Are traditional accounting firms dead?
What is the future of the accounting industry?
We won’t recognise traditional accounting firms in 10 years because of the merging of humans and technology that will have taken place. Like most innovations, the changes will occur first at the Big 4 and the larger regionals, but it will eventually trickle down to medium and small local firms. It’s not a question of if, but when.
The rise of the machine
Two current buzzwords for accountants are artificial intelligence and data analytics. Today, most of us are familiar with these terms but are not so certain as to how they will affect our practices in the long term. Tomorrow, they will be as familiar to us as debits and credits.
Artificial Intelligence (AI)
AI is well known to most of us as being the theory and development of computer systems able to perform tasks normally requiring human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.
For us, at its most simple level, this means a businesses’ bookkeeping system automatically allocates transactions, receipts and payments to the right part of the profit and loss account or balance sheet without the need for human involvement.
Data Analytics
This is the term used to describe the process of inspecting, cleansing and analysing data with a goal of discovering useful information such as trends, patterns and fluctuations, to suggest conclusions and support future decision making.
Data analysis has multiple facets and approaches depending on which domain it is used in. For the accountant here are three examples of what it means:
- Auditors will test entire populations of data rather than sampling, and in a fraction of the time;
- HMRC could send a bill or refund to a proportion of tax payers without the need for a tax return to be filed; and
- Businesses could know the result of a decision before they have committed to it (“What if” scenarios).
The first scenario already exists, see any of the Big 4 websites.
Data analytics is not just the domain of the Big 4, other providers have entered the market to help auditors and accountants interrogate, verify and review business data.
How will these changes affect staffing levels and the way we currently organise our firms?
For several decades now, one of the biggest issues traditional firms faced was finding and training staff. Can anyone remember when this was not the case?
If we look at the rise in the Cloud Accounting providers (for example, Intuit, Sage and Xero) driving changes in the way businesses use technology to record and process transactions and their subsequent development of practice management systems to enable firms to manage and produce accounts and tax returns, then the staff issue will eventually go away. Processing transactions on behalf of a business will become an error checking function, figures for the final accounts and tax returns will be automatically extracted.
As technology advances staffing levels for processing will reduce but not eliminate the need for staff. Someone will need to train business owners on how to use and input data, somebody will need to check the data for errors and there will always be a need for skilled people to exercise professional judgement when preparing final accounts and tax returns.
Analysing data for planning and reporting on audits will again require human professional judgement, machines might be able to provide the figures but they cannot factor in external influences.
The Big 4 are already investing heavily in the new technology. One fear is that the cost to acquire this new technology will further widen the gap between the way the large and smaller firms operate and thus further segment the market.
The rise in Cloud Accounting software has increased the number of book keeping practices (now approximately a third of the UK market for Accountancy services, by number of firms) and will continue will drive these changes.
We cannot see smaller firms being able to afford to train “traditional” Chartered and Certified accountants, this will be the domain of the larger firms, unless the Institutes and Association reorganise their qualifications into specialist (such as Audit, Tax, Advisory, Cloud) modules and qualify individuals on what functions they can and cannot be authorised to advise and perform. The Financial Conduct Authority already does this for their advisers and a similar model appears inevitable with the changes occurring in our industry.
Firms have traditionally organised their business model on leverage or a triangle, with partners at the top of the triangle and new recruits at the foot. These recruits used to come from University and into the profession. We hear firms report that entry level recruits are not prepared for the Cloud environment and the new technologies that are out pacing University curriculums.
Some firms we work with have adopted a new model of recruiting younger or A- Level students and training them immediately in Cloud software and then allocating them to “client facing” (training and support) or “error checking” client entries role. Once experienced, training on business advisory skills follows.
The firm of the future will not be a triangle but more of a diamond with some administrators, trainers, error checkers, specialists (tax, wealth management, finance, audit) and general business advisers.
Firms will offer a wider variety of services and use outsourcers or third parties to provide them.
