How to make the most of your junior accountants

Junior accountants – fresh out of university, £50,000 in debt, and wanting to impress. 

So why does the profession seem to slowly crush the life and the enthusiasm out of them so quickly? 

If they join a big firm, they tend to specialise in one or two niche areas becoming experts in their field eventually but their desire to have a much wider and deeper understanding of the profession is left unfulfilled. 

If they join a smaller firm, it’s generally not as well organised, there are too many clients on the books (who are normally angry or upset at something the rare times they speak with clients), the pressure on them is intense and unrelenting, they often don’t really feel like part of a bigger team, and the hours are crushing. 

What unites junior accountants working for big firms and for smaller firms is the feeling that they’re not making a difference, they’re not learning fast enough, and they’re not getting the chance of promotion they feel they deserve. 

To millennials and Gen Zers, company culture is important as is working with the latest technology. 

Many want personal development programs in place for them at the start and nearly all of them want personalised feedback at least once every six months. 

They want to move around the businesses they work for to find the position that suits them the best to help them decide on their eventual career path – 70% of millennials join in the hope that you will create a job rotation program for them. 

This is quite a tick list for any small accountancy firm. 

However your junior accountants are the future of your practice and, in many cases, they’ll have extra energy and vitality to develop the practice that Generation Xers and Baby Boomers just don’t have anymore because they’ve got mortgages, kids, responsibilities, and so on. 

Accounting: the next generation 

To many Generation Xers and Baby Boomers, the attitude of younger members of staff can be summed up by a line delivered by an anonymous millennial member of staff to a PWC researcher in a survey of that generation’s attitude towards work: 

“My career will be one of choice, not one chosen out of desperation. It will align who I am with what I do.” 

Through a combination of watching their own parent’s experiences and from years of exposure to the news, they believe that being loyal to a company doesn’t bring any rewards or long term security to them. 

They may have a very valid point. 

Therefore what might appear to older generations to be an unreasonable and self-centred attitude makes sense with the way in which they perceive the world and how it works. 

So, what can a small accountancy practice do to first keep the junior members of staff they manage to attract and then encourage them to focus on adding value to your business and what you deliver to your clients? 

1. Give them the widest variety of tasks and be there to support them 

This is true for all of your staff but less so for more senior members of staff who statistically are more likely to be contented on further honing their expertise in areas they’re already very familiar with. 

Junior accountants are taken on by many practices to fill immediate gaps in capacity and they often tend to get stuck doing the same thing again and again. 

In addition to their general responsibilities, try to set aside a day or more every week to give them hands-on experience of, for example: 

  • preparing client accounts part way through their financial reporting period,  
  • analysing clients financial performance to look for warning signs, 
  • examining opportunities to reduce costs and increase profits for individual clients which they could then present to the client as a report, and 
  • trickier bank reconciliations to give them an appreciation of why it’s important to encourage clients to keep their financial records up to date. 

Give your junior accountants an opportunity to demonstrate their level of knowledge across particular disciplines. Congratulate and reward them when they do well and be generous with your advice, time, and support when their work doesn’t meet the required standard. 

If you have the time, show your junior accountant how you do it first with one client and ask them to do the same with other clients bringing what they’ve done back to you for feedback. 

2. Explain the importance of each function they perform to a business 

“Millennials work for a purpose and not for a pay cheque”, according to Forbes Magazine – dozens of surveys in the UK and around the world have confirmed the same. 

The best run businesses survive and prosper because their management teams work off accurate and up-to-date information. Those businesses provide their employees with jobs and they pay for the services we all rely on like the NHS, the education system, and more. 

There is a wider and greater purpose to accounting and demonstrating the value of their work to clients and to society at large will contribute to a junior employee’s sense of self-worth and increase the level of satisfaction they have working for you. 

Accounting ensures that companies compete on a level playing field and, for businesses with the potential to generate significant revenues in the future, the work done by accountants can be used to secure finance to bring forward to creation of new jobs and new opportunities. 

Accounting is a profession to be proud of. 

3. You’re their boss – take time every day to interact with junior accountants 

Three of the main reasons for unhappiness among accountants are: 

  • Expectation to work long or extended hours 
  • Lack of recognition of the work done  
  • Lack of support from managers 

Employees of all ages need to be told that they’re doing well at work – they need you to recognise the contribution they make to the practice. 

