How are accountancy practices changing?
The accountancy profession is taking a step out of its collective comfort zone, embracing new technology and delivering new services that add value to clients' businesses. Nicola Sinclair finds out more.
"There was a time when clients gathered together crumpled receipts and rushed them to their accountant, who would duly complete their tax return in Excel and bid them goodbye until next year. Those days are gone."
So says Kate Baker, director at ECOVIS Wingrave Yeats, and she speaks from experience. In the eight years she has worked with the Business Advisory Team at the London-based practice, she has seen traditional business models stop short, caught in the blinding headlights of technological innovation and a ruthless post-recession market.
"For us, the first bite of the credit crunch changed everything," she explains. "The referrals tap was abruptly turned off."
Changing client relationships
Added to that, the firm found that the Big Four were actually undercutting them on price. In the face of the financial crisis, clients tightened their belts and looked for efficiencies. For many, technology enabled a "do-it-yourself" solution to the more perfunctory accountancy tasks.
It's a scenario that's familiar not only to mid-sized firms such as ECOVIS Wingrave Yeats, but also to small practices whose bread-and-butter work was based on long-standing client relationships.
"We're operating in a different market to the larger firms," says Karen Scholes, who runs two-partner firm AJB Scholes in Orkney.
"Much of our work comes from word-of-mouth recommendations, and we have a loyal client base built on solid relationships. Nonetheless, the nature of that relationship is changing. Many clients are doing tasks such as annual accounts and tax returns themselves, taking advantage of online filing and cloud accounting. Some traditional practices have been slow to embrace those changes, but it's essential that we stay ahead of the game."
A new business advisory role
In her role as chair of the ICAS Members in Practice Advisory Board, Karen has been instrumental in leading the charge towards a new business model.
She says: "The focus has now shifted away from compliance toward business advisory work. We want to become our clients' first point of contact when they have business concerns. It's not about moving away from our specialist expertise, but about embracing our full skill set beyond our professional qualifications, harnessing the business acumen and softer skills we've developed over the years and using them to add value to our client proposition.
"If we can work in a trusted capacity from the business start-up stage right through funding, stock control, expansion and even into retirement, we're rewarded with a loyal and productive client base. The task now is to market that service to our clients."
She points to the ICAS Trusted in Business campaign as a useful vehicle for promoting the profession. The campaign features case studies from business leaders testifying to the value of having a trusted chartered accountant on hand.
Adapting to different clients
Kate Baker agrees: "Our work now is much more value-led, and we're proactive in identifying what our clients need. Most of the time that means sound business advice in a language they can understand."
Indeed, necessity has proved the mother of invention at ECOVIS Wingrave Yeats. Its post-recession shakeup involved a fresh, innovative approach both to managing existing clients and attracting new ones. Client care teams mean a systematic categorisation and a regular review of the client base.
"It shows us where we need to invest more time in supporting clients in need of extra advice or services, or else where we feel the relationship with our client needs strengthening," says Kate.
"There is always such a temptation to spend time on the new clients we have just won rather than nurturing the relationships that we have already built. The challenge is to be in the right place at the right time, all the time! That means adapting to different clients and ensuring we're pre-empting their needs. For instance, clients should never be coming to us because someone else told them about share save schemes or R&D claims. We should be proactively telling them about these services and the benefits they can bring."
Say the right things, see the right people
It's a theme that business consultant Chris Hughes of The Hughes Company will adopt in his presentation at the ICAS Practitioners' Conference. He says: "I tell businesses: 'help clients see how you can help them'. It's not about schmoozing people over a round of golf or hitting them with sales patter, but about having genuine and productive conversations."
In Chris' experience, most practices don't invest enough time in business development. Many have a steady stream of work coming in from existing clients but fail to follow up on potential new leads. "It's not enough to have good contacts if you're not taking the next steps to move the relationship along."
While there's no one-size-fits-all answer to what that next step might be, he has found some strategies pay off time and time again.
He says: "The trick is to say the right things, and see the right people – that's the commercial radar. The firms I see get big bang for their buck by saying the right things to the clients they have (highlighting areas where they can add value) and positioning themselves as thought leaders by staging professional seminars.
"It's also a good idea to think more broadly about what constitutes a 'lead' – for example, nurturing relationships with people in other professions, such as solicitors, who might send clients your way. Most of all, never get complacent – you might be busy now, but you should always keep an eye to how busy you want to be in future."
Steve Checkley, director with tax software provider TaxCalc, says using technology to handle the day to day work of a typical accountancy practice can free up valuable time.
He explains: "As the software market has developed, so too has its ability to make the modern firm more efficient. A product like TaxCalc chains together processes to avoid the rekeying of data, which would otherwise take time and be prone to error. When a client is set up on the system, their name, address and other particulars are automatically shared with the accounts and tax return. Similarly, the accounts data feeds directly into the tax return and so on. When one source of data is updated, all dependents of that data update too."
He adds that software is also able to monitor the assignment of work and throughput of a firm, ensuring that the practitioner knows who is doing what and that work is completed on time. TaxCalc even includes a tax dashboard, showing work to be started, what's in progress and what's been completed.
"Software can make the running of a practice vastly more visible," Steve says.
Software products like TaxCalc aim to assist the practitioner wherever it can. This can be by providing wizards and worksheets to replace otherwise manual calculations, running validation procedures over data to highlight issues before presentation to the client or HMRC or by creating client-ready documentation, such as computations, letters and so on. The list goes on and on.
As Kate Baker puts it: "Technology has disrupted our professional landscape, much more so than the recession that we have just been through. We have invested a lot of time and resource into developing EWYonline, a cloud-based, document recognition accounting system for clients. Built around the bookkeeping software, Twinfield, the add-on functions mean we can create a solution that exactly fits our client's needs. For us not to harness that potential would be crazy."
Innovation is an over-used phrase, yet some of the most innovative practice in accountancy today stems from a back-to-basics approach that focuses on relationships and communication. As Kate Baker says: "It's about how we sell what we know."