So what do these advances in technology mean for traditional accountants and what should you be doing to protect your firm’s income and take advantage of the changing landscape?
What you just read is so “different” that it will likely cause the conservative and sceptical in our profession to either deny the reality of these changes or adopt the view that like all changes in our profession it won’t affect them.
“We’ll wait until it gets to us”.
“We survived “RTI” and what can be worse than that!”
“All these things are for the Big 4.”
“It will be decades before it trickles down to our firm and by then, the partners will be retired.”
Our biggest fear at 2020 is “denial” by traditional partners.
But…. If you have read this far, your biggest opportunity is to accept the industry is changing and take advantage of the fact that some firms won’t change and thus won’t survive, technology is your friend and you if you can embrace the changes you will succeed!
So how do we maximise opportunities in this changing digital industry?
First, look inwards at your practice, your partners and staff.
It seems Perpetual change is the only thing we can predict. Sense how you, your partners and staff feel about this. Do you see it as a negative? Are you willing to be brave and experiment? Understand this and then you can better how to embrace change in an opportunistic way.
Ask yourself what business you are truly in, are you bookkeepers tax return and accounts preparers or are you advisers to business owners. What do your clients value, the past or their future?
Model other innovative practices, some have already embraced the new technologies and are making the most of the changing landscape. Learn how they do it. Modelling parts of their approach means you can gain advantage without having to reinvent anything.
Look beyond the tech, work out what digital technology actually gives you –for example, Cloud accounting software can give you real time accounting data! Tech needs to achieve something powerful for it to matter, otherwise it does not have any real purpose. What can we use this data for and how can we make a difference to our client’s businesses and their lives?
Be productively paranoid and retain a sense of curiosity about what could potentially disrupt your practice. Start by investigating what you may have discounted as being threatening, then identify what might be harmful to your practice and integrate your thinking into an ongoing strategy.
Second, write down a Strategic vision of what your practice would look like when you have embraced these changes. For example, in 2 years, turnover, overhead, profit, staff roles, type of clients, services offered, management information required.
Third, write an action plan to bridge your practice from where it is now to where you want to be.
Monitor the changes monthly and ask the question “What have we done this month to move our practice towards our strategic vision?”
2020 Innovation Training provide the resources to help you make the changes and to optimise your opportunities. Talk to us about how we can help your practice.
Find out what 2020 has to offer and the benefits of membership
21 practical networking tips for accountants
Networking is a great skill to have, whether it’s for winning new business at Accountex … or for life in general.
But it’s a talent that, for many, doesn’t come naturally. Fear not.
“Your network is who you know. Your reputation is who knows you,” says Rob Brown, business development expert.
“I’m often asked what one skill, quality or talent, if mastered, makes everything else easier. The answer is NETWORKING,” adds Rob.
Rob has created 21 practical networking tips to help you get the most from the massive and potentially overwhelming phenomenon that is Accountex. It will help you to...
- Get on the radars of the right people and have the right conversations
- Prep properly for maximum impact and efficiency while you're there
- Make the very best of your precious time and efforts for maximum ROI.
Check out the tips HERE.
Why failing to digitise will hit the value of your accounting practice
The move towards digitisation is being pushed by both regulatory and client-focused requirements, which means that accountants need to clearly identify their relationship with the client.
Making Tax Digital is a clear example of a regulatory imperative – with its subtle but important difference in the way information is submitted to the taxman, setting a path towards linking the practice with its technology platform of choice to submitted data.
From the client perspective, some will embrace the idea of a digital relationship with their accountant; others will wish to continue the same contact and personal service. However, the regulatory push means that maintaining the status quo is not an option.
From a compliance perspective, the accountant will need to consider carefully the processes and workflows of their practice and those of their clients. Fortunately, technological advances mean that information can be shared over the cloud seamlessly and in a timely fashion – if both parties take the data capture/sharing project seriously.
At this point, there are two things to consider. Firstly, how can I take advantage of closer and more frequent contact with my clients to provide a more valuable service, if I evolve my offering? And secondly, if I carry on focusing on tax compliance, what impact will that have on my practice as HMRC continues to drive digital record-keeping and filing?
