As an accountant – are you blind to opportunities?

Recently I was chatting with a CFO on the phone. To protect the innocent let’s call him Ed.

Ed is an accounting and finance professional with over 40 years experience. Over the last 15 years or so he has worked as a “gun for hire.” His speciality is to go into a business that is experiencing trouble and turn the place around.

Ed’s current assignment is as an interim CFO of a small to medium manufacturing company. This particular business has been in operation for 50+ years and employs over 100 people. For some reason, the business has been trading at a loss for the last 10 years. Ed, with a fresh set of eyes and some skill, within one year has turned around the business from a loss to a profit.

Now I know what you’re thinking … that’s easy James. Ed simply went in, sacked a lot of people, controlled some other costs and got the business to make money. No – it didn’t happen that way. Rather, Ed asked questions of people on the shop floor, middle management and of course of the owners. Through a combination of asking the right questions and some digging into the financial records, Ed was able to uncover a fundamental flaw. The flaw was both simple and destructive. Believe it or not – no one knew what margin the business made on the products they manufactured. Or put another way … that they didn’t really know what it cost them to produce their products. So how on earth can they make a profit when they didn’t know the cost of what they were making.

In my phone chat with Ed he told me that, armed with the above knowledge, it was a relatively straightforward process to make the necessary adjustments to get the business back to profit. A success story!

However, it was Ed’s next comment that caught my ear the most. He noted, with some frustration and amazement, the fact that that the external auditors and accountants that this business had been using over the last 10 years (trading at a loss every one of those years) weren’t proactive enough to at least ask the question “Why the loss was occurring year after year?” As Ed said to me, “It just reinforces the stereotypes of accounting firms and their people – they look through the review mirror and don’t come up with ideas to tangibly help their clients. They are more focused on ticking forms about the past and making lodgement deadlines. Its very sad – 10 years of missed opportunities.

Now compliance is important, but clients see it as a necessary evil – not as something that helps their business. Lets face facts, the majority of compliance services are simply commodities. The now and the future for the profession lies in advisory work which helps businesses  make more money, save more money or save time.

Until next time,


5 pieces of great advice

Given the type of work I do I get to meet a lot of accountants, lawyers, management consultants and corporate advisers. Most of the people I meet are just fine. However, from time to time some people just “stick out.” Often its not because of their technical brilliance or long impressive track record it might be something as simple as being enthusiastic and passionate about their work. One such person is Karen Eaton – a client services director with accounting firm Allan Hall Business Advisors in Sydney, Australia.

Here is Karen’s response to the question, What do you do to understand what your clients really want?

Every client is unique and their needs and expectations will differ – there’s no “one size fits all” when it comes to understanding what a client wants. Recognising this enables an adviser to tailor their services to provide advice that the client can rely on and use.

In my view, a good starting point in determining what your client wants is to simply ask them!

Good communication is vital. Take the time to listen to what they have to say; encourage them to be open; ask questions to clarify your understanding; and seek feedback to confirm that you are both on the same page.

Tailor your style. As the client shares their thoughts and opinions in their own words, you will gain insight not just into the business and its issues but also the client as a person. This enables you to individualise your approach and language style to suit that particular client.

Know the clients business. Gain an understanding of the client, their industry and the challenges they face. This knowledge allows you to assist the client to identify opportunities and to detect and avert potential problems early.

Build the relationship. Make the effort to get to know management and key staff, and to understand their roles within the business. Showing interest and being involved helps to build the relationship with the client and promotes mutual trust and respect.

Work together. Be honest, friendly, approachable and accessible. Offer the client solutions (not just answers) and provide practical advice to enable the client to make informed decisions. Encourage the client to consider non-financial and lifestyle factors when making decisions. Taking all these things into consideration will assist to promote a good understanding of each client’s needs and expectations, which provides a solid foundation on which to build or grow the relationship.

Nice one Karen!

See you next post,

James E