contributions increase to 3% and employees’ to 5% for a total minimum contribution of 8%. Confused yet? Of course you are! Welcome to the automatic enrolment club!
As an employer, you need to make sure that you understand how these changes will affect you, your clients and your employees. We’ve talked already about what the minimum contributions will increase to but not how this will be done. It would be nice to think that in this technological age that this update might be installed automatically on your payroll software. Guess what, you can on BrightPay, where you will be able to seamlessly handle the respective increases, with various options depending on the different scenarios. BrightPay will automatically uplift these workplace pension contributions to the minimum due, with no action required in BrightPay by the employer or payroll bureau. Other scenarios are listed here.
Be aware that some other payroll systems may require you to adjust the rates manually. To remain as a qualifying scheme, all automatic enrolment pension schemes must cater to the new minimum contribution higher rates. If you do not do this in line with the legal requirements, your pension scheme will no longer be a qualifying scheme for existing members and cannot be used for automatic enrolment.
It's also possible that the increases will take place in the middle of a worker’s payroll period. So say your employee has a pay period from the 1st to the 30th of April with the increase effective from 6th April. In such an instance the contributions for the pay reference up to April would be calculated based on old rates, and the contributions after April 6th being based on the new rates. And employees can choose to pay more than the minimum contribution which would mean separate calculations for each one. Yes, don’t worry, I have a thumping headache and feel like I might cry too. But, we’re not done yet.
So would I be in breach of legal requirements if I don’t adjust my rates correctly to reflect the ever-changing and shifting tides of auto enrolment? But kind Sir, my only crime is being really bad at maths; how can I avoid this reproach? Well you have 3 ways of keeping up with legal auto enrolment requirements:
- You can do the calculations manually - Believe it or not there are still people in the world that decide to waste hours of their lives by manually calculating these adjustments for each individual employee each payroll. Hey, each to their own - but I can think of better ways to spend a weekend.
- You can use HMRC Basic PAYE Tools and the AE Toolkit to do the calculations - Now now, the AE Toolkit is a very useful spreadsheet if you know how to use it and don’t mind wasting a few hours. It won’t do the calculations for you but it will give you a basis of where to start and some directions on what to do.
- You could use a payroll software to do it all for you - Yes folks, there are things called computers nowadays that do the hard work for us! A dedicated payroll software will be ready to cater for the increased contributions on April 2019 and will automatically calculate the correct minimum contributions and save you from being non-compliant.
I know which option I’d pick! Remember this is mandatory and if you’re not compliant you can have action brought against you. So, if the only reason you haven’t invested in payroll software yet is that you’re trying to save some money, well then you better watch out as all those savings could quickly disappear if you’re hit with a big fat fine.
BrightPay is a dedicated payroll product that handles your auto enrolment duties automatically for you. BrightPay 2019/20 will be able to seamlessly handle the respective increases, with various options depending on the different situations. Head to https://www.brightpay.co.uk/pages/MinimumContributionIncreasesPhasing/ to see for yourself all the hassle you’ll be saving yourself from.
Free webinar with top accountancy adviser Steve Pipe
BrightPay are co-presenting a webinar with the world’s most highly rated adviser to accountants, Steve Pipe.
This fast-paced session on Wednesday, 6 March, at 11am, will show you how to earn enough extra money from payroll to pay off an average size mortgage in five years.
For the first time ever, this brand-new workshop will show you how to make payroll one of your most profitable and strategically important service lines.
It will also give you – completely free of charge - a powerful new step-by-step system for using payroll to win really high-quality new clients and get many more of your existing clients buying payroll services from you.
And it will give you all the other insights you need to make payroll really fly in your practice.
When you attend you will:
- Discover how to make payroll one of your most profitable and strategically important services
- Get a complete step-by-step system for making a lot more money from payroll
- Learn where you can get all the other free tools, resources, training and support you need to transform your reputation, profits and work-life balance
A dynamic speaker, former UK Entrepreneur of The Year and founder of the “Get and Give A Million” movement, Steve’s books including “The world’s most inspiring accountants”, have been described as “masterpieces”, “ground-breaking” and “desperately needed”.
