Professional Services

Hate Accounting! Or Love Accounting?

The accountancy industry, like every other, is going through a rapid period of change. When I read posts like this, I feel a little despondent.

It gives me that awkward feeling that I get when people ask me what I do at dinner parties or networking events? I stumble between:

  • “I’m an accountant”
  • “I’m a tax advisor”
  • “I work in finance”
  • “I’m a tax partner”
  • “I’m a creative accountant”….mmmh , perhaps not!

It all feels a little apologetic and understates the value we can provide. I think that as an industry we’re a misunderstood bunch, yet we’ve only really got ourselves to blame.

I believe that there is a common misconception amongst business owners between accounting or bookkeeping on the one hand and business advice on the other. The former relates to data capture and entry (which is important yet mundane) and the latter is what can make entrepreneurs healthier and wealthier.

John O’Nolan makes some great suggestions on how we can embrace the ‘uninterestingness’of many aspects of accounting work and turn it to our advantage – some ideas which are already being embraced by new firms in similar ways – but I believe he misses the mark in relation to business advisory services. Dealing with the bookkeeping aspect first, I believe that we are getting closer to creating a solution with the emergence of cloud based accounting software e.g. Xero and Freeagent, which is intuitive and provides realtime data access.

Yet business advisory services covers the whole gambit of a business lifecycle from initial advice on structuring the business on startup, to raising finance, growing the business and making acquisitions and disposals. It involves treating the business and business owner(s) as one, providing all-round tax and strategic advice. Sometimes its just a shoulder to lean or being a sounding board when an entrepreneur has some tricky seas to navigate and is perhaps feeling a little isolated at the helm of the ship.

But there’s far more as an industry that we can do.

For me the real killer move for accountancy professional service firms will be the shift from a position of information or intellectual property protection to information flow management. We’ve spent decades building huge barricades around our knowledge in professional firms to ensure that we get maximum value on consultancy services yet the waste and cost to our economies of this information not getting into the right hands (in time) must be astronomical. Let’s turn it on its head and set the information free to get to the right people as and when they need it.

Tomorrow’s accountancy firm winners will be those that can get relevant information in the hands of business owners first – business advisory information that gives entrepreneurs that “Aha” moment right when they need it – perhaps John O’Nolan and those of a similar ilk would then change their perception from HA! to LA! (Love Accounting!)?

Moving from a mindset of information or idea protection to idea release will be difficult (perhaps more difficult than identifying the tools available to achieve it) but it is the critical next step in my mind if business advisors are to be able to demonstrate their expertise and relevance in an increasingly noisy market.

Back to my dinner party “what do you do?” question: how about this response?

“I help entrepreneurs turn great ideas into great businesses”

Any takers?

Enhanced by Zemanta

Xero cloud accounting offers Virtual FDs for clients

Image representing Xero as depicted in CrunchBase

Image via CrunchBase

As a partner accountancy firm with Xero, it was good to welcome Hamish Edwards (co-founder of Xero) to our offices today to talk about this online cloud based accounting solution and how it can further benefit our fast growth SME clients in Manchester and across the North West.

Having enjoyed talks with Rod Drury (Xero co-founder and CEO) and Gary Turner (UK MD) it was interesting to hear Hamish’s perspective on the vision for Xero given that he is a Chartered Accountant with his own successful accountancy practice (Openside) in New Zealand.

Hamish focused on the increased value role of accountants as “Virtual FDs” via Xero with the ability to access clients’ accounting records in realtime in order to provide timely, proactive accounting, financial and tax advice rather than just dealing with the traditional year end reporting compliance work – this is a crucial practical and mindset change for accountants that is long overdue.

Hamish also talked about “collaboration” as a cornerstone of Xero and the key benefits such as the clear and easy to follow dashboard, live (and growing range of) bank feeds and fantastically intuitive bank reconciliation process.

I am both optimistic and excited about what the likes of saas based Xero technology might mean in terms of accelerating the flow of knowledge and information between accounting firms and clients (versus the curse of traditional knowledge silos). Put another way, there is a whole raft of valuable knowledge available in accountancy firms that is often never fully leveraged because it is perceived to be either “too early” or “too late” or “not quite right now” to discuss with a client. This timing issue can hurt both clients and accountancy firms and results from a widespread and enduring tendency to build the relationship around year end reporting – due in no small part to the lack of ongoing visibility of the accounting records.

