Adding value for money
Business-orientated services are accounting's future. Sarah Perrin chases the forerunners
Business-orientated services are accounting's future. Sarah Perrin chases the forerunners
The headaches caused for PricewaterhouseCoopers by the Maxwell saga and for KPMG by Prince Jefri haven’t done much for the image of the major-league accountancy firms. Meanwhile, the main body of accountants based in smaller practices across the country are getting on with their work.
How are these practitioners perceived by their clients and how well are they evolving to meet their needs?
Evidence suggests the majority of small businesses still trust their external accountant as an adviser. Sue Battle, chief executive of Birmingham Chamber of Commerce, says: ‘Businesses, and in many ways small businesses, regard external accountants as being very much part of their extended business team. When you have a positive relationship between a company and its professional advisers, it will use those professionals for broader business advice.’
There are also signs that accountancy firms are aware of the need to develop themselves so they can offer focused, added-value advice to clients. English ICA member Dr Bob Sweeting from Manchester School of Management at UMIST, says: ‘I am really quite positive about the movement I see among firms at the moment.’
Sweeting believes members in practice recognise they need to make a shift towards business-oriented services, as that is what their clients are calling for. ‘I see a move towards more specialism in smaller practices because that’s where the added value is,’ he says, naming corporate finance and tax as two key areas ripe for such specialisation. Similarly, Peter Johnston, chief executive of the Scots ICA, believes firms in Scotland are recognising the need to develop services that clearly add value. But he says: ‘We have a way to go and our members have to be adaptable. They have to ask questions about ways they can add value.’
The need for accountants to develop added-value services has created a role for organisations such as the new Association of Profit Advisers and Results Accountants’ Systems. The latter runs boot camps for accountants. These residential courses are designed to help accountants in practice turn their firms into highly focused, business-like operations and at the same time deliver value-adding services for which clients will be happy to pay.
The first UK boot camp was held in Brighton in March 1995, and well over 1,000 practitioners have now been through the course.
Gill Burn, UK general manager for Results, believes it is the market that is driving the need for change in accountancy firms, but that accountants still need to get better at listening to their clients. ‘Accountants tend to be too judgemental and think they know what their clients want,’ she says. ‘They don’t realise there are challenges facing their clients that they could help them resolve.’ Boot campers learn that it is good to ask questions about their clients’ needs and gain confidence that they can then deliver a service to meet those needs. They seem to be doing pretty well in creating a brand image. Results has started to receive requests from companies asking for names of accountancy firms who have adopted the boot-camp approach.
The Association of Profit Advisers launched itself nationally in January and now has 25 member firms. A further 50 have expressed interest in joining. ‘We are being selective in the firms we want to attract,’ says Mark Lloydbottom, chief executive of the Association. ‘We seek those with resources who are prepared to commit to the ProfitPlus system.’ This is the trademarked system developed for use by Association members by the 20-partner Kent-based firm Reeves & Neylan. Through tailored IT tools, it can identify profit-boosting strategies and then help implement them.
Firms who join the Association try out ProfitPlus on themselves before taking it to clients. Lloydbottom believes the strength of ProfitPlus and the Association lies in the narrowness of its focus – on increasing profits. ‘Accountants aren’t necessarily blessed with the skills to deliver general business consulting,’ he says. ‘We are focusing on this niche area and are finding it very successful. If you focus on profit, it is amazing how you see things differently.’ Lloydbottom applied the principles to his own business, which, after nine years, had built up reserves of #110,000.
Last year, his annual profits alone were #145,000.
The Association is trying to create a brand for its members. ‘We have a public profile,’ says Lloydbottom. ‘We are an Association. We are able to stand alongside our members and help them in the delivery of their services.’ Reeves & Neylan now trains other firms and companies on the ProfitPlus system. Partner designate John Selwood gives some of the training courses. ‘Everyone in the profession recognises the need to change,’ he says. ‘We are bombarded all the time about the need to be value-added professionals. The Association fits in nicely with this, as it gives people a tool with which to move forward.’ Adopting a profit-focused approach also encourages changes in the way firms do business themselves, for example, by changing the way they bill clients. ‘Billing by the hour isn’t relevant any more,’ says Selwood. ‘We tend to bill on a fixed-price basis. ProfitPlus is something where you can charge for the value.’