BrightPay: Cloud innovation will be central to the future of payroll services
During the webinar, BrightPay will discuss cloud innovation and how it will be central to the future of payroll services. Be ready to offer a new level of payroll and HR related services by embracing cloud innovation. Find out how to use automation tools to become more efficient, comply with new GDPR legislation and grow your practice.
View webinar agenda | Register for webinar
Making Tax Digital for VAT... made simple
Why is HMRC Making Tax Digital?
According to HMRC £9bn is lost every year as a result of tax calculation mistakes, something that can be mitigated in most cases with the implementation of MTD.
Seeing the necessity to make tax administration more effective, efficient and simple, HMRC are taking steps towards a fully digitalised service that revolutionises tax reporting as we know it today.
What is MTD for VAT?
MTD for VAT is currently at the forefront of the initiative, requiring MTD compliant software to keep digital records and prepare VAT returns. Businesses will no longer be able to upload their records to HMRC’s website manually.
- Business owners will be required to keep digital records of their taxes, using MTD compatible software.
- Rather than submitting digital records directly to HMRC’s website, the requirement will be to submit tax reports via their MTD compliant software.
What is MTD compliant software?
There are two options for choosing software that is compatible with MTD. You can either use one product that does everything, or several different products that are linked together:
- Select from HMRC's list of software capable of both keeping and submitting tax records. Popular choices are Xero, Sage, FreeAgent, KashFlow and Reckon - all of which integrate with Tide.
OR
- Use a spreadsheet to to keep your tax records alongside a bridging or linking software to upload them.
Who does MTD for VAT apply to?
From April 2019, all registered businesses with a turnover above the VAT threshold (currently £85,000 excluding VAT) must use MTD.
If your business is voluntarily VAT registered, you can choose whether or not to use MTD, if your business is not VAT registered at all you won’t be affected at this stage.
The complete timeline has yet to be set in stone, but it’s expected that from around April 2020 all remaining VAT registered businesses will also be obliged to comply with MTD.
Are there any exemptions?
According to the Chartered Institute of Taxation, you can apply for your business to be registered as officially exempt if it is incompatible with your religious beliefs, disability or remoteness of location. If you think you’re eligible you should contact HMRC as soon as possible.
How do I sign up for MTD?
You can sign up for MTD at GOV.UK. It’s important to note that once you’ve signed up to MTD, you cannot go back and use your old method. Once you’re signed up to MTD you must start using your MTD compliant software to send returns.
What if I don’t comply with MTD?
There will be penalties in place for those who don’t comply with MTD, but it’s likely these won’t be enforced in the initial stages, so don’t panic! HMRC recognise that MTD is a big change for business owners so they’re taking a lenient approach during this transition. If something out of a businesses control goes wrong, HMRC may refrain from inflicting penalties.
Taking time out for a working holiday in Morocco
I take a working holiday to warmer climates to escape the winter and to create focused time working on a project. This year I wrote the first draft of my second book Scale Your Sales, but then another surprise project materialised.
I spent six weeks in Morocco. I took my book outline, and within days of arriving I secured a local data SIM for internet access, drafted a work plan and started writing. My target was to write 1,500 words a day, but I was soon beating this target. The writing and research were going well all through Christmas and New Year celebrations.
I would wake and jog along the beach at sunrise, after breakfast, I sit down for the day to write, with a break on the balcony I would continue to work until my brain was completely fried. Dinner was at 7pm followed by a relaxing evening speaking to family and friends or watch movies.
Atlas mountains
The uninterrupted days were interspersed with massages, reading, visits to the Hammam, a tour of the Atlas mountains, a few socials with other tourists in local bars. You can see my many posts of this time on my Instagram channel.
I have enjoyed these working retreats for many years and would highly recommend it if you have the flexibility to make space in your life for an extended working holiday.
The benefit of a long retreat is the expanse of space for uninterrupted creative thinking. Creative thinking is simply the ability to look at the thing in a new was, to make a new connection, to problem solve and to see things differently. It is said, that creative thinking encourages self-expression and allows you to distinguish yourself from the crowd. During this time, I am my most productive and I deliver my best work because I have the thinking space to do so. I do not see this as a luxury but as a necessity for my business.
“I wonder how much better your company would be if you were able to take stock every year?”
