A question all accounting partners should ask themselves

Had an interesting experience the other day. I was presenting to a group of partners & principals about the importance of understanding the mindset of their clients and prospective clients. The presentation went well with lots of good interaction and wars stories shared.

After the seminar I was chatting with one of the attendees and he shared the following frustration with me.

James – 95% of what you shared today was spot on. It was good, solid and compelling stuff. The problem that I have, as the head of my firm, is that we hear what is said today, agree that we have to change the way we do things, get all excited and then go back to our office and fall into the familiar cycle of doing what we do the same old way and not changing. What do I have to do to break this cycle?

You might be reading this and thinking the same thing.

I put a few questions to this head of firm about the personality make up of his partners & staff and their attitude to trying new things and their willingness to step outside their comfort zone. As I expected he told me that there is a real mix – some have the “right attitude” and some are willing to leave their comfort zone. I would like to think that the some that the managing partner was referring to equated to more than half of his partners and staff.

At this point I usually ask the following question, “What proportion of your partners would respond well to the following challenge?”

The challenge: Come 1 July next year – all of your client relationships will be given to other partners within the firm. You will have a blank sheet to start building a client list from scratch.

In the above situation of the managing partner he answered that 2 of his 8 partners would be up to that challenge – himself and one other. So 25%. Hmmm – is that sufficient? I honestly don’t know.

The ironic thing about it is, from a client perspective they want the accounting profession to be more proactive. The above challenge is not a bad start!

See you next post.

James E

 

Are you an accountant that is worth more than $5 per hour?

Following on from the last post I now share the 2nd theme which is contributing to the inevitably of compliance services not dying, but certainly being eked away bit by bit. The surge in the use of outsourced services as indicated by the popularity of sites such as odesk, elance & freelancer. These sites have a created a global market for anyone to buy services ranging from bookkeeping up to network administration.

A quick scan through the elance.com site shows that there are over 1.8million individuals who provide services on an hour by hour basis with costs ranging from as little as $5 per hour. what is even more interesting is the range of skills. Here is a list of skills & disciplines in just 3 areas pertinent to this accounting blog. The numbers in brackets refer to the number of contractors on the elance site that offer the service.

Finance Professionals
Accounting (13,494)
Accounts Payable (4,563)
Accounts Receivable (4,699)
Analytics (3,560)
Bookkeeping (6,303)
Budgeting & Forecasting (3,598)
Business Analysis (5,493)
Business Mathematics (1,206)
Business Plans (5,826)
Corporate Strategy (1,893)
Data Interpretation (989)
Data Sufficiency (197)
Financial Analysis (6,102)
Financial Forecasting (3,517)
Financial Management (11,258)
Financial Reporting (6,059)
Financial Statements (4,668)
Human Resources (2,281)
Inventory Management (1,522)
Investment Research (932)
Job Costing (728)
Lacerte (45)
MYOB (357)
Management (21,831)
Negotiation (1,589)
Operations Management (4,238)
Organizational Behavior (624)
Payroll (3,230)
Peachtree (986)
Project Management (6,358)
QuickBooks (2,951)
Quicken (205)
Six Sigma (330)
Statistics (1,078)
Strategic Planning (1,599)
TQM (23)
Tax Preparation (2,067)

 

Consultants
Accounting (13,494)
Accounts Payable (4,563)
Accounts Receivable (4,699)
Analytics (3,560)
Bookkeeping (6,303)
Budgeting & Forecasting (3,598)
Business Analysis (5,493)
Business Mathematics (1,206)
Business Plans (5,826)
Corporate Strategy (1,893)
Data Interpretation (989)
Data Sufficiency (197)
Financial Analysis (6,102)
Financial Forecasting (3,517)
Financial Management (11,258)
Financial Reporting (6,059)
Financial Statements (4,668)
Human Resources (2,281)
Inventory Management (1,522)
Investment Research (932)
Job Costing (728)
Lacerte (45)
MYOB (357)
Management (21,831)
Negotiation (1,589)
Operations Management (4,238)
Organizational Behavior (624)
Payroll (3,230)
Peachtree (986)
Project Management (6,358)
QuickBooks (2,951)
Quicken (205)
Six Sigma (330)
Statistics (1,078)
Strategic Planning (1,599)
TQM (23)
Tax Preparation (2,067)

What more can one say? The above is only one such site. I know what you’rte thinking. What’s the use of having people in India, Sri Lanka and similar places doing your accounts? If you can’t see the use to a business person needing a compliance servoce done then that in itself concerns me 🙁   See you next post.

All my best,

James E.

Should Accountants be using the “Cloud”?

