Practice of the Future Part 2: Changing accountancy services – How to thrive and survive

by QuickBooks UK

9 min read

 

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This blog post is adapted from a ‘Practice of the Future’ whitepaper, part of a series written by John Stokdyk, editor of AccountingWEB.co.uk, and sponsored by Intuit.

Prefer to print out and read the article? Download the full whitepaper now

In the first of our three-part series on creating the practice of the future, we looked at how deregulation and government initiatives are commodifying accountancy services, as well as at the technological and social changes which are encouraging more fluid behaviour among both clients and accountants. In part two, we’ll discuss how you can adapt and make these changes work for your practice.

With so many market forces coming to a head, accountants need to put aside their traditional reticence and be very clear about what sets them apart in the marketplace, and how they work with colleagues to deliver their services. As the formal bonds with clients and staff members become looser, you need to work harder to retain their loyalty by sustaining productive and mutually satisfying relationships.

The antidote to commodification is differentiation. To do this, you must understand and target your ideal clients, you must improve your communication with them and your staff, and crucially, you must collect their feedback and use it to improve your processes and service quality.

Avoid the slow fade-out

The technology industry can teach us many business lessons and one of the most important is the basic survival formula: “Get big, get niche or get out”.

David Maister puts the slogan in slightly more theoretical terms in his book Strategy and the Fat Smoker, where he categorises firms as either transactional or relational. Transactional firms concentrate on solving technical problems for their clients, while relational firms put clients first and problems second.

There is merit in both approaches. A transactional firm will flourish by serving an ever -increasing number of clients as efficiently as possible, and aspire to “get big”. The client-driven relational firm will be more likely to “get niche” as it defines its offerings around specific client groups – and will perhaps extend its reach and capabilities through partnerships and relationships with other niche service providers and transactional specialists. Additionally a relational firm will design the work around the needs of the client – and will tend to use technology to support flexibility and client choice.

The third option – getting out – is what lies ahead for those who are unable to adapt. The market pressures we discussed in the first paper in this series mean that firms aiming to maintain a steady course in the years ahead face a slow decline in work volume, client numbers and profitability.

The art of differentiation – put the client first

While smaller firms can certainly get bigger, the profession’s highly consolidated structure will block challenges to bigger firms on a regional or national level. For most accountants “get niche” will be the most relevant strategic advice.

Becoming a more relationship-focused, niche accountant may be asking a lot. You don’t have to buy into the Maister philosophy completely, but you should be able to apply some of his ideas to move your firm in that direction. The first step to doing this is to stop thinking about your accounting expertise as a differentiating factor. There are very likely to be other accountants who are just as capable as you. But what can you do with your skills to make the most difference to potential clients? Do you have experience dealing with particular industries or tax arrangements, and could you market what you have achieved with those clients to build up specialist areas in your practice? And are there other needs you could be catering for among those client groups?

What will make your firm stand out from others are the clients you serve, and the way you serve them. Even if you see yourself as a general practitioner, your niche could be geographical and draw from an understanding of the local economy and the challenges businesses in your area face, and adding value by networking and sharing expertise and opportunities among them.

Identify and develop ideal clients

A common characteristic of firms shortlisted for AccountingWEB’s Practice Excellence Awards is that they have a clear idea who their ideal clients are. Client-focused firms use all available data to profile clients and prospects. Benchmarking your clients, researching their markets and collecting and acting on their feedback should be a fundamental part of your client care processes.

As you gather more data on clients and prospects, customer management relationship software (CRM), or practice management software incorporating contact management and tracking, can help automate many of these tasks. The third instalment of the Practice of the Future series will discuss the disciplines of CRM in more detail.

More than tax and accounts: New practice services and styles

With so much accounting, auditing and tax work prescribed by laws and regulations, the core workload is uniform and, as we have seen, subject to a number of competitive pressures. Firms that decide not to become experts in low-margin compliance work will need to put more emphasis on the “trusted advisor” approach advocated by David Maister for relational-style accountancy firms.

Various avenues of business and wealth advice are open to you, all of which are likely to demand a new mindset. Don’t just seek to deliver the services set out in your engagement letter with a client: you need to build a relationship with them based on trust. As Accountants’ Bootcamp founder Paul Dunn puts it: “The more things you do to increase that trust, the client will more likely to take up additional services.”

