Relevant Service Offerings—Practice of the Future
IFAC’s recent Global SMP Survey shows that practices—especially small- and medium-sized (SMPs)—are facing a plethora of challenges, particularly the pressure to lower fees and the need to attract new clients. To address such challenges—and benefit from related opportunities—practices must offer services key to the sustainable success of their clients. This article looks at the case for SMPs offering advisory services.
Relevant Service Offering
Small- and medium-sized entities (SMEs) are faced with a business environment that seems to be changing at an exponential rate. To stay competitive, SMEs increasingly seek expert external advice to help them navigate through this fast changing business environment. For reasons outlined in an IFAC research paper, accounting practices have long been regarded as the most trusted business advisor for SMEs. These reasons include:
- Competency—SMEs often lack a full range of managerial expertise in-house and so outsource some functions, such as CFO, to SMPs that have the required technical competencies and expertise;
- Integrity and trust—as members of a regulated profession with codes of ethics, accountants enjoy “institutional” trust while their provision of compliance services wins them “competence” trust; and
- Responsiveness/proximity—SMEs rate highly SMPs’ responsiveness to their demands, and owner-managers appreciate personal attention from their advisers and value ease of access.
Because of recent technological advances, this comparative advantage is under threat: SMEs are now able to produce financial reports without an accountant. However, accounting practices can learn to see these changes as an opportunity. Equipped only with an internet connection, accountants can now advise clients anywhere in the world. However, many practices seem reluctant to embrace advisory as a significant—let alone primary—service offering. As audit thresholds increase, compliance services become commoditized, and cloud-based technology revolutionizes business practice, accounting practices must reexamine the services that they offer. Advisory is a fast-growing service line likely to become the dominant and most profitable service offering.
Advisory includes a diverse array of services, including the following:
- Business development
- Corporate advisory
- Human resources/employment regulations
- Financial planning
- Tax planning
- Succession planning/business transfers
- Information technology (IT)
- Enhanced organizational reporting
- Management accounting
- Business intelligence
All of these activities ensure the efficiency, effectiveness, and sustainable success of SMEs.
Benefits of Offering Advisory Services
Accounting practices want to thrive rather than survive. Practices that primarily offer advisory services can expect to maintain—rather than lower—fee levels, attract and retain clients, and boost employee satisfaction. Clients will receive what they need and want, and practices will improve their ability and adaptability, leaving them better equipped for future change.
Practices that want to begin offering advisory services must be prepared for change. This is, of course, more difficult than it sounds; we tend to be averse to the unknown. But in the words of George Bernard Shaw, “Progress is impossible without change, and those who cannot change their minds cannot change anything.”
To begin this change, ask your clients what advisory services they would want from you. They may want you to fill a similar role to that expected of an accountant in business as characterized in the graphic on page 9 of CIMA’s Finance Transformation—A Missed Opportunity for SMEs. CIMA’s vision will likely manifest as a practice that:
- ensures that their financial management and controls are in place;
- helps manage their business through timely and relevant insight and guidance;
- ensures that all the financial compliance requirements are satisfied; and
- prepares and presents information they and their stakeholders can trust.
These services must be delivered at a price that adds value to your client while generating profit for yourself. By switching to value-based pricing, you can ensure that you maximize the returns on your efforts.
To help us help you embrace advisory services, we’d like to hear your views. Please answer the following questions. Multiple-choices questions will display the results to date after you submit your response.