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Are you an accountant that can spot an opportunity?

Recently I was chatting with a CFO on the phone. To protect the innocent lets call him Anthony as in Anthony Hopkins.

Anthony 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.

Anthony’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. Anthony, 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. Anthony 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, Anthony 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, Anthony 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 Anthony 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 Anthony’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) wern’t proactive enough to at least ask the question “Why the loss was occurring year after year?” As Anthony 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,

James

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,

James

What is the most important thing?

Sorry guys. I missed out posting on Wednesday this last week.

I’ve been putting in lots of hours with my day job recently in preparation for a trip to the US next month with my 18 year old son. My son finished high school last year and is taking a gap year this year before going to university next year. Wow that last sentence certainly had a lot of years in it!

Anyway my son is REALLY into music and he has been saving up to attend Coachella – a music festival being held in Palm Springs, California. He wanted to go with his friends but none had saved up enough cash to go. so being the cool and wonderful dad I offered to go with him. My son has never been overseas before and I’ve never been to the US.

So the above is a long way of saying that I needed to make sure that the wheels are turning while I’m away for 3 weeks. Being self-employed one has to consider such things.

In short – my day job has been getting in the way of my other activities like blogging.

Here is a post that I wrote for MYOB last month which I think you’ll get something from. Hopefully it will make up for my omission during the week 🙂

I’m assuming, if you’re reading this article, that you’re an accountant or at least working in the industry in some capacity.  Let me ask you a question … “As an accountant what is the most important thing you do for your clients?”  Over the years I’ve been given any number of responses to this question.

Some say, “Keep my clients safe & compliant”.

Others say,  “Make their lives easier”.

While many say, “Get them a big tax refund”.

However, the most common response I receive to this fundamental question is, “to add value”. Like most business-speak terms, to add value just rolls off the tongue. It sounds right and makes people who hear it (at least at first) believe that everything is going to be ok and that you’re the right person for the job.

However, what does adding value really mean? We all know what adding means so let’s focus on the value bit. What is value to your client? Is your GEN Y self-employed IT contractor client wanting the same value as your 40+ years TAFE teacher? What about the single mother working two jobs or the construction company owner employing 100 staff?

It’s obvious that value means different things to different people. So how do you determine what is valuable for your clients and prospects? The answer is incredibly simple – you ask them.

A few months ago Thomson Reuters published a book I wrote titled, What do Accounting Clients Really Want?The book is a series of 20 interviews of people who buy accounting services for their respective businesses.  Statistically, of course, a pool of 20 interviews means nothing, however, 20 in-depth personal conversations does.  Overwhelmingly, the people I interviewed want their accountants/advisors to invest in a meaningful relationship with them. They don’t mean the odd lunch and/or drinks after work; but rather a relationship that tells them (i.e. the client) that you have their best interests in your mind and heart. By having a close relationship you can truly determine what is of value to them and what isn’t.

Kym Warner is the CFO of The Coffee Club – a national chain of coffee franchises generating over $320m revenue annually. When I asked her,  “What is the most important quality or attribute you look for in an accountant? Her reply was simple

… for me it’s about the relationship. I want to know that I can build a relationship with them…

Kym relayed the story of her first day as CFO for The Coffee Club and her relationship with her new external accountant.

It’s the relationship that we’ve built. I think the fact that when I started, my second day was the first day of our audit partner; we’ve really built a bunch of knowledge together.  We’ve shared the improvements in the business, so she understands where we’ve come from.  The partner herself is a lovely lady.  Very professional, knowledgeable and commercial. If we have any toing and froing, I can talk openly and honestly with her, which is great, because everything they do has to be reported to their sister firm in Thailand, which is where our investors are based.  I think this partner has a real empathy for my position; she seems to understand the pressures I’m under.  I want our auditors to be honest and ethical, and sensitive enough so my role is not undermined with the board and stakeholders within the business.

It’s the relationship rather than the process that means more to your clients than anything else.  What they are really after is someone who can connect with them.  A conversation with a client over a cup of coffee will do more to deepen the relationship than sitting at a computer in your office.  Don’t believe it?  Why don’t you try it a couple of times – you may just surprise yourself!

Until next time,
James E

A good adviser

Now we turn our attention to a good adviser.

One of the CFOs I interviewed last year in my book, “What do Accounting Clients Really Want?” gave the most wonderful & impressive answer to one of my questions. The response is about her experience with a good adviser.

The question I asked was …Tell me about a time when you received the best service from an accounting firm. What made it the best? How did it make you feel?

It was in my last CFO role. I didn’t like the firm but I really liked the tax adviser. This individual just stood out. He was extremely good at what he did. He’d taken on some of the big firms who had provided (in his view) poor advice for some clients and had actually won. However, what made him so spectacular for us was the level of dedication to our business. It was as if we were his only client, even though we knew we weren’t. He was committed to us. He communicated in a way that we understood.
As soon as we had a need, he was there to meet it. The level of service he provided was outstanding. Although he was in a firm that was providing us a service, he always seemed to position himself as if he was part of our business and showed that he cared. I saw that for the other clients he serviced as well. There’s a big distinction about how you make your client feel if you come in and you have a care factor showing, “I’m part of this business”, as opposed to, “I’m a service provider and I know it all – here is my advice”.
As a CFO for this business I felt supported and important. We paid him a small fortune and he was so well worth it. We definitely got our value-add!

How cool is that!

See you next post.

James E

Missed opportunities

The other day I was chatting with a CFO on the phone. To protect the innocent lets call him Sean as in Sean Connery (the slightly older version).

Sean 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.