We work hard to meet up with our clients at regular intervals for planning meetings and trading updates but I can see technology like Xero being a great enabler for us to work much more closely in the future. Better for us, better for our clients.

Enhanced by Zemanta

A holistic approach to tax planning

I couldn’t help but sit down this afternoon to reflect on the sheer complexity of our UK tax code and how it is virtually impossible to advise on specific commercial matters in isolation.

This followed a meeting I’d had with an entrepreneur earlier in the day to discuss future strategic plans and tax planning opportunities, initially aimed solely at the family owned business being as it was fast approaching the company’s year end – although the discussion rapidly spread across other diverse areas of business and personal taxation as these meetings so often do…

For example, one moment we were discussing whether a building should be acquired by the owner’s company, pension fund or personally and the next we were discussing the optimum tax mix of salary, dividends and director’s loan account draw-down. In the midst of this we touched upon maximising VAT recovery on the potential property acquisition, the hideously complicated anti-forestalling regulations in relation to pension contributions and making best use of capital allowances on some machinery. Oh, and we also discussed benefits in kind on a car and how this could be mitigated by use of the LLP in the group structure plus some possible R&D tax credit claims available in the future.

Tax typically has a knock-on effect to other taxes so no sooner than you think you have a potential solution to a problem then something else rears its head in the discussions and puts the brakes on – often VAT! – before we switch gears and head off in the direction of an alternative solution.

For me this is the really enjoyable aspect of being a tax advisor (there are some, honest!) – the chance for a bit of mind-gymnastics – although the investment of time in keeping up to speed with legislative changes and latest ideas is on the increase (this is without taking into account the depth and breadth of experience and expertise that we have in our Firm).

This is leading me to experiment with new ways of capturing, interpreting and disseminating tax information and planning ideas whilst maintaining a holistic approach to tax planning for each entrepreneur’s specific facts and circumstances. More to follow…

Enhanced by Zemanta

Putting Client Service 1st

It is tempting to spend your time chasing new clients and new work. It seems that as humans we are wired this way – the thrill is in the chase.

But when I look back over the past 12 months, I am pleased to say that most of my new work has come from existing clients. This makes sense as my business consulting and advisory work usually results from either:

  • clients happily picking up the phone to seek advice for specific business opportunities or issues
  • regular update meetings I arrange to identify opportunities e.g. tax saving or other growth opportunities
  • client referrals.

My key objective as a tax and business advisor is to develop close working relationships with my clients such that they view me as part of their business management team. To serve my clients first. If my clients grow, then I can grow. To have received the humbling feedback that I did from my clients in a recent survey suggests that I am on track in achieving this goal.

The challenge now is to further invest in my client relationships, to find new and more effective ways of working collaboratively (ideally in real-time) to deliver great service and, overall, to continue to build a circle of exciting, ambitious entrepreneurial clients (ideally by referral) here in the north west.

How have you benefited from putting client or customer service first in your marketing?

Earning a Buck in the Digital Age – Delivering Professional Services to Digital & Creative Businesses

Pro.Manchester‘s Creative session on Earning a Buck in the Digital Age proved to be a compelling discussion on how professional service firms can work more effectively with the North West’s flourishing digital and creative businesses.

Held at Halliwells in Manchester, the panel consisted of Simon Wharton, Nick Rhind, Shaun Fensom, Coral Grainger, Philip Hemsted and Steve Kuncewicz (hosted by Nick Jaspen ).

The session focused primarily on the interaction between law firms and digital businesses, however, the discussion was equally applicable to ALL professional advisers (PSFs).

Here were my key take-aways:

