BIGGER doesn’t necessarily equate to better. Such is the ethos at independent accountancy firm Sobell Rhodes.
Rather than adding a multitude of clients in search of growth, the firm looks to generate a higher level of fees per client by finding areas where they can provide extra value and then up-sell the relevant service.
“Our process is straightforward,” explains managing partner and founder Andrew Rhodes. “We try to elevate the client base from compliance-type client business to providing consulting and broader services. Our client base has got to get better and better, where they take on every service.”
Those services take in the whole gamut of traditional accounting products one would expect from a firm like Sobell Rhodes – from the most basic book-keeping and payroll and HR services, to providing support in raising finance, developing growth and profit improvement strategies.
Even at that most basic level – payroll for instance – clients can select from a gold, silver and bronze service at a fixed price. While that gives clients clarity about what they will receive at what price, the firm also invest a lot of time in gauging client satisfaction.
The firm benchmarks its clients’ results against their respective industries, benchmarks the performance of its partners against their review engagements and is rigorous in canvassing its clients for feedback about its service; something it has linked to its corporate social responsibility aims – which at its most colourful included providing six goats for poor families in Kenya.
“We write to all our clients and send them a questionnaire. If they send in a completed form, they can nominate a charity and we make a donation,” Rhodes says.
Turning cost into an investment
It is no coincidence that 98% of new clients come from personal recommendations and referrals. Indeed, Sobell Rhodes was picked out for its global channel work and the overall satisfaction of its clients when it was named National Independent Firm of the Year at the 2012 British Accountancy Awards.
While Sobell Rhodes is a dedicated regional firm – it has offices in Pinner, Watford and London’s West End – it is also a founding member of INAA, an international network of firms with 125 offices worldwide.
The firm is hardly unique in being part of an international association, but having founded the organisation “for defensive reasons” 20 years ago, it has since become “more offensive in nature”.
“Our philosophy was to join an organisation where we could be influential at an early stage,” says Rhodes. “By being at the core of a hub of international firms we benefit more, more people are known to us.”
That philosophy of investing to gain influence, and essentially turn capex into a profit centre, also extends to the firm’s approach to training. Sobell Rhodes’ Continuing Professional Development training group, set up 12 years ago, now trains more than 40 firms with more than 900 delegates attending its courses in a single year.
In its latest guise the training group includes four tax updates a year, along with audit and accounts training and briefings around the time of the Budget.
“Training is an intensive area, we all have to do it. It was always the idea to turn it into a profit centre rather than a cost,” Rhodes explains.
Despite its success the firm is not without its challenges. Like many of its size and scope, audit and assurance remains a key service line. Alongside its peers, Sobell Rhodes is preparing for the prospect that more than 99% of UK businesses will soon no longer be required to have an audit.
If, as expected, the proportion of audit-exempt companies is increased this year, many firms risk losing a significant chunk of audit business, raising the prospect that they would be better-served ditching the service line altogether.
As part of changes to the EU’s Accounting Directive, voted through European Parliament earlier this year, member states have the option to significantly increase the size of businesses that will no longer require audited financial statements for those with a turnover below €12m (£10.3m) and a balance sheet below €6m.
Nevertheless, there are cheaper alternatives to offering a full audit. Audit exemption has created a market for services that add credibility to the financial statements of audit exempt companies, including voluntary audit, a compilation engagement and an assurance review engagement.
And Sobell Rhodes has led the way in providing an assurance review engagement for clients that don’t want or need a full audit service.
“An assurance review increases credibility of accounts…improves business confidence…and helps practices that feel under threat from unqualified accountants,” says Michelle Fisher, partner at Sobell Rhodes.
There is a mixed view on the value of limited assurance. For every advocate, there are those who think it is a waste of time. Indeed, the service was originally launched by the ICAEW in 2006 “with a whimper rather than a bang”. But Sobell Rhodes has made its name and achieved some notable successes by investing early in its international network and CPD training group. There is no reason why its efforts in adopting assurance reviews should be any different.
Andrew Rhodes’ CV
1973-1976 – Trainee, Slater Chapman & Cooke
1977 – 1995 – Partner, Bellman Messik & Co
1995 – Present – Managing partner, Sobell Rhodes
Sobell Rhodes in numbers
Offices – Three (Pinner, Watford, West End)
Partners – Six
Staff – 40
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Fraser Nicol joins the firm from EY, bringing experience in cyber security, data analytics and business technology
Rowan Williams will be responsible for growing the firm’s presence in the Gatwick Diamond and across the south east
Kevin Humphreys joins the insolvency and restructuring firm from the National Crime Agency (NCA) Economic Crime Command
Ann Pomfret joins the Manchester office from BDO