Why do Business Owners Leave Their Accountants? Avoid These Top 5 Mistakes
Posted on 15th June 2017 in Advisory
Written by Freya Hughes
As Ray Charles once sang, “Hit the road Jack and don’t you come back.” When it comes to accounting, don’t be Jack. If you mess up, your clients’ loyalty can wane and they’ll send you on your way or be on theirs. We’ve summarised some of the top reasons clients move on, so read this as a quick checklist to make sure you’re not making any mistakes.
Brand loyalty starts from birth in some industries but sadly, kids don’t tend to grow up inspired by their local accountants. It’s been reported that larger banks can earn an enormous $82,000 per customer, per lifetime from targeting children. “If they attract kids, they might just have a customer for life, plus score their parent’s lucrative home loans and insurance products,” writes The Sydney Morning Herald. Having a position like this in people’s lives certainly gives banks a head start in terms of customer retention. But how do we determine why people leave brands? What is it that makes them seek out your competitors and what went wrong with your relationship with your client? Let’s discover the main reasons clients abandon their accountants and how you can keep them loyal.
1. Accountants not understanding the clients business
How can you properly advise a client and add genuine value to their business if you don’t understand what they do? As a business investing in a professional accountant, I expect them to ask questions and listen, and remember! This should be continuous and if you’ve had a client for a few years and you’ve never done this – there is no time like the present. The questions don’t need to be complicated, they just need to be asked: How is your forecast looking this year? How did you perform against it last year? Can you give me an idea of your sales targets this year?
So many businesses are let down by their accountant so this is your opportunity – thousands of businesses a day move to the cloud. That’s thanks to your help but it also represents a growing market of businesses who have insights that can be unlocked and transformed into informed action to drive real results, without that much effort.
2. Not being visible
How often do you see or speak to your client? Are you sending flowers when they smash a sales target or warning them when they are 40% down on their monthly forecast? If your client doesn’t hear from you until the end of the year and they have to chase you for information, it is unlikely they will think of you as a core part of their business. Instead, you’re a “tick-box” for them. This is doing a disservice to you both – they don’t know the value you can bring and this means you’re both missing out.
A lack of communication with your client is a very risky strategy in 2017 and it will only become more so. Combine that with a bill that lands in their inbox for, erm, what was that for? What did my accountant do this year? If they can’t see you, they can’t value you. Before the cloud, the world was different and a time-delay was commonplace but, as more firms move to the cloud and adapt from being accountants to hybrid advisors, you can’t leave your client open to a better offer. One of the biggest benefits of technology is that it will keep you informed of the right thing to say, at the right time so you can just pick up the phone.
3. Failing to forecast
Serena Humphrey, Managing Director of F Word Training, tells of her experience meeting a client whose family business was four days away from running out of cash. All because of one accountant that didn’t communicate or forecast for the client’s future. The clients ran a nine-year-old manufacturing business in the UK, so had slim margins and a tight cash flow. Despite becoming a household name, the company never had much cash to play with, and the clients started to suspect something was wrong.
Serena writes, with disbelief, “Even in a business with very tight cash flow, he didn’t have a cash flow forecast. It appeared he just juggled week by week what they could pay.” The business was about to be closed by the bank and the owners faced a penalty from HMRC as their previous accountant had hidden tax files for two years from them. So how was this all fixed?
- Created a cash plan that allowed daily forecasts, and then weekly for the next four months. This took the constant panic out of the business and suppliers started to trust they would get paid.
- Put together real management accounts for the last year to see what the actual position was, and then put together an action plan.
- Found them a good management accountant to take over the monthly reporting.
- Put a strategy together focusing on the most profitable areas of the business.
4. Being unable (or unwilling) to explain things simply
“It’s simply not true that all accountants are poor communicators. It is true that some accountants use industry jargon as a way of keeping their clients in the dark and making themselves seem all that more valuable,” writes our client Square Mile Accounting, you can read their case study here.
You have to make sure that your client is on the same page as you – do they really understand their way around a P&L and balance sheet or can you help? Filling their heads with words they don’t understand is counterproductive. They will leave probably feeling less connected to their finances than before the meeting, you want to make them feel safe, secure and protected not confused and apprehensive. Keep things simple – there’s no sense in confusing people just to make yourself seem more impressive. Your clients need your services and knowledge, so make yourself approachable and friendly – it’s the easiest way to obtain trust and a positive working relationship.
5. New staff training and missed opportunities
Clients will understand that newer accountants will need training. However, they may not take kindly to you training these new employees during their consultations. Put yourself in their shoes, if you were faced with a bright young thing with no idea about your company, you or what you’re trying to achieve, you might be a bit peeved that you have to wait for them to learn it all again. People want reliability, especially from the people looking after their assets today and goals tomorrow. There is a time and a place for training, and while new staff do need contact hours with clients, it’s best to check with your customers before surprising them with it.