  • How do you square £100-£200 hourly rates of PSFs with small digital agencies which have a handful of employees and a limited budget? This crucial question framed most of the debate and was never fully resolved. What did become evident is a clear communication gap in perceived and actual value that professionals can bring to fledgling and more established SME businesses. Nick Rhind conceded that he had learnt a lesson by settling for free business advice either online or from friends in the early days until his business needed bailing out by professionals a couple of years later. An “expensive mistake” given that it is usually more expensive to fire-fight problems after the event than to stop cock-ups happening in the first place. I see this time and time again when I pick up new clients and just wish I had been involved from an earlier stage. There is so much we can do.
  • Speed of delivery of professional services. Digital businesses operate in a fast moving world driven by technological advances – can traditional PSFs keep up with the pace and demand? Coral Grainger raised the point that many business owners’ experience in working with lawyers for the first time may have been in buying a house – the typical drawn-out conveyancing timetable doesn’t bode well for digital businesses who will expect responses quickly – in hours not weeks!
  • Transparency of billing was quite rightly viewed as key. Businesses want to know how much they will be billed upfront rather than working on a time spent billing basis. I am pleased to say that from comments made from the floor, it appeared that most professionals in the room operate on a fixed fee basis agreed in advance. At my firm, we offer a heavily discounted tax and accountancy package for fledgling digital businesses for this reason. However, the fact that this point was raised shows that we are not communicating our working practises clearly enough and the old image of the ‘ticking clock’ still lingers….
  • Introducing open-source methodology to professional services. Digital and technology companies are increasingly breaking larger projects down into smaller manageable tasks that can either be crowd-sourced or taken on by specialist teams. This has proved hugely effective. Can this be applied to professional services whereby template documentation or boiler-plate information can be offered online for free and amended by businesses for their own use (with advice sought where necessary)? There are already examples in the legal market where such practises are emerging – there is still a long way to go.
  • Professionals need to better engage with social media to build relationships online – professionals have long been good at networking at events, however, they increasingly need to bring social media into the networking mix “or die”. Judging by the limp show of hands from the floor when asked who is active in social media online, us professionals have much to learn and do!
  • Risk averse mentality. Most professional are risk averse – “this is how you surely want us” was a comment made from the floor – so how can professionals make better use of social media as a tool to interact whilst avoiding potentially costly errors or law-suits from instantaneous or “off the cuff” remarks online? I believe the key is in the “social” of social media – we don’t have to constantly spout out technical advice and, quite frankly if we did, we would be preaching to a v limited (and bored) bunch of followers!
  • PSFs / businesses should bring SEO analytics into the boardroom – Simon Wharton is bang on with this. Marketing data has never been so readily available and website and online marketing provides the tools to achieve this. This could be a session topic in its own right.

Overall, this discussion opened the floodgates to a huge raft of issues that, when fully explored, should allow us professional advisers who wish to engage to increase collaborative opportunities that we are clearly sadly missing at the moment.

A great start folks, where next?

Serial Entrepreneur Questions the Value of Lawyers

Successful entrepreneur and VC, Luke Johnson challenges the value that lawyers bring to our economy in an article in today’s Financial Times – although his criticism is directed at lawyers, ALL professionals and consultants should take heed.

Johnson refers to a recent company acquisition and the significant six figure fees charged by the 4 law firms involved. Although he concedes that the fees were agreed in advance, one law firm (that was not named) raised its fees considerably at the last minute – £35k to £110k (ouch!).

Luke Johnson goes on to question the value that lawyers bring to our economy, arguing that the increasingly litigious nature of their work is a drain on value and wealth creation. He adds that innovation, enterprise and job creation may be stifled by lawyers – harsh words indeed.

As a professional advisor myself, I think it is important that firstly we listen to valuable feedback from a respected entrepreneur such as Luke Johnson. We then need to question where the value we can bring to business lies and to ensure that we communicate and implement this effectively. Agreeing fees in advance is important to me (‘no surprises’) – the ‘no name’ law firm does not help our cause with actions like those described above.

There is, however, a deeper and more fundamental underlying point. Professionals have long occupied a position of privilege, status and respect.  Our ability to help clients navigate rules, regulations and best practise, whilst helping them identify opportunities adds value to businesses and the wider economy. This remains unchanged in my view. What has changed is a historical perceived ‘license’ to pass on escalating time costs in fees to clients – fees that have no direct relevance to the value delivered to the client. This must change if we are to keep pace with business demands and change.

Professional advisers also need to focus on and more effectively communicate the value that we can bring.  We need to focus on future value creation alongside entrepreneurs and avoid getting bogged-down and indulging in bureaucracy. To be solution (rather than problem) oriented.  The fact that Johnson states that businesses should “avoid lawyers altogether” should send shivers down the spines of all professionals and ensure that we focus on contributing to business success and avoid “ambulance chasing” tactics that can detract from the value we bring.

Tomorrow’s law and accountancy firms will look very different. Thanks Luke for nudging us further forward.