The first point has been covered by Foulger Underwood here. The second point is worth considering from a ‘tax return revenue stream’ point of view.
We developed an analysis model to categorise personal tax returns into five categories:
- Simple forms that will all be prepopulated;
- Entries where there will be some input required from non-HMRC captured information;
- Those with input from SME dividends or other non-earned income;
- Multiple sources of income from non-captured sources including overseas dividends etc; and
- Non-resident or high net worth individuals.
From this analysis it became clear that the simple tax returns 1 and 2 might be at risk from HMRC’s ongoing personal tax return digital initiative and possibly the workload in preparing tax returns for category 2 would also be reduced.
For practices, this means a focus on continuing to ‘do as you’ve always done’ will erode your practice’s value.
This is an interesting example of one of the negotiation issues in selling and buying practices, but whereas in the past there has been a reasonable consistency in approach and methodology we have seen: increased audit thresholds; the MTD effect on VAT; and the further digitisation of self-assessment tax. The values of these services, in terms of sustainable returns, need to be considered and re-evaluated.
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.
Free guide to Accountex 2019
MyFirmsApp, a developer of bespoke apps for accountancy firms, is offering accountants the opportunity to download the Ultimate Guide to Accountex 2019 so they can start planning their visit to the number one event in the UK for accounting and finance professionals.
This indispensable guide will make it much easier to navigate the event with top tips on how to get the most out of the two days, comprehensive check lists and logistical advice on how to get there, where to stay and which sessions to attend. The event takes place across two days on May 1st and May 2nd and is being held at ExCel in London.
Last year, a record 8,000 accountants and finance professionals attended the show and this year’s Accountex is set to be bigger than ever with over 200 exhibitors showcasing new products, technologies and solutions. What particularly appeals to delegates is the ability to choose from more than 200 sessions that examine the big ideas defining the profession in the free CPD accredited education programme.
Mike Page, Head of Product Management and Customer Experience strategy, MyFirmsApp commented: “Every year Accountex gets bigger and bigger and with some pre-planning and with a download of our guide to hand, accountants can ensure that they don’t miss anything and they get as much out of the event as possible.”
The Ultimate Guide to Accountex can be downloaded HERE
MyFirmsApp will be running 16 thought leadership sessions across the two days in the Joel Oliver Innovation Theatre, which has been named after the company’s CEO, and can be found alongside Stand 145.
The line-up includes Will Farnell, Founder, Farnell Clarke, Richard Keys, Managing Partner, Taylorcocks, Andrew Van de Beek, Founder & Director, Illumin8, Tony Margaritelli, Chairman, ICPA, Mark Telford, Director, Telford Accountants, Amanda C Watts,Founder, TwentyTwo Agency, Alexander Bond-Burnett, Presentation Trainer, Bond Ambition, Alan Woods, Managing Director, Woods Squared, Nicki Adams, Director Ad Valorem, Jen Surtees, Head of People Experience, Xero and Claire Bennison, Head of ACCA UK, David Oliver, who is a member of the Executive team at MyFirmsApp, an author of fourteen books and an international keynote speaker and Dan Richards, Head of Global Sales at MyFirmsApp.
What does a soft landing for MTD digital links really mean?
All VAT-registered businesses will be required use digital links in their bookkeeping processes.
HMRC says digital links are “connections that allow details to automatically be transferred from the point a transaction is made until it is included as part of your quarterly report.” HMRC hopes digital links will make VAT reports more accurate and less open to accidental or deliberate errors.
Manual links aren’t acceptable under Making Tax Digital for VAT. For example, “Noting down details from an invoice in one ledger and using that handwritten information to manually update your software" is a no no.
However, this doesn’t mean you have to create invoices, delivery notes or other primary business records electronically.
Paper documents are acceptable, despite what current TV ads for bookkeeping software imply. It’s what you do with the data on them which matters, i.e. how the information gets from an invoice to your VAT return.
