ACCOUNTING FIRM OF THE FUTUREbusinesssuccesssystems.com.au/downloads/Accounting_Firm_of_th… · operating in a traditional style accountancy practice. If you really think about it,

Business Success Systems | Accounting Firm of the Future 1

BUSINESSS U C C E S S S Y S T E M S

ACCOUNTINGFIRM OF THEFUTURE

THE TRANSITION FROM COMPLIANCE TO BUSINESS

ADVISORY

Business Success Systems www.businesssuccesssystems.com.au 1800 015 545

Troy EadieCEO, Business Success Systems


The Traditional Accountancy Practice Business Model is Broken 2The Trusted Advisor 4Leveraging Trust 8Developing Relationships as Resources 10Strategically Leveraging the Accountancy Firm 11

Table of Contents


The Traditional Accountancy Practice Business Model is Broken Ask yourself this question.

Do your clients see the services you provide more as a valued contribution to their business success or as an annoying necessity that they would prefer to do without?

Let’s Face Reality

If you are less than satisfied with the way your firm operates and the relationship it has with your clients, you are probably operating in a traditional style accountancy practice. If you really think about it, you will realise that the way your practice is set up, in other words, your business model, is more relevant to the needs of the Taxation department than it is to the needs of your business clients.

How much of your time and attention is focused on Tax Office requirements compared to clients’ success? How much of your work is devoted to minimizing tax compared to proactively helping your clients be more successful in their businesses? How much work satisfaction do you get from having to maximise your billing hours while having to justify


and sometimes write down your fees to your clients? How much is your involvement with clients merely transactional compared to developing positive and constructive, mutually beneficial relationships?

In my work both in accountancy practices and for accountants as clients in Australia and New Zealand, I know that these questions are real and confronting, but seldom dealt with effectively. But confronting the reality in these questions is the first step to changing your work life from the frustrating, time consuming treadmill of meeting compliance deadlines and billing quotas to a much more engaging and enjoyable life invested in helping clients succeed.

The reality is that traditional accounting services are now virtually a commodity and the pressures that accountancy firms have faced over the past decade or so now considerably impact client relationships, revenues and profits. The only alternative to accepting the downward spiral and defending traditional positions is to actually get on the front foot and start to take a proactive stance towards market development.

In this report, I wish to propose an alternative to the traditional accountancy practice model that frees you from the frustrating constraints of the normal approach and facilitates positive, constructive client relationships that can be leveraged for mutual financial benefit.


The Trusted AdvisorWhether justified or not, the accountant is still regarded by most business owners as their most trusted advisor. Almost every accountancy practice I know promotes themselves as Business Advisors. Most websites or marketing brochures describe a list of advisory services they offer. However, few accountants actually derive more than a token amount from these services each year. Most struggle to sell these services because of a perception (quite justifiably due to the fact that clients tell them) that clients don’t want these services. However, my experience is that this reality is more due to an ineffective selling approach than the willingness of clients to embrace these services when advised effectively.

While compliance services are very structured and considerably prescriptive, the area of business development advice opens up a whole spectrum of possibilities. Some accountants don’t approach this in a strategic manner and are just content to add a few perennial favourites such as business valuations or business planning to the range of services listed on their firm’s brochure or marketing documents. If these services are just “tacked on,” it is highly unlikely they will ever be offered to clients proactively.


The reality is that while clients need strategic planning and many other services that accountants could offer, they are often unaware of the value of these services. Accountants, being accountants and not sales people, typically are reluctant or perhaps just too busy to proactively work with their clients to recommend these services. There is typically no strategically developed process to introduce these valuable services into the client service package. However, the value of these services and the strategic positioning of them is how you transition from working on many low level tasks that clients have to have done, to the high value, high level advisory activities that strategically help clients succeed.

If your firm wants to build its business advisory services revenue, there are four major issues which must be addressed before such services can become a significant and successful aspect of your operations.

1. What are “business advisory” services and what range of services can your firm (or you) provide for the benefit of clients?