Big projects
It is essential to have a compelling reason for any big projects; otherwise, you will get distracted and lose momentum. I know the book writing process is an endurance race that is not complete when the book is written or even published. The hardest bit for me is to get started on connecting coherent ideas into relevant strategies and models.
“What important project could benefit from you taking yourself away and dedicating focused time on starting and completing the project?”
Here is my process of planning for any successful business project that provides a solution relevant to an audience.
What’s Your Reason Why?
My reason for writing was to get my Scale Your Sales system in a format that was easily accessible and widely available to my audience. I had developed the model from my work developing sales teams in Key Account Management using strategic sales tools and social selling methods. The first task in any project is to understand your reason why and create clarity on the objective of the project. Your reason and intention may be lead generation, credibility building, passive income, or new business opportunities, but establish it up front.
Why You or Your Business?
What unique perspective, experience or skill do you or your business have that no one else has that an audience needs to help solve a problem? I had the experience and knowledge; however, there was always a niggling feeling around the impact this book would create, something I need creative time to explore. While writing the Scale Your Sales draft book, there were more significant ideas germinating on the bigger sales transformation, which did not easily fit into my Scale Your Sales model.
If like me you want your project to become one of the most powerful marketing assets in your business portfolio, potentially earning you multiple media appearances, speaking opportunities, more clients, consulting contracts and new product development, then there is a process that you need to ensure your project is successful.
- Begin with the end in mind and ask what do you want your project to do for you and your business?
- List your objectives in order of priority; here is mine:
- Create thought leadership.
- Secure paid global speaking opportunities.
- Land opportunities for consulting and masterclasses.
- ‘If you build it and they will come’ does not work so list the audiences that your objective will have the highest impact on, this your project's community.
- Nurture and engage the community with survey and updates long before the project is ready to launch.
- Market and promote the creative process and the launch strategy long before the project launches, the sales strategy must all be well executed if the project is to be a success.
Regardless of your business objective, for
your project to have a significant business-building impact, it is crucial to have clarity when undertaking an energy-intensive project.
Writing a book can become a meaningful brand and business opportunity only if the book is relevant and compelling to your target community of potential buyers. The best way to ensure that they do come, get them involved and invested in discussing the content and adding value to the solution. Excellent sources of answers to your research questions include Quora, Ask the Public, Industry forums on social media and survey platforms.
The critical thing is not to go through the agony of writing a book or investing in a project unless you have evidence that there is an audience to buy it. I plan to continue interviewing industry experts, as I am aware that my perspective is not the only consideration.
I want the book to have a unique value proposition, and I have read the books my target audience would have read, to get the audience perspective and a clear idea of the gaps in the market. Some of the expert interviewees may add to the recommended reading, which will help create a blueprint.
Get a Mentor
You would not start a business or advise anyone to do so without first doing diligent research on the target audience, the product and seek professional advice from someone who has done something similar.
If you have never written a book before and would like to then I would recommend The Ultimate Guide to Writing and Marketing a Bestselling Book - on a Shoestring by Dee Blick, I have written one chapter on self-publishing, but this book gives you everything you need to know. There are many decisions to make, and it is best to have an overview of the options, the pros and cons. Whether you decide to self- publish, hybrid or go with a publisher, you must develop your community early in your book writing project.
There is no point writing a book or doing any project if it is not going to get found by the audience, it was created to help. The marketing and sales are as essential as the creation of the product unless you invest in the promotion then you will not generate the impact and the sales worthy of your energy investment.
The surprise project that materialised was that I had material for another book that take the perspective of the buyer rather than the seller – watch this space!
I have some exciting sales strategies to share with you at Accountex, make sure you book your seat for: 6 Ways to Scale Your Sales Building Brand. Janice will be speaking at Accountex on May 2 in the Sales and Marketing Theatre at 11am.
Building a successful accounting practice requires digital at its heart
Excellent and well managed clients, as well as effective talent management, are the essence of a successful practice. But providing clients with a modern and high value service is more than just bringing in fresh blood to the practice. Transforming your practice requires a mindset change and a willingness to leverage technology.
Practices have traditionally been focused on partners and a limited range of services including compliance as well as, optionally, advisory services.
Client loyalty has been of paramount importance and the lifeblood of the business has been recurring fees.
