A challenge for accounting firms everywhere!

A few weeks ago I was presenting to a group of 30+ partners from accounting firms from regional NSW & VIC. The group was a cross-section of age, gender, experience and market outlook. However, the common thread among the partners is an overwhelming concern about “selling themselves” This of course is nothing new. Be it accounting firms at the big end of town in the cities or at the small end of town in urban suburbs or in regional centres in Australia & beyond most accountants (and indeed professionals in law, engineering, management consulting and the like) seem to not like to sell.

With the above in mind, I gave an interesting challenge to one of the accounting firms who attended the presentation.

I asked the managing partner of this particular firm the following questions:

How many staff (professional & support)  are in your firm? The answer: around 40.

Do the staff know people in the community? Answer: Yes

Would your staff know at least 3 people who either own or are employed by businesses in the local area? Answer: Yes

So this managing partner has given all his staff the challenge over a period of two weeks to do the following:

Name of the person the staff member knows

The name of the business/organisation they own or are employed with

The accounting firm’s connection to the person (i.e. family member, friend, went to school/uni with, sports service club etc …)

So within 2 weeks the managing partner will have 120 names of people that he didn’t know before. Now of course there will be overlap and some doubling up of names across the firm. So let’s assume the degree of duplication is 50%. That means there are potentially 60 names of people in businesses that the firm “knows” and has some connection with. Now you’re probably thinking “so what – some of that list will already be clients of the firm since the firm in question is the biggest one in town” Fair enough. So let’s slice off another 50% of the names so now we are left with 30 names that represent “green fields.”

Two important things come out of this challenge.

1. Potential clients that are “known” to the firm.

2. The firm having a much better understanding of their connections in & around the community. For a regional firm to have this knowledge (and to act on it) is pure gold.

Down the track I’ll share with you Phase 2 of the challenge – that is once you get the 30 names what do you then do?

See you next post.

James E.

 

Emerging trends for accountants – skills shortage

The 3rd trend I’d like to look at now is that of skills within the profession.

During the global financial crisis (GFC), many accounting firms (large and small) in the face of declining demand for their services and the fact that many clients were unable to pay their fees on time (or not at all,) sacked thousands professional staff. This happened in the US, UK, many countries in the EU, New Zealand and of course Australia.

Some firms used the GFC as an excuse to let go of staff they didn’t want or as an opportunity for “team renewal.” Others had no choice – they needed to cut costs quickly.

In Australia, (I can’t comment specifically on other markets around the world) in the period after the GFC, the market had picked up and professional accounting skills are now in hot demand. The Accounting market isn’t alone in this; many sectors within the Australian economy are facing (or soon will face) skill shortages which will adversely impact a business’s performance and viability.

Set against this background, accounting firms will need to be smarter and more selective in their use of professional accounting skills. If people with the right mix of skill and experience are more scarce and difficult to hire and retain, then Partners/Principals of Accounting firms need to redesign work processes and methods of service delivery to cater for a greater input/role of support /semi-skilled staff and having less work done by the fully trained professional.

This redesign may also involve the use of outsourcing companies to have much of the “compliance” work done out of house.

Smaller firms (i.e. those with 50 or less staff) will have to be particularly adept at work redesign since it is commonly believed that they will have less resources to expend on recruitment, training & development and provide scope for career progression.

Here is an interesting hypothetical question … If you were told tomorrow that within 3 months 30% of your professional staff would be leaving your team or firm and you couldn’t replace them with the same skills (the demand in the market is just too hot) what would you do?

Unfortunately, given current trends, the above question may just turn out to be reality!

See you next time.

James E

Emerging trends for accountants – “one stop shops”

Another emerging trend for accountants is the desire by their clients to use them to meet their business needs in traditionally “non-Accounting” areas. I suppose its not an emerging trend per se (its been happening for years) but it is a trend that will grow in strength and intensity in 2011 and beyond.

I was in a meeting recently with an organisation recently that operates in the property development sector. The business is a privately owned enterprise that employs around 200 people in a few different locations around Australia. Due to a combination of business growth and clunky legacy systems, the organisation was looking for a new ERP  (enterprise resource planning) platform. I was surprised when one of the business’s senior managers told me that they had hired their external accounting firm to review the market for options, make recommendations and conduct the request for tender rather than doing it themselves.

On face value it would appear unusual to use an accounting firm rather than retain a specialist management consultancy working in the field of system selection and deployment.

However, upon further thought the decision makes perfect sense. Their accounting firm had an intimate understanding of their business, a proven track record and had built a good relationship with the owners, managers and staff. Moreover, they could (and would) bring a dispassionate and objective approach to the research and selection of the “right” ERP system for their client.

The above is a wonderful example of accountants being used to meet business needs outside their normal zone. This practice will grow.

Over the last 20 years the Accounting profession around the developed world have morphed into “one stop shops”; a far cry from the core “tax, audit and advisory” service offerings that made up the standard menu throughout the 1970’s and 80’s.

Here is a short list of services that have been added to the core over the years

  • Recruitment and selection of staff
  • Information Technology
  • Management coaching and mentoring
  • Branding, marketing and distribution
  • Migration services
  • Market research
  • Environmental & sustainability consulting
  • Business process outsourcing

The services offered by accounting firms probably won’t grow in breadth, but will certainly grow in depth and modify in line with their clients demands and industry/market trends.

Tune in next time to read the next emerging trend.

James E

Emerging trends for accountants – advocacy

Well … after a break over Christmas & New Year its back to the world of work! Hope you all had a good break too.

Since I’m based in Australia the thrust of my comments apply to this part of the world. However, that being said, I dare say that the trends being discussed will apply in other markets within the developed world.

What does 2011 hold for professional services firms and their clients? Short answer: quite a few things. Over the next few posts I’ll be sharing some trends that I’ve noticed emerging over the latter part of 2010 that I think will gather strength during the course of 2011. I’ve titled each post a guess – a combination of my thoughts, discussions with friends in the various markets in which I work and some (hopefully) objective observations.Person who supports a cause and exercises his right to be heard, or represents a party before a court or tribunal to defend it or plead on behalf of it.

So here we go … guess No.1

Clients need advocates with their financial institutions

Lets firstly define what an advocate means. According to businessdictionary.com an advocate is a person who supports a cause and exercises his/her right to be heard, or represents a party before a court or tribunal to defend it or plead on behalf of it.

In the accounting context this could be a financial institution, government authority, industry association etc…

Over the last few months I’ve been working with a medium size business (about 300 staff) that works in the education services sector. This particular business has been investing in its infrastructure and services offering over the last few years and has reached a stage where it needs to acquire smaller businesses so it can add scale to its business and thereby generate a better return on its investment. In order to acquire these smaller businesses my client needs external funding. Owing to the Global Financial Crisis, banks in Australia have been reluctant (to say the very least) to loan funds to my client and other businesses. Great acquisition opportunities would be lost  if my client didn’t get funding.

To cut a long story short, my client retained a new accounting firm to present their case to their bank. The accounting firm went through the business, made recommendations to improve their “bankability” and conducted the discussions with the bank. After a few months of work with one of the major Australian banks, funding was approved to the equivalent of one-third of the business’ annual revenue. A fantastic win!

Without wanting to put too fine a point on it, my client would not have a “snowflakes chance in hell” of getting the funds without their accountants help.

A wonderful way to help your clients and strengthen your relationship with them is to be their advocate!

Hope the above helps. See you next time.

James E