2. How can you/your firm market and sell business advisory services to clients when the relationship has traditionally focused on compliance work?

3. How do you/your firm plan, structure and deliver business advisory services so that each project delivers real value to clients and not just extra costs?

4. How do you/your firm allocate time and personnel to sell and deliver these services in relation to the team’s skills and current commitments?

The answers to these questions will depend on how willing you are to change your business model from the traditional compliance based practice to a proactive client value based relationship model. That will mean that you need to start


thinking strategically about how you can add value to your clients’ businesses instead of simply walking the well worn path of providing taxation based services and compliance reporting.

When you realise you can become a valuable contributor to your clients’ success instead of mostly a scorekeeper for them, you can start to transform your practice to deliver more value, more satisfaction and more success to your clients, your own team and also to your principals or partners.

Significantly, if you get this process right, you develop a relationship with your clients based on trust and value so that you can leverage those relationships in a mutually beneficial way and increase sales and profits for all. One of the biggest challenges for most accountants in this transformation is to stop seeing yourself and your firm as a service provider and start seeing yourself as a marketer of value added service packages and a high level advisor. You need to start developing relationships that enable you to understand clients’ real needs and to be proactive about sourcing and selling appropriate services that meet these needs. Your need for certainty and unwillingness to challenge the norm will only keep you stuck in frustration. Nothing will change for you unless you are willing to change your thinking and actions.


Compare these models.

Traditional Practice Value Based PracticePractice based on service and transactions

Practice based on Value and Relationship

Compliance Based Tax / Financial Reports

Reports/Advice for Business Performance Management and Compliance

Service seen by client as a necessary evil

Service is a valuable contribution to excellence in performance

Service is regarded as an unwanted cost

Service is regarded as a beneficial investment

Intent is to minimise tax for clients Intent is to maximise performance Not selective about who to take on as client

Select high potential clients who match business objectives, philosophies and values.

Charge fees based on time/cost Charge fees based on value of service

High level of debtors – high costs of recovery and disruption to cash flow

Low level of debtors – many fees paid in advance or monthly basis by automatic payment

Work completion highly dependent on principal or partners.

Work completed by others with minimal input from principals

Workflow planning and timing of service provision is reactive, driven by when client brings work in.

Workflow planning and timing of service provision is driven by proactive client relationship management.

Practice is characterized by a large gap in experience and expertise between senior people (principal or partners) and inexperienced juniors, with succession options negligible.

Staff experience levels across the range, with reasonably experienced sub-partner levels to support principal or partners. Also utilise effective alliances with strategic alliance partners for service delivery.

Practice operation creates high stress, low morale, high staff turnover, low job satisfaction.

Practice operation generates enjoyment, high morale, low staff turnover, high job satisfaction.


Leveraging TrustOne of the most under-utilised assets most accountants possess is client trust. Once you have earned the trust of your clients through doing good work on their financial reports and tax returns, you typically have a very high retention rate of clients. For most accountants, client loyalty and client retention is very high. But what this means at best for most accountants is that your clients come back year after year to get you to do their compliance related work. The big question is, why aren’t you using this trust to leverage your ability to do more work and provide more valuable assistance for those loyal clients?

The answer for most accountants is related to the reality that you operate through transactions instead of through relationships. For most accountancy firms, the most immediate and beneficial way to build overall revenue is to increase the level of services to existing clients rather than to find more clients to service. However, the comfort zone for most accountants is to spend more time networking and waiting for referrals to new clients than to spend time meeting with existing clients to try to get to know them and their businesses better and to try to identify how they could


provide more services that their clients could benefit from. The main reason that this is difficult is that there is typically no planning for this and no strategy to make it effective.

But how different might this process be if there was a step by step process in place?

Imagine the scenario where you could meet with a client at specific, preplanned times during the year to discuss the client’s goals, strategies and results and make sure they were on track towards achieving their specific objectives. You could assist them to determine the goals, the resources they need to achieve their goals and monitor their progress. You could play an active part in helping them succeed.