Having taken the trouble to understand your ideal clients, anticipate the problems they are likely to encounter and develop new services to neutralise them before they get serious. One of the best ways is to talk to them on a regular basis with face-to-face meetings and phone conversations. And even if you can’t do this often as you would like, you can still share ideas with them via email and social media.

Modern communications technology increases the ways clients can reach you. To keep and develop their trust you need to be available and ready to respond quickly to their queries. Client-focused firms accept this as inevitable and make it standard practice to give mobile phone numbers to clients. If you don’t already do this, you may need to adjust your work/life balance to keep up.

Solve clients’ problems and remove their pain

Cloud accounting has swept through the profession during the past few years, and most firms now recognise that clients like the simplicity and convenience of these systems. Accountants, meanwhile, can take advantage of more efficient data transfers and year-end processes.

But so far, few firms are making full use of online accounting’s ability to bind them more closely to their business clients. Having real-time online access to client books gives the advisor more immediate insights into clients’ problems. Bookkeeping mistakes can be caught and corrected earlier, and conversations around the accounts can open the door to a range of service possibilities that fit the forward-looking, trusted advisor model.

For example, a monthly management summary could give the client more clarity on how their business is performing, but also lead on to benchmarking assessments and strategic reviews that help the business identify their commercial drivers and key performance indicators.

Manage clients and communicate the value they get

The practice of the future will need to have very good structures and processes in place to cope with all this flexibility and instant responsiveness.

In a competitive market, clients will respond to straightforward pricing strategies and it can help to have pre-defined packages that set their expectations and address what will be expected of them. Use new initiatives and proposals to educate clients not just about your systems and standards, but also to emphasise the benefits they will enjoy from using them.

Managing the firm

With a wider variety of services on offer to clients, with some provided through sub-contract arrangements and joint ventures, accountancy work will be more modular in the future.

To remain effective, partners and senior managers will have to turn away from command and control habits of traditional partnership hierarchies and employ more emotional intelligence to get the best results from loosely connected project teams. Additionally, staff will need to communicate in new ways, since they may not all be in the office at the same time. Encourage web meetings and conference calls, and an open door policy so they can get the guidance they need when they need it.

Manage by results

As well as being more comfortable with entrusting confidential information to the internet, digital natives are less subservient and will respond better to collaborative leadership models that give them greater autonomy. By setting high quality service at the centre of your strategy, you should measure how your people meet this objective.

Rather than requiring their presence in a particular place to carry out their assignments during specified hours, tell them what needs to be completed when. This may sound like an unacceptable loss of control for some traditionalists, but practices of the future will commonly delegate tasks with automated workflow tools, and monitor their completion using similar systems.

Practice Excellence Awards nominee Greenstones has been running a “results-only work environment” since 2010. The firm summarises its philosophy as: “We don’t care where you do it, or when you do it, as long as the work gets done (to the right standard and by the right date).” Team members come and go as they please, and work wherever they like, but are 100% focused on results. Crucially, they make themselves available whenever clients want to see them. This self-managed approach encourages more efficient ways of working that benefit both the firm and employees who, as long as they achieve their results, are free to work wherever and whenever they like.

CPD and knowledge management

To have that trust in your team, you are going to have to ensure that the people you work with have the same commitment to quality that you do, and follow similar methods so other people in the team can review or pick up a project from someone else and know what’s going on.

Getting recruitment and training right is vital to ensure this happens in your firm, but you also need to effectively share that expertise and knowledge among your colleagues, wherever they are.

The technologies that can support collaborative teams have evolved rapidly. Information you need to run and develop your firm could be stored in practice systems, online reference sources, mobile/email threads and even social media. One of the biggest challenges facing firms in the years to come is bringing all this data together in a coherent whole.

If you take nothing else from this Practice of the Future series, start investigating how you can improve this aspect of your firm. Talk to other practitioners who have made advances in this area; along the way you may uncover insights that will stimulate other improvements and enhancements.

We’ll look in more detail at the how you can meet these challenges in the third and final part of the Practice of the Future series: Tried-and-tested tools and techniques.

Download the full whitepaper now

The Intuit ProCloud Partner Programme offers a package of benefits and support to help accounting professionals looking to work with their clients online. The ProCloud Partner Programme benefits are free to accountants and bookkeepers with at least one QuickBooks Online active client*. Join now.

* Terms and conditions apply. Subject to ProCloud partner agreement.
 
[Image courtesy of artur84/ FreeDigitalPhotos.net]

 

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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