Driving down prices
But compliance and accounts production, including straightforward tax, are becoming homogenous products, which is driving down prices. The overlay of advisory work is no longer optional.
And while MTD might seem daunting, it is a once-in-a-lifetime opportunity for the accounting profession to change the way it operates.
It offers accountants a real opportunity to provide clients with an improved service, while also increasing the profitability of their practice. There’s no option to opt out, and firms that are not on the front foot with the changes, will suffer.
Process improvement
Moving the majority of your work onto the cloud, maximizing the benefits automation can bring you, as well as its scalability and the process improvement it brings too, will change how your practice works – for the better.
The process of change can affect all areas of practice, including how fees are billed. Again, the gulf is widening between those firms still billing on a traditional, annual basis and those adopting a regular subscription-based model (usually including the cost of the cloud software).
This second group are already seeing benefits in their cashflow and profitability figures. The value of a practice with a regular, monthly set of recurring fees will move ahead of those that stick with an annual billing model. There should be little sympathy for the practice that fails to embrace new technology.
Digital represents some real challenges, but its introduction can’t be ducked. It must be seen as an opportunity to change the way your practice works. If you do this successfully, your practice can become more attractive to clients, more agile, efficient and profitable, and consequently worth more at retirement or sale.
If practice transformation is an issue for you and your practice to resolve, then come and meet the Foulger Underwood team on stand 490 at Accountex on 1-2 May. If you’d like to speak beforehand, please email Julia Whistler at [email protected].
Foulger Underwood are M&A and strategy consultants focused on the accounting, legal, trust and corporate service and wealth management sectors.
AI and machine learning for accounting: is it the future?
AI, or artificial intelligence to give it its full title, is huge. It’s everywhere. No matter what sector you are in or what you do within your business, you’ll be more than aware that AI is the future. Or so we’ve been told. In fact, we’ve been told it so many times that it can be difficult to really determine whether using AI is going to be helpful or not – and if we do choose to use it, there is always a chance that we could be expecting a lot more than it can deliver.
With a financial management system like Microsoft Dynamics 365 Business Central, however, the claims are not hype. It really does do what it is meant to do, taking away from the workload that the accounts department would otherwise be bearing. As well as simplifying routine tasks including coding accounting entries, the fact that it is cloud based means that it is totally secure. But it is the AI that really counts here. This technology can replicate the human element by offering tax planning suggestions, client goals, and even operational reports.
AI and Machine Learning For Accounting: It’s Here
Our initial query was whether this kind of AI and machine learning for accounting was the future. The answer is that it’s not, but only because it’s actually already here. Although most experts within the accountancy sector have stayed away from suggesting that AI capabilities are exactly what it needs, it is slowly coming round to the fact that it really can make things easier, quicker, and much more efficient.
An essential requirement for a modern system should incorporate built-in intelligence in the form of AI. This design will save the user time and energy by providing insights, for example cash flow forecasts and automating data entry. A modern system should also notify you about tasks, you might be interested in connecting to other tasks you are about to complete. If you create a purchase order to reorder a product from a supplier, a modern system should notify you of other items from the same supplier that are about to be sold out, so you can add them to the purchase order to ensure stock never falls below your designated thresholds.
AI also allows you to streamline your business processes and reduce time consuming manual data entry tasks. For example, when uploading a product image during product setup, a modern system will read the image and recognise the associated product and automate parts of the setup, complete fields and offers suggestions for improvements. Additionally, when receiving an order from a customer, your system should read the order details and autofill these into the system on your behalf.
Functionality
One of the major benefits of a modern system is its adaptability: it should be easily moulded to a company’s requirements and capable of being amended at any given point to meet the needs of the business. Your organisation will change as it grows, and having this adaptable software at a business owner’s fingertips is a huge bonus.
A modern system should also work directly with Outlook straight out of the box, with no integration required. Users should be able to access system data from within Office, Power BI and Outlook. From within your Outlook inbox, imagine being able to perform tasks such as raise and email invoices and quotes, view customer balances and send statements. The ability to create workflows to ensure you comply with necessary controls and business processes are a must and, as part of a modern package, audit trails are there as standard too.