In my last post I mentioned two big, big driver that make the “cloud” something that accountants and their firms need to embrace for the reasons of cost, convenience and speed.

Here is an extract from an article titled  “Aussie companies lead the way with cloud computing” written by Michelle Hammond which appeared last year on the startupsmart.com.au website. Although it is over a year old it raises some excellent points. It’s a good read 🙂

Australia is leading the way in the adoption of cloud computing in the Asia Pacific region, but companies continue to be cautious about the workload of moving to the cloud, according to a new report.

Business research and consulting firm Frost & Sullivan recently released a report, titled State of Cloud Computing in Australia: 2011, as part of its cloud computing research program.

According to the report, 43% of Australian companies now use cloud computing in some form, while 41% of IT decision-makers say cloud computing will be a top priority in the current fiscal year.

The figures confirm the findings of another survey by technology giant IBM, which reveals 60% of chief information officers in Australia and New Zealand plan to implement cloud computing over the next five years, compared to 39% two years ago.

According to Frost & Sullivan, companies value cloud computing due to the reductions to capital and operational expenditure, cost savings, increased business agility, and the ability to deliver IT on demand.

Their report also provides a breakdown of the main cloud computing deployment models:

Public clouds are typically offered via a web application or as web services over the internet, and involve applications such as customer relationship management, messaging, conferencing, payroll and office productivity.

Private clouds are owned by the user company and/or a service provider deployed inside a corporate firewall.

Hybrid clouds involve a combination of public and private cloud services.

According to the survey, hybrid cloud deployments are the most popular model in Australia, adopted by 22% of companies, compared to 18% of companies using public clouds.

Not a lot to add here. If the cloud is good enough for so many of the above businesses then why not accounting firms? Go the cloud!

An announcement

Hi everyone,

Life is getting way too busy over the last few months so I’ve come to a decision. Rather than blogging 3 times a week I’m going to reduce it to twice a week. I’m doing this for a couple of reasons. Firstly, I’d rather do less and increase the quality. Secondly, you may have noticed that over the last several weeks I’ve been missing a post here and there. I’d much rather say that I’m going to do less (i.e. twice a week) and stick to that rather than say I’m going to do more and not be consistent! I hope you understand 🙂

So from today I’ll be posting – every Monday & Thursday (Australian time).

In my last post I mentioned that I wanted to unpack the two big trends which make the whole compliance market not what it used to be. These trends are:

  1. The acceptance of the “cloud” by many businesses including government departments and the big end of town.
  2. The surge in the use of outsourced services as indicated by the popularity of sites such as odesk, elance & freelancer. These sites have a created a global market for anyone to buy services ranging from bookkeeping up to network administration.
To do the above justice – I’ll start unpacking these over the next two posts.
All my best,
James E

Are compliance services dead?

I’ve been doing a lot of travelling around Australia over the last few weeks for a client and have managed to catch up with some new & interesting people. During my travels I had lunch with a nice young chap who was working in a small accounting practice. It was himself working with two other more senior accountants.

Whilst we were munching on our salad I asked my friend how many clients his firm had. With great pride and gusto he said 7,500. That’s right you read it correctly – 7,500! He then went on with great pride to tell me that the systems & processes within their firm were top notch and that they give H&R Block a run for their money in processing tax returns.  The last comment was shared in the spirit of it being a thing of great beauty & virtue.

I was too polite (or gutless) to point out to my friend that his firm was on the wrong track and they would be working themselves into the ground providing a commodity (i.e. compliance services) that clients see very little value in and resent paying for. Does that sound too harsh? I’m sorry if it does but that is the cold hard truth.

Now I know you have heard for many years that compliance is dying and that it will go away and guess what it is till around. However, in the last couple of years in particular two big things have happened:

  1. The acceptance of the “cloud” by many businesses including government departments and the big end of town.
  2. The surge in the use of outsourced services as indicated by the popularity of sites such as odesk, elance & freelancer. These sites have a created a global market for anyone to buy services ranging from bookkeeping up to network administration.

Please tune into the next two posts where I’ll be unpacking the above two big things!

See you next time.

James E

 

Does the size of an accounting firm matter? – the YES case

I conducted an interview with another CFO recently and asked him the question about the importance of an accounting firm’s brand. This chap has given a qualified YES – the brand is important. For the time being I will withhold his name but suffice to say his organisation is big, complex and has high expectations of its external accounting firm(s).

