9 critical areas practices must be considering

People

Managing performance, retaining staff and getting ‘the mix’ right

• Firms’ problems usually start with the partners. They must be committed to the firm’s direction of travel and allow staff to manage the compliance services while they provide higher value consultancy to clients. Partners must, crucially, avoid blocking access to clients from the rest of the practice.
• A practice must get the right mix of people – those who are technically proficient and those with more entrepreneurial and advisory skills – then work them together. Clarity in roles makes it easier to gauge and monitor performance.

Improving social networking

• Accounting practices have been slow on the uptake when it comes to marketing (exacerbated by being restricted from advertising until the 1980s). This has carried over into the use of social media. More needs to be done to promote the firm and its people via social networks. Clients are generally well-versed in using social media to promote their own businesses and will expect service providers to do the same.

Technology and client services

• Practices have been using technology to manage service provision for decades, but often for narrow purposes. However, new systems allows practices to interlink client information. This gives firms a great opportunity to both streamline processes and use up-to-date client data for the provision of broader and more valuable services.
• Can firms grasp the nettle and remove manual processes, re-train team members and rethink their hiring strategy? These are vital questions, which will also form part of post-lockdown issues around working from home and office strategy.

Clients

Manage out ‘Z-listers’

• Firms are loathe to rid themselves of low-value clients, but this is usually a symptom of having little strategy in terms of who they are looking to serve and what they will be offered. In other words, practices need to understand their client base and what they want to offer. The group that is difficult to work with, provide poor fee recovery and are generally of low value should be ditched. Clients need to fit your direction of travel.

Taking a joined-up and client-centric approach

• Unfortunately, few practices take a client-first approach. Accountants need to speak to them.
• Care must be taken in creating both a cultural and organisational structure that supports the provision of valuable services to clients. Does the practice want a technically-oriented partner providing compliance services to help a client develop their business? Probably not. Ultimately practices want clients wedded to the organisation, and not a single person. A firm should be looked upon by clients as the trusted adviser.

Differentiation and ‘competitive edge’

• Accounting practices are built around core compliance offerings. They do the same work in very similar ways to each other. For potential clients it means one thing: who can provide a reasonable service the cheapest? Technical, compliance, offerings need to be reliable, professional and undertaken efficiently by the practice. However, differentiation comes down to putting across personality, a business growth and advisory offering, and in some cases will be about finding niche sectors or services.

Practice management

Management, leadership and internal comms

• Managing and leading has to start at the top of the practice and be carried through by the partners, but this also applies to any non-partner managers. Agreement, commonality, of direction must be agreed in consensus and run with by all.
• Firms face a multitude of challenges, including macro issues including Brexit and the ongoing impact of the pandemic, but which could be opportunities with the right approach. Certain sectors are, for example, in flux due to the impact on trade by the coronavirus. So, what is the firm’s battle plan to help them create an alternative plan if a sector fails to improve? Partners are loathe to change, as change often means a short- to medium-term impact on profits. But if change is required, who will drive it? Often, maintaining the status quo can mean being left behind.
• There has been a lot of communication going out from firms to clients in recent months, but a focus on delivering messages to all team members – and listening back – must also be a priority. They are at the coalface and so understand clients’ issues – they also undertake the bulk of any change in processes a firm goes through.

Financial management: chargeability and recovery

• Client chargeability is pivotal to a practices’ operations but it’s often badly managed. Partners often bill time for work that could be undertaken by more junior staff – this looks good on their ‘books’, but these bills are usually too costly and are resisted by clients. Appropriate staff must undertake the most appropriate work – this should free up partners from menial tasks to provide more value – which should increase recoverability.
• Non-chargeable time is looked upon frostily by many practices, but there’s a strong argument that it is time setting up fees for ‘tomorrow’, rather than ‘today’. In other words, an investment into future income. It’s certainly been a hot topic during the lockdown and subsequent support needed by most clients – some work has been billed, but much hasn’t – instead building a relationship and goodwill for the future.

Practices should take a more strategic approach to mergers and acquisitions

• Not enough time is put into strategically crafting an approach to either merging or acquiring other practices. Ask the question: what value are we looking to create? Even if the practice is looking to bulk up by buying more turnover, due diligence isn’t to be skirted over. Other questions must be asked: what is the integration plan? Does the move complement what the firm undertakes, or is it ‘filling a gap’? And has any market analysis been undertaken?