Our experts discuss what firms can do to help clients improve services and access funding from reluctant lenders
Have accountants reviewed their service offerings since the credit crunch
and recession began?
Ian Sumbler, partner, Morris Owen
The biggest issue facing the profession is to step away from its traditional
base of compliance services.
Providing figures back to the client that are six months out of date and
after the last year end is meaningless in the current economy with the speed at
which the situation has developed and is continuing to escalate.
Trying to get more proactive and less reactive is a real challenge.
It may not actually be about management accounts. It may be the KPIs that are
significant to the client’s business. They want meaningful information that will
help them better run their business. A lot will not really understand what those
statutory or management accounts are actually telling them about their business.
Richard Brooks, CEO, FD Solutions
Accountants have been brought up doing statutory accounts, annual accounts
and tax returns. There is an internal (management) requirement now to provide
more timely information. Clients need to have meaningful management accountants.
That’s an internal requirement. There is also external pressure from lenders to
get information of a decent quality. Because banks are under more scrutiny,
where before they would tick the box to say ‘we have received them’, they are
now looking at those management accounts and saying: ‘What are the accounts
There are ways in which accountants can help in terms of the timeliness and
quality of information. There are some very simple things that can be done.
Are clients willing to pay for advice that goes beyond simple
Richard Brooks: There’s a big psychological issue for SMEs
and lenders. They are used to paying a fee for compliance. But if that same
accountant comes along and says ‘I can tell you something meaningful about the
business but it’s going to cost you x pounds’, there is disbelief in the mind of
the owner manager.
In order for the accountants to get over that hurdle with the SME owner they
are going to have to demonstrate they can do more than audit and tax because
they haven’t demonstrated it before.
It’s also important how often you have contact with the client. The pressures
of just doing the compliance activity creates pressures that makes this
difficult. It takes time to build that up.
Ian Sumbler: What we’re looking at is agreeing a fee upfront
and then the onus is on you to deliver the product that someone has agreed to
buy. I hate to use the word product but that’s what it is in our industry.
The key is recognising the clients you can do that with and that will
recognise the value in it, as opposed to those (the vast majority) that see you
as compliance driven. The hurdle to get over is the mindset of the accountant.
Given that credit markets for SMEs are yet to fully reopen, are
accountants doing enough to help clients access finance?
Richard Brooks: I think they can do more. From an SME point
of view, accountants should be ensuring that the business is getting the right
sort of information in order to run the business. If they have got a facility
with a bank they will be looking at the information more closely. To me that
should already exist in the business’s reporting as a standard. And that’s not
always the case.
We have found it harder for banks to make decisions. Having said that we have
done financings. If you approach them with the right information in the right
way there are still deals to be done.
Ian Sumbler: Banks will still respond to the information
presented almost on the reputation of the person or organisation that is
supporting it. It’s the external verification of the information. They will have
ratings of the professional firms involved and will nod through some and
What role does technology have to play?
Ian Sumbler: The profession has been quite slow in
encouraging investment in technology beyond ‘you can put in an accountancy
package’. The sort of support should be available for any SME is that the
accountant should be able to go online and look at the data there and then.
No more should we be having to drive across the country to sit in front a set
of records for half an hour. It is far more efficient to look at the same data
over the internet, talk over the phone and see what each other is doing.
For the accountants they should be able to act for significantly more clients
in a proactive way. This should release a lot more of the partner’s time to
spend with the business.
Can accountants help persuade credit insurers to release ratings for
Richard Brooks: That is going to be a harder nut to crack.
The question for SMEs is: ‘How do I improve my credit rating with the credit
insurers?’ That should be where accountants can help. They need to get accurate,
complete and timely information to the right parties.
Chaired by Damian Wild
This web seminar was sponsored by Validis, providers of the award-winning
accounts review solution, which is working with Accountancy Age on a new product
for accountants in practice. To find out how you can use Validis Amtino to slash
the time required to validate accounts and prepare meaningful monthly management
accounts and financial analysis for clients