Sticking with the example of an invoice, it’s OK to enter the data manually into a bookkeeping app or a spreadsheet, e.g. Excel, but from there the data must flow automatically to your quarterly VAT return.
Tip. If you use a bookkeeping app which HMRC has approved for MTD, you can be certain that the data will digitally link when you press the button to produce and send your VAT return.
If you use spreadsheets instead of an HMRC-approved bookkeeping app, the data must still link digitally. For example, a cell that shows the total of other cells, or another app, by using a formula is OK, but manually cutting and pasting from one or more cells to another isn’t.
Tip. Whether you use an app or spreadsheets, you’re allowed to make manual adjustments to your data if necessary. For example, if your client's business is partially exempt you’re allowed to manually work out the fraction of VAT you can reclaim.
For the first 12 months that MTD applies, at least, HMRC won’t enforce digital linking. This means you can wholly or partly use manual bookkeeping. However, as your clients' VAT return data must be submitted electronically at some stage in their record keeping, they’ll need to use digital links.
Tip. Our advice is to ignore the soft landing period and get to grips with digital links for data as soon as possible to avoid last minute changes when the soft landing ends.
Indicator – FL Memo Ltd will be on stand 683 at Accountex on 1-2 May at ExCeL London.
IRIS springs into MTD and compliance action
IRIS Software Group has announced its spring 2019 update, focusing on driving efficiency and productivity for accountancy professionals.
The IRIS Accountancy Suite sees the continuation of Making Tax Digital (MTD) functionality alongside data protection enhancements to ensure accountants remain compliant. The business has also updated IRIS Time and Fees, IRIS OpenSpace and the Accountant Go portal for greater integration.
Nick Gregory, Chief Marketing Officer for IRIS Software Group says, “The spring release demonstrates we are able to support all types of accountancy practice, whether focused on traditional assurance and core compliance or delivering advisory-based services. The improved functionality and integration are designed to improve workflows and ensure everyone can capitalise on the digital economy.”
New features include:
Making Tax Digital
- The IRIS Time & Fees export feature is now compatible with bookkeeping platforms such as KashFlow, Xero and Sage, resulting in a simpler and smoother VAT return process.
- Data can be directly imported to IRIS VAT Filer from digital record keeping products, including Excel, KashFlow and Xero to centrally manage all filings.
- Payment and liability information can be imported across any selected time period. This provides a clear view of all payments and liabilities according to the digital tax account with HMRC.
- The ‘Edit Tax Return Dates’ screen in IRIS Personal Tax can be dynamically populated for registered clients, providing display dates for End of Year submissions under MTD.
Data protection compliance
- IRIS AutoMail engagement letters now reference GDPR with a free form section to add detail on uses of personal data if desired.
- Additional security and encryption logs for files that may contain personal data and restricted access to clients, based on which branch the staff members and client are associated with.
Time and Fees
- A new WIP Control Panel screen for IRIS Time & Fees provides a snapshot of work in progress, highlighting key client priorities to make billing decisions more efficient.
- A new Actual vs. Budget comparison screen in IRIS Fees enables practices to easily track fees against budgets across multiple clients, providing greater control when running reports.
Other enhanced functionality includes the ability for practices to access all client messaging in Accountant Go directly in IRIS Suite, via the OpenPortal. Short, secure messages can be attached to shared client files within IRIS OpenSpace, enabling accountancy professionals to provide further details and clarification on the contents. Practices can also automate notifications for selected staff when a client is brought over to OpenSpace from the IRIS suite, alongside enhancements to IRIS client browser search. A full list of annual updates, including company secretarial and tax legislation is available on the IRIS website.
2020: Birth of the data-powered small business
For decades, small businesses have been at a disadvantage compared with larger corporates, because they simply haven’t had the tools, expertise and resources to manage their financial performance effectively.
One of their most significant impediments has been the difficulty, if not impossibility to get a real time view of their financial position, with the vast majority having to wait until year-end for a comprehensive picture - by which time, it’s inevitably out of date.