Medium-sized firm Hereward Philips, now merging with Smith & Williamson, has joined the Association of Profit Advisers. Partner Nick Hamilton explains what attracted him: ‘I suddenly saw an identifiable product which we could put to clients where we focus our advice on something they really want – extra profits. A lot of accountants give good advice, but it can be unfocused.’ The key tool, ProfitPlus, gives identifiable targets and allows the accountant to guide the client through the profit-improvement process.’ Clients see true added value,’ says Hamilton. ‘We see ProfitPlus as being a major addition to our advisory service.’
Firms outside the Association are also increasingly finding new client services. Diane Eatough, partner in six-partner firm Porter Matthews & Marsden, believes her practice is ‘ahead of the game’. She says: ‘We do the compliance work, but there is so much more to do. We are looking to be more astute business and financial advisers and to be proactive.’
The firm continues to enhance its services. It now employs cost and management accountants and has set up an outsourcing department.
A marketing expert has also joined the team and the firm runs marketing seminars. It has also expanded its IT capabilities and developed a software package – available for purchase on disk – that can create five-year summary accounts to help clients who find standard accounts difficult to understand.
The firm is open to new ideas. Several partners attended boot camps a few years ago, and the firm now participates in a new focus group involving like-minded accountancy firms across the country. Members share ideas on how to develop their practices. For example, Eatough’s firm recently changed its billing method following a focus group session. Historically, the firm billed clients annually, but now it bills in any month where it delivers services worth #100 or more. ‘We are also finding that more clients are happy to pay by standing order,’ says Eatough. ‘We are trying to spread the word about that.’
Clearly some firms have taken warnings about the shrinking pool of compliance work seriously, finding fulfilment in discovering new ways of doing business.
But Eatough thinks there are others who still need to wake up. ‘There are some accountants who aren’t changing their ways,’ she says. ‘They will be in for a shock if, for example, the audit threshold is lifted to #1m. These people won’t be skilled in doing other things.’
The real issues affecting smaller practices around the country are some way removed from the stories behind the Jefri and Maxwell headlines. The firms likely to succeed in the next millennium are those who successfully brand themselves as professionals who offer valuable services, and then deliver them.
Sarah Perrin is a freelance journalist
HOW ACCOUNTANCY BODIES ARE PROMOTING THEIR MEMBERS AS BUSINESS ADVISERS
For the last few months, the English ICA has been running an advertorial campaign designed to encourage the public to see chartered accountants as business advisers. Articles, which include case studies showing how members have helped local businesses, have been appearing in local papers around the country. The campaign, organised around the 22 English ICA district societies, seeks to place articles in the more heavyweight regional dailies, or local weekly papers.
ACCA is also actively plugging itself round the country through press releases targeted at regional areas. A recurring theme is to caution local businesses against using ‘cowboy’ advisers. In January, for example, ACCA issued a press release warning businesses to be careful of unqualified advisers giving guidance on the euro. It suggested they should talk instead to qualified advisers such as chartered certified accountants.
The Scots ICA is running an ongoing campaign under the heading ‘CA – The Mark of Quality’ supported by leaflets and fliers for use by CA firms.
The institute believes its members have a strong image, helped by the fact that in Scotland, it has exclusive rights to the ‘CA’ designation.
‘In Scotland, most people know what a CA is,’ says chief executive Peter Johnston.
‘We think it’s a very strong brand. That’s what we are trying to sell: the mark of quality. All the surveys we do suggest CAs are held in high regard for qualities such as integrity and intelligence.’ Johnston admits, however, that the branding is not yet perfect. ‘The CA is generally seen as an accountant, full stop,’ says Johnston. ‘But the CA should be a business adviser.’