During the IFAC SMP Committee meeting in London on October 9, 2018, there was a panel discussion on the “Practice of Tomorrow”. Three small- and medium-sized practices (SMPs) leads shared their insights and perspectives on how SMPs can transform into the “Practice of Tomorrow”.
Sara Harvey, Director of Hines Harvey Woods Ltd
- Entered accountancy in 1977, spending 6 years with Peat Marwick Mitchell (later to become part of KPMG) at its Norwich office.
- Over 30 years of experience in general practice providing audit, accountancy and taxation services to small- and medium-sized entities (SME) clients.
- Chair of the ACCA Global Ethics Forum, and a member of the ACCA’s Global Tax Forum and CCAB’s Ethics Group.
The majority of the firm’s 1,000 plus clients are SMEs (annual turnover usually less than GBP 500,000). Hence, these companies rely on the firm for most of their compliance needs. It thus pays to train the staff (the practice has 13 partners and staff in total) to keep their skills up to date since the same staff will be able to service a large segment of clients. The cost of such training can be recouped over time. The practice has it’s staff specializing in payroll, accounting software, tax compliance etc.
One of the skill sets that new employees should have is to be a “fast learner”. The rate of regulatory changes is high. Firms need to ensure that all staff are kept current. Firms should also consider the need to embrace technology. It is a way to retain staff because if routine tasks can be automated, staff can have more opportunity to provide added-value services.
However, sourcing new staff is a real issue. Being located in a small town outside the nearest city may not be appealing to some younger individuals. The perception that a small firm may not be dynamic can also be a factor. Hence, the firm employ many staff on a flexible arrangement basis, e.g. part time (usually, mothers with school age children), different working schedules for staff with different needs.
One of the most significant roles is to listen to the clients’ challenges and provide them with the necessary support. Most clients want a long term relationship and fairly straightforward assistance.
In an era of consolidation, SMPs continue to have a viable future due to the trust that has been built with the clients over time. Often it is the firm’s role to lead clients on their digital journey. Finally, the important role that Professional Accountancy Organizations (PAOs) play in maintaining and distinguishing the professional accountant’s brand from other unqualified service providers cannot be underestimated.
Paul Kennedy, Partner of O’Byrne & Kennedy
- Practicing Fellow of The VeraSage Institute, an international think-thank for the advancement of professional service firms, Paul is regularly invited to speak at conferences for accountants and lawyers.
- Specializes in helping business owners build better business, providing coaching and running courses to support this work.
- Does not believe in using time sheets and offers a money back guarantee policy for the firm’s work.
Paul was a partner of a pure compliance firm until 1997. He then attended a boot camp run by Paul Dunn and Ric Payne, a couple of Australians who encouraged accounting firms to move from compliance to business development work.
He came back from the boot camp with a new sense of purpose. In one of the boot camp exercises he and his partner were challenged to write their own eulogies. They wanted their eulogy to record that they made a real difference to the lives of their clients. The practice sought to move from the score keeping business and into the transformation business. Paul believes that success is measured by impact on others.
The transition was an eye-opening journey. Not all clients were able to fit into their new business model. Eighteen months out of Boot camp, the firm had gone from 500 plus clients to just 50 but revenue per client increased to GBP10,000 on average per client. Over the years, one of the lessons learned was that the opportunity cost of doing the wrong work for the wrong client was too big. In recent years, the firm’s average take-up rate of referrals from satisfied clients is around 1 out of 4.
The firm prefers to work with business owners who are already successful, but want more control over their own destiny. The firm agrees all fees in advance with a money back guarantee and as a result has been able to move to monthly billings, which has improved cash flow within the practice. Time sheets have not been used in the practice since 2001 because Paul believe the practice should be totally focused on value delivery rather than the costs. The firm also provides an e-learning tool as part of the training they provide to business owners.
Unlike traditional compliance work which tends to be focused on historic results, the firm looks forward with their clients and provides services such as business modelling, strategic planning etc. Paul is of the view that advisory is a natural progression for the profession. To differentiate itself, the firm retains the brand of a chartered accountancy firm but with a consultancy edge.
The firm primarily obtains new clients through word of mouth. A satisfied customer is the best marketing agent for the practice. Another sales pipeline is the training courses that the firm runs regularly.
Fundamentally, a good consultant asks questions. It is important that they are curious about what is driving the clients’ businesses. For firms that want to transition from compliance to business development, the partner or proprietor will need consultant’s mindset.
Suzanne Spicer, Managing Director and founder of Spicer & Co.
- Started the business in 2001 and has built it to around 500 clients with 8 staff members.
- Proactive in moving clients over to the cloud based software to help them have more real time information about their businesses.
- The firm’s clients range from sole traders to multi million pound turnover companies with a niche in the construction industry.
In Suzanne’s view, the Practice of Tomorrow will need to adapt to technology and have developed new ways of working with the clients. It is important that staff has the necessary digital skills to ensure that firms can “service” its clients effectively. But, amid all the technology developments, communication skills have become increasingly important.
Automation reduces the risk of manual error and opens the possibilities of adding value in the provision of services to clients. Staff will also be relieved from the more mundane and repetitive tasks and can dedicate their time on services higher up the value chain.
It is, however, important to obtain the staff’s buy-in to the firm’s philosophy. Spicer & Co. utilizes a well-established accounting platform and the best way to help clients to embark on their digital journey is through demonstration of the platform’s capability. The firm organizes networking sessions for clients to exchange their views and experience on the migration to the digital platform. Because the firm only specializes in one platform, it is relatively easy to train the internal staff on the system’s functionality.
Suzanne has found that bringing staff on annual trips to accounting and digital conferences motivates and helps staff learn about new software and apps. The staff that attend conferences share information within the office, fortifying the firm’s knowledge in those areas.
Suzanne advises that moving clients to the digital platform needs to be done on a staggered basis. The phased approach enables a more focused effort on “hand-holding” clients through the transition.
Using a digital platform enables clients to have real time reporting and key business numbers. This can be the first step for the firm to start offering more advisory services on an incremental basis. Merely, starting the conversation around what is driving the numbers being generated can be a way forward. The firm has found it beneficial to meet with clients, ask the right questions and explain the range of services available to get clients interested in moving up the value chain.
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The following is an audio summary of the discussion: