Relevant Service Offerings—Practice of the Future

Berend van Aswegen, Paul Thompson | July 27, 2015 | 6

Introduction

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 Services

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.

Starting Out

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.

Your Views

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.  

 

 

 

Berend van Aswegen

IFAC SMP Committee Member

Berend van Aswegen became a member of the IFAC Small and Medium Practices Committee in January 2015. He was nominated by the Chartered Institute of Management Accountants (CIMA). Mr. Van Aswegen is a chartered management accountant with 20 years of financial management and consulting experience across various industries and institutions. He is passionate about the role professional accountants can play in developing global economies by providing relevant advice to growing businesses. See more by Berend van Aswegen

Paul Thompson

Director, European Federation of Accountants and Auditors for SMEs

Paul Thompson is EFAA Director and a consultant dedicated to thought leadership and development of the global accountancy profession. From 2004 to 2016 Mr. Thompson worked for IFAC latterly as Director, Global Accountancy Profession Support, a role that extended to overseeing the IFAC Global Knowledge Gateway, research and innovation, and activities in support of small- and medium-sized practices (SMP) and professional accountants in business (PAIB). Mr. Thompson also serves on the SME Implementation Group, an advisory body to the International Accounting Standard Board (Board), and is a member of Nottingham University Business School Malaysia’s Industry Advisory Board (IAB), an advisory group providing strategic advice to the Business School. He advises developing professional accountancy organisations in Europe and Asia. Previously Mr. Thompson worked for Touche Ross & Co., London before going on to lecture on corporate reporting and analysis at universities in the UK, Singapore, and Malaysia. He has a number of publications in academic journals and the professional press in the areas of ethical finance, corporate reporting, corporate governance, integrated reporting, practice management and the future of the profession. Mr. Thompson graduated from the University of Warwick with a bachelor of science in accounting and financial analysis and is a fellow of the Institute of Chartered Accountants in England and Wales. Mr. Thompson is an internationally ranked masters distance runner. See more by Paul Thompson

 

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Join the Conversation (6)

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Paul Thompson August 16, 2016

The Gateway recently ran another article in this subject: https://www.ifac.org/global-knowledge-gateway/practice-management/discussion/future-small-practices-service-offerings

Ray Baxter August 16, 2016

Some practises need to go well beyond simply adding advisory services. The huge technological changes which now allow cloud based services means that the division between internal and external accounting for the smaller SMEs need no longer exist. There is a tremendous opportunity for Accountants to offer a full outsourced service just like a large Company's Finance Department. This is the most efficient service that can be provided because the whole process from bookkeeping, management accounts and compliance is integrated and under the control of qualified and experienced staff.

Samuel Abiaw September 23, 2015

This is an excellent article. SMEs especially in Ghana are currently bedeviled with myriads of challenges notable among them is financial planning and how to comply with IFRSs. To leverage the opportunities in offering advisory services to SMEs, there is the need for SMPs to position themselves well in terms of technical competencies and expertise. IFAC should assist SMPs build capacity to enable them proffer the array of advisory services, especially in the areas of IFRSs Conversion Services.

Twaha Kaawaase September 18, 2015

This is an excellent article. We need all efforts and ideas to assist and grow the SME sector for reasons illuminated in the article. I would like to add a twist to the debate ! Wearing the same lenses, SMPs are SMEs in the accounting Industry ! We need to ask a question is the "Doctor really equipped with the skills. knowledge and experience to diagnose and treat the disease ?" IFAC efforts to support SMPs with resources to meet the challange are commendable because for the SMEs to indeed benefit from the menu of advisory services available on offer, SMPs themselves need to be 'ready' and well equipped to offer the services. A practice of the future should therefore be a practice well equipped in the host of advisory areas required by SMEs. There in lies the debate of how this can be achieved by IFAC and its member organisations.

Berend Van Aswegen August 8, 2015

Hi Kari. Yes, it is all about being helpful and providing relevant and useful help and support. And if you do not have the relevant skills and expertise in your practice, why not consider partnering with another firm that does. Being able to partner successfully will be a key skill of the successful practice of the future.

Kari Lydman August 7, 2015

Smaller SME's need very often help. And we can provide it (if we have the needed talent), who would not help his/her fellow who is in trouble? Just to be sure you advice within your capabilities and expertise, bad advice is the worst advice. The best you can do is provide help.

 

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