Going international to aid clients

THERE WAS A TIME when being a “multinational” meant big business. Not any more. The internet and cheap air travel have made the world a smaller place and, these days, many SMEs have built, or are preparing to build, an international presence.

The HSBC Global Small Business Confidence Monitor published earlier this year revealed that 20% of SMEs in the UK are currently trading internationally and 40% of SMEs worldwide will be operating internationally by 2013. Also, a survey by the Federation of Small Businesses revealed that 23% of members currently export products and services.

Accountancy firms that fail to see the implications for their client bases will struggle to provide the value-added services that their clients need in future. Client expectations have risen: they now expect their advisors to have developed some international contacts and understanding of overseas issues.

Some firms that are members of international networks and alliances might console themselves with the thought that they already have international capability. Many mid-tier networks are flourishing, as can be seen from the league tables showing ever-rising geographical reach, membership and fee income.

Yet there is a danger from relying too heavily on such statistics. Clients don’t care whether their accountant has links to 50 or 100 countries. All they care about is how their accountant can help them understand the issues and contact the right people in the territories where they want to expand their business. If your “international capability” is little more than a country-by-country directory of member firms, you might as well face the fact that you do not have an international capability.

The reason is one that accountants understand very well: people buy people. We know the importance of personal chemistry and reputation. We know intuitively that the value of our personal network lies in the quality of our contacts, not the quantity. The same applies on an international scale.

It is not just about having contacts in other countries but having the right contacts. Pass your client on to an overseas advisor who is not up to the job and you risk sending them down blind alleys that result in delays and create frustration that will ultimately damage your relationship.

Building a strong international capability requires understanding the territorial issues and having good relationships with the right people. This comes from working closely to meet deadlines on joint projects; it comes from collaborating on multi-jurisdictional issues; and it comes from sharing your knowledge and experience.

The more you put in, the more you get out. For example, as a member of HLB International, we have identified a group of partners, directors and managers who build and enhance our international relationships by attending workshops and speaking at conferences. We invest more deeply in overseas relationships through other means, though. We exchange staff through secondments with other firms. The individuals broaden their skill set and improve their language skills. They also gain an understanding of the foreign business and regulatory environment, which can only be achieved through practical experience. Both firms benefit because the shared experience builds trust at a personal level.

We also invest by working together to educate and share knowledge. In conjunction with other HLB member firms, with banks and with legal contacts, we produce joint papers, articles and seminars. This type of activity is a considerable investment but it pays dividends for anyone willing to make the effort. We believe it is a necessary investment.

The accountancy profession is undergoing fundamental change, much of it driven by international pressures. As traditional compliance and assurance services are commoditised by low-cost offshore providers, accountants will be forced to find new ways to differentiate and add value.

“Value lies not in the knowledge itself but in the application of that knowledge.”

As we have built our international capability, we have gained an understanding of what clients want and where we can add value. First, they need help understanding the issues. You cannot just apply UK rules or expect an overseas territory to have similar legislation; no two territories are the same and accountants are rightly being expected to appreciate the differences between them and to build in-country knowledge to further support their clients.

Value lies not in the knowledge itself but in the application of that knowledge. We help companies to understand the interaction between jurisdictions. Each territory does not stand alone. They are related and the value added for clients is our interpretation of the advice from one territory, our explanation of what it means in the other, and our guidance on actions the client should take.

International experience also gives you an understanding of the boundaries of what you can and cannot advise on, and enables you to identify the pitfalls before clients fall into them. Such practical advice is of immense value to clients, as it can be difficult and expensive to make changes once they start down the wrong path.

An experienced international accountant can save their client considerable time and money. The international aspect adds an extra dimension to the advice you give, while having experience means you are likely to ask the right questions and make clients aware of what they need to know at the right time.

Deadlines on international work can be very tight and doing things in the wrong order, such as omitting to get visas for employees, can result in serious delays and possible loss of work. Every transaction has its own critical path and having the practical experience to know what lies on it, and what does not, is of great value.

International transactions can involve many parties and multiple deadlines, so a UK-based company will expect its accountant to interpret and coordinate all overseas advice. Such projects can demand a great deal of time: the deeper the relationship with overseas advisors, the more seamless and better the delivery for clients.

Globalisation might have brought overseas expansion within the grasp of SMEs but it is still a significant investment in terms of time and money. Accountants need to realise the full significance of this fact. As companies evolve, their needs and expectations increase. Expansion into new territories pushes clients well outside their comfort zone. They really value advisors that can take some of the pressure off their shoulders and can provide commercial and practical advice throughout the transition.

Julie Adams is managing partner at Menzies LLP.

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