Kevin Whitehouse, founder of Prime Entry
The accountancy industry is currently in a state of flux, with the millennial generation beginning to infiltrate both practices and their clients. In fact, 75 per cent of professionals will be millennials by 2025 so it’s vital accountants begin to combat the traditional – and often inefficient – ways of working to ensure they keep the next generation engaged.
HMRC’s Making Tax Digital initiative seemed set to enforce this change but now this has been further delayed, it seems some firms are breaking open the champagne. They view this delay as a reason to ignore or postpone digital transformation and enjoy another two years of paper receipts and Excel documents rather than pushing themselves. Simply put, this isn’t good enough and isn’t going to attract digital natives to become clients or new recruits. To do so, it’s vital practices consider the issues facing modern business leaders and shape their firms accordingly.
The modern entrepreneur
WANT TO BUILD A FINANCIAL EMPIRE?
Subscribe to the Global Banking & Finance Review Newsletter for FREE Get Access to Exclusive Reports to Save Time & Money
By using this form you agree with the storage and handling of your data by this website. We Will Not Spam, Rent, or Sell Your Information.
The odds are severely stacked against modern entrepreneurs, with half of UK start-ups failing to last more than five years. Take the founder of a carpentry business for example – not only will he spend his days producing beautiful creations out of wood, he then needs to manage sales, cash flow and all other business critical admin.
It’s unsurprising then that so many business leaders I speak with are constantly working to stay afloat and are kept up at night by the fear of failure. Nightmares about everything from poor customer satisfaction to running out of finances and being unable to pay their employees are commonplace. This then begins to impact relationships at home, with entrepreneurs often working late or over the weekend and missing out on time with their family they’ll never be able to get back. It is these types of issues the modern accountant should be considering and aiming to resolve – simply managing tax isn’t enough.
Business owners won’t go to an accountant and just ask for tax returns, they are expecting high level business advice to help alleviate these fears and resolve the issues plaguing their company. The client wants their accountant to inspire them with innovative ideas or ways to either save or generate income. This isn’t going to happen if the practice solely focuses on tax returns and compliance while the issue is compounded when accountants only see clients once a year and offer redundant consultancy based on outdated data. Clearly, the time has come to transform the accountancy industry or face the very real prospect of practices becoming redundant.
Changing the face of accountancy
It’s been forecasted that by the end of 2017 more than 90 per cent of SMEs will be on the cloud in some form, showcasing just how digitally savvy today’s businesses are becoming. Clearly the days of clients handing over bags of physical receipts are coming to an end. However, until accountants provide robust consultancy and tell clients they aren’t working in this outdated, cumbersome manner it will continue in some instances.
This is exactly what I’ve done at Prime Entry. In 2013 I looked at my business and realised there wasn’t enough quality in our service offering. We had such a large number of businesses on the books that there was no time for us to empower or educate them, which in turn resulted in us being unable to add true value.
I took the decision to cut the client base from 350 to 120 businesses in 2013, which sounds like a terrifying prospect but comes back to the age-old question; would you take a 20 per cent pay cut to regain 80 per cent of your time. I decided this was a risk worth taking as if clients weren’t willing to do what needed to be done, I wasn’t going to work with them anymore.
This included ensuring all clients were using the same software to ensure the highest levels of efficiency so right now I know my clients are all based on KashFlow and IRIS Insight. This saves us huge amounts of time which previously would’ve been wasted on shovelling data from one system to another. This is now entirely streamlined which increases efficiency and enables us to build better relationships with businesses while the clients are reaping the rewards of running digitally. My team is now adding huge amounts of value and in my opinion this is the route the entire industry should go down if it wants to remain relevant in the digital age.
Educate before it’s too late
Too many accountants take the view that if they empower clients to manage their cash flow for example they will get to a tipping point where the client doesn’t need them anymore. This just isn’t the case. Nobody understands how to run a business better than its founder so let them run the business. If this includes managing their own business data, filing tax returns and overseeing cash flow management that’s perfect. It frees up the accountant to offer business advisory services such as forecasting to support the client’s business goals. Entrepreneurs want peace of mind that the decisions they’re making are the right ones for their business, not a professional inputting data and contacting them once a year.
For example, one of my clients is a band which had been struggling with selling merchandise at their gigs. By working with them on IRIS Insight and analysing the real-time data within the system, I was able to recommend bundling together items – one album for £10, two for £15 for example. It sounds simple, but this change has resulted in an additional £30,000 revenue for the band so far. Similarly, one of my clients was spending two days a week on bank reconciliations. After running the forecasting tool and making some minor amends to her processes, this has been reduced to one day a month. Her business has been changed for the better and I didn’t so much as look at her tax returns to do so.
If accountants continue to bury their heads in the sand and ignore the benefits educating their clients has, it’s only a matter of time before the industry has shifted to an extent where they can’t catch up. Before long the Airbnb or Uber of the accountancy industry will rear its head and traditional accountancy will become redundant. It’s therefore vital the industry changes its mindset now and begins offering services which will not only change their clients for the better, but showcase exactly how valuable an asset high-level business advisors can be. At this point, failing to do so isn’t an option.