Business journalist Rachel Willcox joins us in our mission to demystify advisory services. A career has seen her specialise in financial, business and technology journalism. Read on for insight into whether the bean counter is dead or not. Has advisory taken over completely?
If writing about the accountancy market for the last decade or so has taught me anything, it’s that – perhaps contrary to popular belief and lazy stereotypes – accountants are most definitely an entrepreneurial bunch. And in the light of some of the development in recent times, it’s a good job too.
Fair to say, the last few years have thrown some fairly serious curve balls at the accountancy profession and I’d be lying if I didn’t say it was an unsettling time for those whose default position was to settle into the status quo.
In particular, a combination of deregulation and automation have led to a changing landscape for accountancy services that has seen the number of high street accountants plummet to an all-time low. An inching up of the audit threshold may be good news for SME clients struggling with the burden of red tape, but it presents a challenge to accountancy firms long reliant on their bread and butter audit fees. Similarly, the cloud accounting revolution has undoubtedly led to “commoditisation” of the accountancy market, certainly for basic bookkeeping and simple accountancy processes.
The digitisation of accountancy is also driving a significant shift in client expectations about the kinds of services they could expect to receive from their accountant and the role that technology plays in the delivery of that service. And that was before the prospect of digital tax accounts reared its head. By 2020 all 50 million taxpayers and entities will have their own ‘digital tax account’ driven by HMRC’s vision of a new world where the taxman’s primary relationship is directly with the taxpayer. Of course, there will be a role for agents in the new digital world but it will almost certainly look quite different to the one they enjoy today.
The opportunity – and it’s a big one – is for firms to offer advisory services that go above and beyond the grunt work and drudgery and instead focus on adding value, insight and expertise. The onus has shifted away from transaction processing towards value-added services and management accounting with technology giving accountants the edge as they desperately attempt to win the hearts and minds of both existing and prospective clients.
At the same time, the growing IT literacy of clients is boosting their appetite for services that go way beyond box-ticking and instead help them analyse the numbers in a way that helps them grow and avoid as much as possible the inevitable bumps in the road to business success that they experience along the way.
Whereas the audit hinged on looking in the rear view mirror at a company’s financial performance, the opportunity is to develop services that help clients to identify risk and offer a forward-looking perspective on the numbers.
Against a backdrop of high business failure rates and the low proportion of start-ups that evolve into scale-ups, the profession has a huge opportunity to better position itself as the first stop for business advice. And the fact that accountants are consistently cited as the most trusted source of business advice means that they are well-placed to capitalise on burgeoning demand for advisory services.
Fundamental to that transition is understanding and acceptance that the role of today’s accountant has changed. Clients need a much more rounded vision, service when they want it and from people who understand their business and their aspirations. Accountancy is a window to the rest of the business rather than the end result.
In the words of one extremely entrepreneurial and successful accountant I know, it’s no longer about how quickly you can add up a row of numbers with a calculator. “It’s about translating tax jargon into English and empathising with your clients. I think the profession needs to evolve so that accountants understand the wider needs a business has now.”
In many respects this isn’t just about developing new revenue-generating service lines; it’s also about forging a different kind of relationship with clients. The need for accountants to relate to their clients – rather than hide behind a wall of jargon – has never been greater. The emphasis on value-add services and the ability to understand clients’ needs requires judgement, tact and for highly-credible people at relatively early stages of their careers to deal with senior clients in challenging circumstances.
Your accountancy qualifications will undoubtedly give potential clients reassurance about your technical capabilities, but successful and compelling delivery of advisory services demands the right mix of technical and soft skills together with a good dose of emotional intelligence. Realistically, would you go to an audit partner for more generic business advice? Firms need to start engaging on a multi-partner basis with clients so they know your corporate finance, audit and tax experts in the business.
In practical terms, this requires accountants to have proper conversations with clients using terminology that they understand and ensuring that the relationship you have with them is a business relationship, not an accountancy one. That’s a much more compelling proposition.
Of course, companies may be put off by misperceptions of the cost and the breadth of services that their accountant can provide. But if that is the case, you need to do a better job of communicating what you have to offer in a jargon-free way that clients can relate to.
Do all of that and, despite all the talk of downward fee pressure, I have something to tell you. Clients are happy to pay for your services, particularly when they provide answers to the business questions that keep them awake at night, the pain points, the stuff they really care about.
Demand for outsourced accounting processes supplemented by advisory services aimed at helping clients to grow and manage risk has never been stronger. If you understand how to add value and grow with your clients you’re in a privileged place. Resistance is the nemesis of progress.