In professional services it’s always the individual it comes down to in terms of expertise and the quality of the work that you get, but you rely on the professionalism of the brand of the overall organisation as to the resources that they send to you.  So at the end of the day it’s very important, but it comes back the integrity of the organisation and the professionalism of those organisations.  If we were looking to appoint a new auditor, for argument’s sake, and I was aware of a local audit firm that’s just gone through some problems with some audit clients, I would probably tend to steer away from them because I would feel that their processes had broken down somewhere that meant that I was taking on trouble by adopting them and therefore I’d go elsewhere.  So, their quality through their professionalism is very important at the end of the day, because you’re paying for that expertise, you’re paying for those services, and in most cases you want something that you can rely on to take to other parties – not just internally – therefore that name has to stand up in front of those other parties that you’re using that work for as well.

They (the external accounting firm) ultimately have to present our accounts to their investors, which are institutional investors, and they wouldn’t be happy if someone was being used that they weren’t familiar with in most cases I would imagine. For purposes of quality assurance with other parties that we would use that information for the brand is absolutely important.

Size does matter for some clients. That being said the individual must be up to the task of delivering a consistent & sound service that provides an effective outcome for the client.

See you next post,

James E

Does the size of an accounting firm matter? – the NO case

Hi everyone.

Shame, shame, shame. Not on you … but me. I have not posted a blog for over 3 weeks. Lots of reasons and excuses. I think the best reason/excuse is that I just finished another book – What do Financial Planning Clients Really Want? I’ll tell you more about that in a couple of weeks.

But back to business. Here is a re-blog of a popular post I wrote a few months ago. Hope you get something out of it.

I asked a CFO friend of mine who used to head up Finance at an engineering firm (Revenue $80m employing 100+ staff) how important an accounting firm’s brand is to him when he is looking to engage external help/advice. This is what he had to say.

I wonder whether brand is quite the right word. Perhaps reputation or their perceived level of expertise is better. But for the sake of the question, let’s stick with brand. The brand itself in the first instance, I wouldn’t say is that important. I would be more interested in speaking to the people who were going to be doing most of the work and looking at what their experience is, their qualifications, or how “good” that particular individual is. Brand doesn’t really come into it. Look at the case of Arthur Andersen which at the time was a major global accounting brand. They were the auditors for WorldCom, Enron, HIH, Ansett and One Tel – not a very good track record!

You can talk about the brand of a major multinational firm, but they’re only as good as the person that you’re going to be dealing with week to week. There is always going to be variation in the quality of the people within a large organisation. So, I wouldn’t say that brand itself is that important. I probably look at the professional firms generically and say, “Big Four, second tier, smaller…” In my mind, I don’t see any difference between any of the Big Four firms. I wouldn’t really know whether one was better than the other. Furthermore, I wouldn’t know if one individual within the big firms are better than the other.

Some interesting thoughts from Paul. The insight that captured my imagination was his statement regarding the “person” – You can talk about the brand of a major multinational firm, but they’re only as good as the person that you’re going to be dealing with week to week. There is always going to be variation in the quality of the people within a large organisation.”

Leaving aside the important areas of  support infrastructure, methodolgy, staff training and development it is the individual which makes the biggest difference to the client relationship. The other areas should be seen as hygiene factors (their impact is felt when they are not present)

In the next post we will talk about the “YES” case for a firm’s brand being important.

Bye for now,

James

Are you a “commercial” accountant?

Sorry for not blogging on Friday – no excuses just too many things to do 🙂

A while back I met with a CFO of a privately owned steel fabrication business. Their revenue was over $100m and they employed a workforce of just over 200. To protect the innocent, lets call the CFO Jack as in the great Jack Nicholson. I asked Jack the following question – What is the most important quality or attribute you look for in an accountant?

Integrity, supported by the capability to get the job done. A strong, considered independent viewpoint with the comfort to communicate in a frank and open manner. Having a clear understanding of the genuine incremental value of what can be provided to an organisation. Maintaining a consistent reputation with an acceptance of past failures and an ongoing focus on improving the quality of their offer. An attribute that I would like to see more of is the nurturing of commercial acumen across the range of individuals in the accounting firm and the application of that into the dialogue of business thought and sentiment.

Jack is offering a most interesting insight here: nurturing commercial acumen across all the professionals in the accounting firm, not just the partners or directors. The definition of the word “acumen” is to have the ability to make good judgments and quick decisions, typically in a particular domain. So it follows that commercial acumen refers to an individual’s ability to exercise judgment and make quick decisions in a commercial setting. It is vital that individuals coming into a firm as graduates, and those moving through the ranks, are given the opportunity to develop and grow their abilities to judge a situation and make an informed decision. No number of courses, workshops or reading books can ever take the place of a younger inexperienced accountant being mentored and nurtured by more experienced professionals within the firm. If you’re a partner or a director, a key part of being a leader is to grow those in your team. By doing so, you will help your clients, your firm and yourself. Sounds like a great deal!