The rise of cloud accounting
But this gap in finance capabilities is rapidly shrinking and a whole variety of tools now gives small businesses the same kind of visibility on their finances that larger businesses have had for years, while also reducing the dreary admin.
One could even argue that with accounting platforms such a Xero or Quickbooks, potentially coupled with an overlay of cashflow management & forecasting, such as Fluidly or Float can provide, SMEs are on the front foot when competing with larger companies.
Over time, the capabilities of accounting platforms and the apps built to support them, are becoming more diverse, more sophisticated with a plethora of add-on services.
Hence, today’s CFO can tap into an ecosystem of hundreds of congenial apps when a large corporate CFO is trapped with inflexible legacy systems. The only thing that is missing now is access to easier and faster funding and insurance.
The chart below provides an overview of the current app landscape and the ongoing convergence of accounting with business banking.
Hokodo’s radar on the cloud accounting and digital banking spaces
The risk of “app fatigue”
But let’s have a look at the flipside of the coin. Is there a risk that the proliferation of apps and services have the opposite effect than the one sought at the outset? Might it end up confusing the SME owner around which app to use and lead to an overall ‘app fatigue’?
Take the example of invoicing. This could be provided through single-focused apps like Zervant, Solna or InvoiceBerry, but also through more generalist apps like BigTime, which also offer additional features like project management or expense tracking. And what about the default invoicing functionality that comes with all cloud accounting platforms? Or even neo-banks that are starting to venture into value-adding services such as invoicing? Among this jungle of options, a tech savvy person might find it difficult to choose, let alone a small business owner who doesn’t have the time for this.
And the same question repeats itself for pretty much every single process, not only invoicing. More than 800 apps are now available through the Xero and QuickBooks app stores. That’s before mentioning the hundreds of apps that can be found on the SalesForce appstore. As a result, it is now estimated that SMEs now juggle with more than 50 SaaS products, of which more than 20 are paying.
At Hokodo, we believe that the app explosion is not sustainable in the long run. Small businesses will demand a no-brainer solution, that is a consolidated ‘business cockpit’ providing different insights and metrics to put their finances on autopilot. Look for more insights in the coming weeks as we look to ways to narrow down the winners and losers and come visit us at the start-up zone at Accountex on 1-2 May 2019.
How to create a cyber-security conscious firm
Most of us are aware of the dangers associated with a lack of awareness around cybersecurity.
We’re constantly being tested by cyber criminals who use increasingly sophisticated methods to access our data.
As soon as we easily recognise one malicious technique, they source new methods that test our habitual assumptions. As accountants, you hold incredibly valuable personal data in your systems. The Cyber Security Breaches Survey 2017 (published in a joint report by the Department for Digital, Culture, Media & Sport and National Cyber Security Centre) identified companies holding Personal Data as more likely to be targeted than companies than those that do not (51 per cent compared to 37 per cent). This puts accountancy practices firmly in the target zone for cyber-criminals. The most common attacks took the form of fraudulent emails, followed by viruses and malware.
Here are five top tips to create a culture of cyber-security
- Provide clear instructions
Explain the habits you’d like your team to use when thinking about cybersecurity. If you don’t give explicit instructions such as not to download a file or click on a link from an unknown sender, then you’ll have a greater chance of a breach in your firm. Make sure your guidelines are clear and concise. Try not to use jargon, make sure your remove ambiguity wherever possible. Providing in-depth training for new staff and regular refresher training is one way of proving clear instructions.
- Discuss it regularly at team meetings and meetings with your bosses
Just because you’ve provided clear instructions on best practice, education doesn’t stop there. The more you discuss threats associated with cyber security, the greater their awareness and likelihood of recognising a potential attack. The more stories your team can share about things they’ve read and seen, the greater the engagement levels across the firm. You’ll be surprised how quickly this becomes part of a conversation piece with customers.