AI and Machine Learning for Accounting Is Good For You
AI and machine learning for accounting won’t mean that you don’t have a job to do anymore. However, what it will do is to make you better at the job you are doing now – you will be more efficient, more engaged, and much more able to get the answers that you need and other people want. Using technology in the right way will increase and strengthen your role. And by embracing machine learning in your processes, predictive insights will deliver more value to your role too.
Times They Are A-Changing
Disruption seems to be everywhere at the moment, in both the good and the bad sense. When it comes to AI and machine learning for accounting, that disruption is definitely good. Nothing like this sort of all-round change has been seen for decades, and what Business central is able to do – and allow those working in the sector to do – is to become much more aware and powerful when it comes to real time accounting.
Automation is not something to be afraid of; it is something that needs to be embraced if you are going to succeed and rise to the top of your field either individually, or within your company in general.
For more information on how Business Central can help you achieve your goals, and how AI and machine learning for accounting can make all the difference, speak to one of our specialists.
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Auto enrolment: employees telling tales on their employers
Auto enrolment compliance is still very much at the forefront of the pensions regulator’s (TPR) objectives. However, a small minority of employers are still not complying with their auto enrolment duties. Some employers tell their employees that they would face a pay cut if they joined a workplace pension scheme.
Others tell them that they have in fact been enrolled when a pension scheme has not even been set up. These employers are hoping that their auto enrolment duties will simply disappear or that their employees won’t even notice that they are being denied their rights.
Fortunately, employees are very aware of their rights and entitlements. TPR is relying on employees to inform them where their employer has failed to properly carry out their automatic enrolment duties.
According to TPR: "It was a whistleblower who alerted us to the situation at Birmingham-based Crest Healthcare, whose staff were told that pension contributions were being paid by the employer when, in fact, a scheme hadn’t even been set up."
Both the company and then managing director at Crest were prosecuted after pleading guilty to non-compliance.
For the most part, the role out of automatic enrolment has been hugely successful with over 1.2 million employers gone through the process. More than 9.6 million people have gained a workplace pension as a result which is some achievement. The majority of employers continue to comply with their AE duties and it’s now a regular part of their payroll process.
It’s likely that a small number of employers will continue to try to evade their duties. Whistle-blowers are a vital component to identifying these employers that have not acted on their legal employer duties. TPR receive over 80 reports every week from employees who suspect that their employers are breaking the law. These reported cases have directly led to around 600 employers being investigated for non-compliance.
Complying with auto enrolment is easy!!
It makes sense for every employer or payroll client to comply with their auto enrolment duties. It is a relatively easy process when users utilise payroll software that has automated functionality to process their employer auto enrolment duties. BrightPay is one such payroll software tool that takes the grunt work out of calculating and processing the ongoing duties required.
What really defines you as an accountant?
You may have read that Xero have started on online petition to change the dictionary definition of an accountant to “a person whose job is to keep or inspect and advise on financial accounts.”
Putting Xero’s possible motivations to one side, they’ve raised an interesting debate and one that I’m not sure has an answer. Accountancy is such a wide profession now with so many branches, specialisms and niches that I’m not sure there is such a thing as ‘an accountant’ these days.
Most job titles require a more specific word putting in front of the accountant tag. I guess that, whatever that additional wording is, most accountant roles involve at least an element of financial maintenance or inspection so maybe that’s not a bad generic answer that Xero have.
Generic wording
The problem is that a generic wording like this does nothing to enlighten the outside world as to the true role, value or potential of an accountant.
When I moved onto working with accountants rather than SME’s I spent a lot of time trying to work out how to define my role. Was I a mentor, a coach, a consultant, an adviser, an accountant? What’s the difference between them?
It took me a while but I finally worked it out….it didn’t matter!
The challenges
What matters far more is ensuring that my brand, both personal and business, shouts out in very clear terms what I’m about, why I do what I do and who I am looking to work with. It needs to demonstrate that I understand the challenges faced by my target market and highlight the meaningful benefits that I can bring to those in that market place.
By giving myself a generic tag, let’s say ‘mentor’, I am open to those in my target market applying their own interpretation to what that role brings and it may not be the same as mine.
By spelling out who I am, why I do what I do and making it relevant to the right people, I remove any confusion.
So, if you need a title then call yourself whatever you want, but make sure that your message is clear. Define yourself, don’t leave it up to the dictionary writers or Xero to define you.