As a result of helping your clients grow their businesses successfully, you would get more work and become more deeply involved in their success stories. You would become their most trusted business advisor. The natural outcome would be more revenue, more profit and greater loyalty from your clients.

That’s how a leveraged relationship based on high value should work.


Developing Relationships as ResourcesOkay. I hear some of you squirming about the thought of more work. After all, this level of commitment to clients and the extra work involved all takes time. And it’s time most accountants don’t have.

But who says that it should be you, or even your staff, that should do the work. After all, you probably outsource the client’s general bookkeeping. And you probably already have relationships with other trusted resources that you refer your clients to. And I know how much some accountants complain when they have done all the work to help structure finance deals and put together finance plans, then only get a small part of the fee based on the time they put in, while the finance broker gets a huge amount based on a percentage commission for putting the parties together in the arrangement.

Isn’t it time you broke through the limitations of the traditional ways accountants have worked and started to capitalise on your real value rather than just get paid for your time?

The strategic relationship approach I recommend is to


develop relationships with a number of trusted resources your clients could use and then strategically devise ways to add value by introducing these resources to your clients at the appropriate time. Then you should be paid for your knowledge and expertise that creates these results, rather than billing by the hour for doing work for your clients.

It’s all about value and your clients would much prefer you to add value to their businesses through your expertise and knowledge, which includes who you know, than just pay you to do the minimum to ensure they comply with the legalities and pay their dues.

Strategically Leveraging the Accountancy FirmThere is no question that accountancy firms must change from their traditional methodologies if they are to not only survive, but thrive into the future. There are numerous threats to the traditional accountancy operation that have been mentioned in many other places, including the Firm of the Future report commissioned for CPAs in Australia in 2007.


We are seeing the commoditisation of accountancy continue on its downward pricing spiral. We are seeing accountants being replaced by many other advisors who have chosen to specialise in niche activities and fields of expertise. What can be done to maintain the now tenuous position accountants have as the most trusted advisor for business clients?

My proposition is that accountants need to fight back and start to operate from the position of strength they have before they lose it altogether. My answer is that accountants should stand up and BE the trusted advisor instead of letting others barge in and take their place. My recommendation is that accountants work out exactly what their clients want most and then find the best ways to deliver the services that get their clients results.

That may mean that they distance themselves forever from the characterisation of the bean counter and start to be seen as the connector and go to person when anyone in business needs a solution in their business. As an accountant, you are trusted with the most intimate and closely guarded knowledge a client can give, the financial details of their business. That level of trust is where you can leverage your expertise and knowledge to provide your clients with the highest value possible; how to maximise the value of their business by developing the highest quality relationships with a team of trusted, qualified and results driven business advisors.

The process of developing strategic leverage in your practice involves five steps:

1. Decide what your business stands for and what you want to contribute to your clients.


2. Develop the programs and systems to enable you to leverage your capabilities to deliver results to your clients.

3. Develop the human resources and skills to deliver high value to clients without requiring much of your own time.

4. Develop the sales engagement processes to ensure you can persuade clients to see your value without having to sell hard.

5. Develop the marketing assets that educate your clients about the need for your services and have them coming to you wanting to buy.

Completing these five steps effectively will revolutionise the way your practice is perceived by your clients and your team and will create incredible leverage in your ability to generate income and profits, build value and relationships and also free up your time so that you can develop a practice and a lifestyle that will be the envy of all your colleagues.

Business Success Systems can provide you with access to simple systems and processes to transform your practice into a highly leveraged, trusted value based firm for your clients that will lead to an ability to leverage your business value strategically and profitably. To find out more about how to access these systems and services, request a no-obligation discussion with one of our business growth specialists today.

Call us on 1800 015 545 to make an appointment.

BUSINESSS U C C E S S S Y S T E M S

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ACCOUNTING FIRM OF THE FUTUREbusinesssuccesssystems.com.au/downloads/Accounting_Firm_of_th… · operating in a traditional style accountancy practice. If you really think about it,