- Have open and honest conversations
Everyone is a potential target, and nobody is completely infallible. Accidents happen and if they do, business owners need to be aware of this as soon as possible. The more time that goes by after any malware downloads, the greater the potential damage. Be sure not to cultivate a blame culture by encouraging your team to report anything suspicious, however small. Staff should feel comfortable to speak up if they think they may have downloaded something they shouldn’t have.
- Password complexity and reset frequency
I know, everyone hates creating and remembering passwords. But this is a key weapon you have in your defence arsenal. Make sure you have clear guidelines on the frequency and complexity of passwords. If you can enforce regular password resets on your IT systems it is well worth considering.
- Training
There are several low-cost/no-cost online training tools for you and your staff. I’d recommend a finding a good course on Phishing. Phishing is a tool that uses email to try and gain sensitive information. Emails will arrive and look incredibly real, sometimes even experts find it hard to tell the difference between a real and fraudulent email.
My recommendation is to maintain conversation and training around this topic to incorporate it in to your firm’s culture. By protecting your firm from a data breach, you’re doing your best to help protect your clients against fraud. Thomson Reuters Onvio offers secure online file storage and client portal software for accountants. Benefit from a more streamlined process for client communication, easily share files and documents with your clients online and gain online approval from clients with e-signing.
For more tips on cyber-security, see how Lucy Cohen and Olly Evans approach risk management within their successful accountancy firms.
TC Group expands into finance, legal and HR
Top 60 accountancy firm TC Group has announced the launch of a full range of financial planning, legal and HR services.
It marks the latest development for TC (Taylorcocks) which has significantly expanded its operation over the past two years through several major mergers and is officially the fastest growing Top 60 UK firm.
The new Financial Planning, Legal and HR departments will support TC’s extensive range of accounting and taxation services and are headed up respectively by Simon Perkins, James Allen and Wendy McGarvey, all of whom have extensive experience of working with SMEs.
Simon Perkins, head of financial planning, joins from Fidelius, having previously spent 13 years with Lloyds providing advice to its commercial banking clients while also gaining experience with its high net worth, private banking sector. His department will offer a comprehensive range of financial planning solutions designed to fit around clients’ lifestyles, family life, business and professional interests.
Head of legal James Allen has spent 17 years working as a company commercial lawyer, specialising in the buying and selling of businesses and other transactional work.
At TC he will provide clients with a range of advice covering business acquisitions and disposals, shareholder agreements for start-ups and joint ventures, group restructuring, commercial agreements and secured lending.
Head of HR Wendy McGarvey has over 25 years’ experience working in senior positions with large corporates and SMEs and has wide ranging industry knowledge both at operational and strategic levels. Her department will offer a wide range of HR support covering all aspects of recruitment and employee management.
TC’s managing partner, Richard Keyes, is confident that there will be a huge demand for the new services: "Clients trust their accountants who often play a very central role in their business growth and development. It is therefore logical that they will welcome the provision of such a range of complementary support services covering financial planning, legal and HR.
"Wendy McGarvey, Simon Perkins and James Allen have extensive experience of working with SMEs and we are very excited about the additional benefits they will bring to our clients.
"The launch of these new services also coincides with a major rebrand which is designed to facilitate and support our continued growth into one of the UK’s leading firms."
Getting serious about an advisory role for accountants
There is a lot of stuff and nonsense talked about advisory.
I’ve been an advisory partner in a top 10 firm and a 100% new business director in a regional practice plus I’ve worked in big corporate world for a large leisure company and been FD of an SME M and E contractor.
I currently run F3C Advantage and we work with accountancy practices that want to get serious about Advisory - by providing them an Advisory delivery platform called CAS – the Complete Advisory Solution.
So, I reckon I’ve got a pretty good fix on what clients want from accountants plus a pretty a good fix on what accountants feel about Advisory and why to date so many dabble rather than get serious.
OK, let’s get into our helicopters and rise up, look at the big picture, make sure we can see the whole forest and not just a few trees.