Sean’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. Sean, 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. Sean 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, Sean 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, Sean 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 Sean 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 Sean’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 Sean 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,

James

Help your client get answers

Sorry everyone. My standard practice with this blog is to post 3 times each week. However, as you may have noticed there was no mid-week posting. Mea cupla. The reason is that I’ve been busy trying to keep clients happy. Not a bad reason, but nonetheless, I feel bad. Please forgive me.

Last post I ended with the promise that irrespective of the size of your accounting firm you can be innovative and proactive and add tremendous value to your clients just like the big end of town.

Here is just one cost-effective idea for you to play with.

Select one your clients that you believe the relationship can do with some improving and invite them to a “10 solutions” breakfast or lunch. Ahead of the meet, ask your client for the biggest one or two challenges they are facing in their business currently. More likely than not the challenges they identify won’t have anything to do with tax or audit or something that you feel more comfortable with. The client will probably come up with challenges like attracting and keeping good people, marketing, sales pipeline and other such things. Don’t worry – at this stage just knowing what their challenges, problems and issues is all you need.

Now that you know the challenge(s) build a small “task force” within your office (for some accounting practices the task force might be really small – you!) and start to gather ideas, thoughts, notions, perspectives – anything at all ahead of the breakfast/lunch meeting with your client.

You’re probably thinking now – well that’s fine James but what if my client’s challenge is in an area that I know nothing about? Don’t panic. This is a great opportunity to show your client that you are indeed their trusted business adviser for good reason.

Lets say, for example, their current business challenge is attracting and keeping good staff. Here are some simple ways you can build a killer list of ideas and solutions to their problems:

  • Do a web search. You will be amazed what appears on page 2 onwards of a Google search!
  • Have a chat with some of your other clients to ask what they do to recruit & keep good staff.
  • Ask a general question on social networks like LinkedIn. The responses you get from around the world will give you a breadth of ideas that will surprise you.
  • Approach a recruitment firm you know of and ask for their input. Don’t give too much away – otherwise they will hound you for work they could do for you for years 🙂

Once you’ve assembled a good list of ideas hold the meeting with your client and brainstorm possible solutions to their problem. Don’t take out your “something I prepared earlier” list – keep that resource to yourself. In the meeting it’s important that your client is part of the process that generates the solutions. Your list will simply serve as input to that process.

The above exercise is designed to show one important thing – that you can help your client (either directly or indirectly) in any and every aspect of their business. Put yourself in the shoes of your client for a moment and ask the question, “Would you prefer an accountant who is trying to help you in new and broad ways or one that just sticks to ‘doing the books’?”

Go on give it a go – what have you got to lose?!

Until next time,

James E

 

 

Accounting firm or an ideas factory?

A few days ago I was having lunch with a client of mine who had recently joined a 2nd-tier accounting firm having left one of the Big 4 for greener pastures. During the lunch my client told me about an exercise his old firm would perform on behalf of clients. It blew my socks off!

From time to time this Big 4 firm would hold a sandwich lunch for all their staff & partners in each of their offices around the country in a given week. The Brisbane office would hold their lunch on Monday, Melbourne on Tuesday, Sydney on Wednesday and so on.

The purpose of the lunch was to get as many people together – partners, directors, managers, graduates, support staff and others sitting around a table to talk and think about a particular problem or two and how they would solve it. Each table had a facilitator to help guide the conversation. The problems were real world issues that clients of the firm were facing. The purpose of the lunches is give the clients ideas they can use to solve their current business challenges.

The Big 4 firm would make an offer to their clients or even a prospect they are trying to win along the lines of, “How would you like a thousand of our staff who are amongst the best and the brightest in the market work on your problem(s)? By the way … there is no charge. It is our way of adding value to you and showing that we are here to help.”

What business or organisation would say no to such a fantastic offer? Having a thousand men and women of varying experience working on ways to solve the problems you have in your operations, marketing, recruitment and strategy is an incredibly powerful and compelling offer. The cost to the Big 4 firm  to facilitate the “ideas week” of staff lunches? Well it was simply the price of providing sandwiches and orange juice to their staff which of course would be a few thousand dollars. But think of the tremendous impact such an exercise can have on the clients and prospective clients of the firm.

Now … I know what you’re thinking. That is fine for a Big 4 firm – they have truckloads of resources and big budgets to do such things. However, since the lunch I’ve been thinking about ways in which smaller accounting firms can provide similar value for their clients irrespective of their size.

Tune into the next post to find our how!

All my best,

James E

 

Lunch with Michelle Pfeiffer (2 of 2)

Another question I asked Michelle during our lunch was …

What can accountants do to improve their service to you?

Michelle:  First, find the value add and deliver it.  The second one would be the way you communicate to ensure that your client feels or sees or hears that you’ve got a vested interest in them, so that they feel comfortable and they know that you’re doing the best thing for them.

James:  How does one prove that?

Michelle:  It depends what you’re talking about, but it might be a phone call to say, ‘Hey, haven’t heard from you in a while.  Is there anything I can do for you?’  Or it might be, ‘Oh, you know, I was thinking about you.  Are you doing this in your business?  Can we come out and catch up for a coffee?’  There’s different ways of doing it that might be a phone call and nine out of ten times it might be, ‘Well, nah, we’re all good.  Thanks.’  But, you know, you’ve left a good impression.  It’s all about building relationships.

James:  Do you have a third pearl of wisdom?

Michelle:  I think the biggest is the value add, pro-activeness and communication.  They’re the three most important things an accountant can do to improve their service, not only to me, but the majority of clients I’m sure!

Like most CFOs I have interviewed over the last few months, they don’t want the sun, moon & stars delivered on a silver platter from their accountants and advisers. All clients like Michelle want is a relationship that is real and that helps their business in a tangible way. Is that too much expect? I think not 🙂

All my best,

James E