Until next time,

James

The Accountant & the $10 Man

Recently I met with Margaret Scott, CEO of RMG Partners, a mid-tier accounting firm based in Sydney Australia.  A dear friend of mine, Karalyn Brown, called me a couple of weeks ago and told me this wonderful story about her client (Margaret) and a chance meeting she had one lunch time with Phil – ‘the $10 man’.

The story was so compelling that I wanted to hear it for myself so I caught up with Margaret over lunch.  Here is her story:

Around 2.30 one afternoon I left my office to grab something for a late lunch. I went to a sandwich store in a nearby arcade that I occasionally frequent and queued at one of the stores. When it was my turn to be served I placed my order and waited for the sandwich to be made, the lady told me it would be $7. While she was making the sandwich I looked in my purse for money to pay and was shocked to find I had no cash! Remembering that my teenagers had cleaned my purse out that morning, I asked the sandwich lady if they took credit cards and she replied no, they didn’t …Aarghh – what do I do, I asked myself?  The lady suggested I go to an ATM but I knew that was a block away. So much for a quick lunch break I lamented.

Whilst I was wondering what to do, a gentleman to my left who couldn’t help but overhear the exchange, opened his wallet and handed me a $10 note. I tried to protest but he insisted it was his pleasure to help. He then paid for his sandwich (being made by another lady), smiled at me and walked away.

I didn’t know what to say. Here was a total stranger giving me $10 to pay for my lunch and now he’d gone, he didn’t even wait for the change! I paid the lady and she was just as surprised as me when I told her I didn’t know the man. I asked if she knew him and after conferring with a couple of the others behind the counter, told me his name was Kelvin and that he comes regularly to their shop to buy his lunch.

As I walked back to my office I decided that I couldn’t let such a good deed go without proper recognition. A few days later I went back to the shop and asked the ladies if they remembered the $10 incident. After a little prompting they did remember – they must serve a lot of people during any given week! I asked them to give Kelvin an envelope which I passed over the counter. The envelope contained a thank you note, my business card and a $10 note. I thanked the ladies for their time and went back to my office.

A couple of days later I received an email from the $10 Samaritan – Phil (not Kelvin – the ladies in the shop had his name wrong). His email told me of his great surprise to be warmly greeted by the shop staff that day and given my envelope. He thanked me for the $10 and said he ‘was happy to assist a damsel in distress’. I replied and offered to take him out for a coffee; the following week we met and chatted about ourselves, life & business.

During our coffee meeting I invited Phil to a breakfast seminar my firm was holding the next week with guest speaker Jane Fleming predicting the outcome of the London Olympic Games for the Australian team.  Phil came to the seminar and the next day, sent me a thank you note saying how much he enjoyed the presentation and meeting people at our firm. Since then we’ve kept in contact and I’ve no doubt that his company (Phil works for a large real estate organisation) will become a client of RMG Partners sometime in the future. All because of me following up on a random act of kindness!

Nothing to add here 🙂

See you next post.

James E

Who said accountants don’t have a sense of humour?

I was looking through the traffic statistics for this blog a while back and noticed that one of the most clicked on posts was one titled “Some funny client stories” published a few months ago month. So in the spirit of today being Monday & the start of a new working week and me believing in the truth that if we don’t laugh we will all probably start crying, here are a few one-liners to get you smiling. Enjoy!

What do accountants suffer from that ordinary people don’t? Depreciation.

What’s the definition of an accountant? Someone who solves a problem you didn’t know you had in a way you don’t understand.

 

What’s the definition of a good tax accountant? Someone who has a loophole named after him.

What’s the difference between an accountant and a lawyer? The accountant knows he is boring.

Why did the accountant stare at his glass of orange juice for three hours? Because on the box it said Concentrate.

What do you call an accountant without a spreadsheet? Lost.

When do accountants laugh out loud? When somebody asks for a raise.

Why do accountants get excited on Saturdays? They can wear casual clothes to work.

How does an accountant make a bold fashion statement? He wears his grey suit instead of the blue.

If an accountant’s wife can’t get to sleep, what does she say? “Tell me about work today, dear.”

And a few more …

My accountant told me that the only reason why my business is looking up is that it’s flat on it’s back.

A fool and his money are soon audited.

A businessman tells his friend that his company is looking for a new accountant. His friend asks, “Didn’t your company hire a new accountant a few weeks ago?” The businessman replies, “That’s the accountant we’re looking for.”

An accountant is talking to the young child of one of his friends and says, “Do you know what I do?’ “Daddy says you’re a CPA.” “That’s right. Did he tell you what CPA stands for?” “Well, he says you’re a Complete Pain in the Arse.”

Keep smiling and bye for now!

James E