Now looking down from our helicopter, let’s keep it simple, what is advisory? The best explanation I have found of advisory is helping clients to:
- Move forward
- Protect and improve their personal positions
- Protect and develop their businesses
And when we accountants help clients we are “facilitating INSIGHTS to INSPIRE clients to INNOVATE and make changes”.
It’s all about the clients.
It starts by helping clients clarify what is most important to them. As we know clients are not all the same and they want different things. Never assume clients are clear about what is important to them.
When we help clients clarify what’s important to them this enables us to fully understand their personal and business goals and aspirations. Not only is this essential to ensure we are providing best advice but it’s one of the three things that all client surveys over the last 30 years or more have identified that clients want from their accountants
- To show they care and are in it for the long haul
- To bring new ideas
- To understand me and my business
The Success Gap Model is an excellent way of illustrating what is important to a client or prospect. Some measures of success will be financial – the pound note – others will be non-financial – the smiley face. Do you know all the pound notes and smiley faces for all your best clients?
How can we help clients achieve their pound notes and smiley faces?
Every time you look a client square between the eyes think – what’s the plan, their plan? Have they got a clear plan? Does it go beyond just numbers?
Being the person who has helped the client put their plans together is a powerful position to be. Being in the room when the decisions are being made establishes you as their MOST trusted adviser. You want to be more than just someone who helps them with implementation or solves ad hoc problems.
An annual planning event with your best clients is a great place to be and is core to Advisory.
In today’s fast-moving world not everyone wants to take a day out, so be flexible, break it down into bite size chunks. Two hour sessions are probably optimal going up to maybe half a day. The client experience is everything – when they leave you they should be thinking, “that was great and I want more”, not “that was great but I’m exhausted”! Regular client Advisory meetings with the reference point being the client plan that you helped them put together is also core to Advisory – and will result in new recurring income streams plus project spin off work.
So how do we get serious about Advisory?
Well I was the 100% new business director in a regional practice that tripled in size in two years and I have seen other firms achieve great results. How? The answer is – organise and structure advisory just as you have probably already organised and structured everything else in your business – with systems and process.
We know that good process provides
- Leverage and scale
- Consistency and quality control
- Accelerated learning and development
Most firms whether they are large or small have written or unwritten processes for how they deal with accounts and audit work or tax work. Let’s call them standard operating processes or SOP’s. Few have SOP’s for Advisory work. The successful firms have SOP’s for Advisory.
Accepting that most firms seek to be better at the WIN
W - Winning new clients
I - Increasing client spend
N - Nurturing client relationships for retention
Then successful firms develop standard operating processes
W – SOP to differentiate to attract new clients
I – SOP to broaden the services the clients buy
N – SOP to protect and develop client relationships
If you want to get serious then systems and processes are essential as is the development of SOP’s. You could create your own process in your head or you could look to bring in a proven process from outside – make sure it is client centric and can be deployed in a way that fits you and firm’s priorities.
So how does this work in practice?
I was talking with a small firm before Christmas with two partners. Partner number one has started as the champion but the plan is to involve a new director who joins them after Easter thus creating a pod – the champion model becomes a pod model. The long-term plan is build the advisory revenues and integrate advisory across the whole firm but in the short term it is champion to pod.
The firm in question reckon the have 200 or so business clients and they have segmented and targeted the top 20%. Post year end or pre year end meetings are being held with each of these clients over the next 12 months using one of the CAS tools specifically designed for such meetings. The plan is to migrate a proportion of these clients from being primarily compliance to being compliance advisory. Forty client meetings piggy backing off existing meetings over 12 months they believe is very manageable.
Supplementing this will be a process for handling prospect meetings. The plan is to attract compliance advisory clients and advisory only clients. And then migrate some of the advisory only clients to become compliance advisory clients.
Draw yourself three columns. Left hand column is your C clients. The middle column is your CA clients and the righthand column your A clients.
This firm is serious, it is organised, it’s deploying process in a way that suits them and they are making their life easier by using a delivery platform.
John will be speaking at Accountex on 2 May in the Business and Finance theatre at 11am.