In today’s global economy, small- and medium-sized entities (SMEs) are increasingly expanding their operations beyond their home jurisdictions, and they are looking to their accountants for support. As trusted business advisors, accountants can play a key role in supporting the internationalization of their SME clients—consulting on, for example, growth strategy, developing new markets, securing access to finance, compliance with local laws and regulations, and introducing organizational changes.
The recent 2014 World Congress of Accountants (WCOA) included a session on these issues. “Accountants for Growth: Internationalization through SMPs” highlighted the competencies needed by today’s accountants, especially small- and medium-sized practices (SMPs), and debated the issues raised in an earlier discussion, “How Accounting Practices Can Support the Globalization of Small Business,” in the IFAC Global Knowledge Gateway.
According to panelist at the WCOA Daniel Lanre Monehin, Division President, Sub Sahara Africa, MasterCard Worldwide, UAE, four sweeping developments are responsible for changing the landscape of the SMP business environment: the changing demography of entrepreneurs; the changing SMP workforce; the changing competition; and the changing needs of SMEs.
Fellow session panelist, Kamlesh Vikamsey, an India-based SMP, addressed Monehin’s challenge head on and mapped out a response from SMPs as follows:
- To address the changing demographics of business owners, SMPs need to ensure they have the right age mix, including suitably tech-savvy young professionals.
- To address a changing SMP workforce, SMPs need to formalize their HR policies and hone their staff retention strategy.
- To tackle changing competition, SMPs need to offer high-quality, value-added services tailored to the specific needs of the client.
- And finally, to meet the changing needs of SMEs, SMPs need to expand their service offerings to include advisory, as well as assurance services, develop their knowledge and skills to offer these services, and participate in a network, association, or alliance.
Of particular relevance to this last point is the paper, International Advisory Services Provided by Small- and Medium-Sized Accountancy Practices to SMEs by Professor Robin Jarvis, Dr. Maria-Cristina Stoian, and Rosana Mirkovic. The paper, which was awarded Commended Status at the WCOA, was published in order to stimulate and feed the debate around the theme of the Congress: “2020 Vision: Learning from the Past, Building the Future.”
The paper argues that the nature or role of SMPs in their provision of services to SMEs, is not obvious, and one needs to consider all the layers of their activities to fully understand the many dimensions of their service offerings. The study examines one of these services—the provision of international advice to SMEs. The paper reviews the existing literature in this area and highlights the significance of SMPs using networks.
The paper’s findings reflect on 25 in-depth interviews with SMPs that are active in international advisory services to SMEs. The overall evidence from the research suggests that the nature of the international advisory services SMPs provide, or facilitate by accessing their networks, to SMEs is very much tailored to the circumstances of their clients. The study, however, also recognizes the resource constraints of many SMPs in their capacity to provide such advice.
According to the paper, there are two key motivators for SMPs to offer International advisory services. First, SMPs want to differentiate themselves from other more traditional practitioners for competitive reasons. They see their practice as dealing with business advisory services in general, rather than restricted to traditional accounting offerings. Second, some SMPs see international advice as an in-demand service that SMEs expect their accountant to be able to provide. In this case, there is the fear that the practice would lose the client if it did not meet this demand.
The paper points to several vehicles for knowledge transfer between the SMP and its SME client. Knowledge is transferred directly from the SMP to the SME, but if the SMP does not have the knowledge to satisfy its client’s requirements, it may use a network to obtain and relate the knowledge directly to its client; or the SMP may refer its client to a network participant for advice. Importantly, there is evidence that SMPs acknowledge the limitations of their advisory capacity by seeking advice from elsewhere within their networks to meet the demands of their clients.
This research, similar to others in this field, recognizes the significance that trust plays between the SMP and its SME clients. Additionally, trust was found to be an important element in the relationship between SMPs and other network participants. The extent of SMP client referrals and evidence that their advice had been implemented further highlights the trusting nature of these relationships.
The implications of the research have a bearing on a number of participants and stakeholders, ranging from the accounting profession to government agencies. The profession needs to consider how to support the SMP constituency in terms of education around developing advisory services.
Although this particular research is drawn from experiences in the UK, there is much evidence from IFAC sources, in particular the paper, The Role of SMPs in Providing Business Support to SMEs, that suggests similar trends are influencing SMPs around the world. Therefore, the findings can to a great extent be generalized to apply to, and thus support, the global community of SMPs in developing their advisory capacity.
See the IFAC SMP Committee’s Guide to Practice Management for Small- and Medium-Sized Practices and additional practice management resources from around the world, including practice management related to strategy, networking, and business development.
Join the Discussion
Does your SMP provide international advisory services? What was your practice’s motivation to provide this service, and do you use a network to fill the knowledge or resource gaps within your practice?