If a junior accountant feels that you, the boss, sees them every day at work and you take time out of your day to find out more about them and what they’re interested in learning, that interest and support together with the recognition for the work they’re doing will mean that, although they may not like it, they’ll work longer and harder for you because you see their quality. 

Sincere praise and congratulations are natural highs you should not deprive any of your staff of. 

Unlike more senior accountants joining your firm, junior accountants are a blank canvass. In any practice, experienced team members are needed but remember that experience also means that a member of staff is burdened by the expectations and working practices of previous employers. 

Your junior employees are, with work experience excepted, yours to mould. Your working practices will be “normal” working practices to them and you set the expectations you require from them. Take advantage of this. 

4. Partner them with senior members of staff 

To some degree, there has always been intergenerational conflict at work and today is no different. And, as in the past, it’s an overblown fear most of the time. 

The greatest gain for any small accounting practice in partnering junior and senior accountants together is the creation of camaraderie between staff members leading to the feeling that everyone belongs to the same team. 

Junior accountants benefit from knowing that senior and more experienced members of staff are approachable if they need help. And senior accountants know that, as their junior counterparts gain more experience and better insights, they’ll have their back if their workload experiences a temporary spike. 

A happy team stays together and, as long as they believe that they’re being led in the right way by you, your practice’s productivity and organisational resilience will be very strong. 

5. Encourage them to interact with clients directly 

Some people are more outgoing and gregarious than others – this is true for accountants too. 

For some junior accountants, the idea of phoning a client to speak with them is daunting, particularly if they’re ringing up to tell a client some bad news or they’re gently encouraging them to start uploading their invoices and receipts more regularly to their online bookkeeping platform. 

For your practice to be as durable, strong, and flexible as possible, clients must not feel that, if someone other than you within the firm gets in touch with them, they’re somehow being fobbed off because they’re not speaking to the main man or woman. 

Building individual relationships with clients is a learning opportunity for junior accountants and it takes the pressure of you as the head of the business to be there for every eventuality. 

And these conversations give newer team members a much better feel for the people and businesses they’re serving than analysing financial records on a computer screen ever could. 

Make sure that you’re there in the early days – practice calls with your junior colleagues prior to them picking up the phone. When they are speaking with clients for the first few times, make sure that you or a senior colleague (preferably you) are sitting next to them in case they need to ask a question. 

Following the phone call, get them to follow up with an email thanking the client for their time so that the client knows that there is more than one person looking after their account. 

As time goes on, assign more and more clients to your junior accountants to build their confidence and their portfolio making sure that there is a summary of every phone call and email so that you can make sure the relationship is progressing as it should. 

And, when it’s time to visit a client’s premises, make sure to take the junior accountant assigned to them along with you on an appointment so that your new colleagues can appreciate the business they’re working for and the jobs they’re supporting. 

6. Review their performance and ask for their opinions 

Try to review your junior accountant’s progress every six months at a maximum – let them know which areas they’re doing well in and which areas you feel they need further support in. 

But make sure that your performance reviews are just as much about listening to their opinions as sharing your own. 

In particular, ask them what the practice needs to do to make their work easier and more enjoyable – it must be the goal of every practice owner and every business owner to remove as many obstacles as possible stopping their employees from doing the best work they can do. 

Working with you, they’ll have an opportunity they won’t have working for a big firm or a large company’s internal accounting team to broaden their knowledge and their range of skills.  

At the performance meeting, ask your junior accountants which assignments they’d like to work on to both widen and deepen their general knowledge and to provide additional experience in those areas where you feel that they have not excelled yet. 

Getting your practice ready for junior accountants 

Above is a large tick-list and you might be wondering just how you can fit so many activities into your practice’s overcrowded schedule. 

We developed Hindsight over 18 months to make the business of running a small accounting firm easier by: 

  • automating many of the tasks you and your colleagues already do, 
  • allowing you to see which clients need additional training and prompting to keep their financial records up to date on Xero, and 
  • providing notifications to you and your team when a client may require help together with guidance on the type of help which you could offer. 

Hindsight has been designed to free up much more of your and your colleague’s time by making sure that the bulk of the work needed to complete a period end, year end, or Self Assessment is borne by the client over the year. 

You can use the time you’ve gained with Hindsight to make colleagues’ workloads more manageable, to delegate more of your responsibilities to colleagues, to create a better team atmosphere, and to free your practice’s dependence on you. 

You and your colleagues will have the time and the mind space to improve your relationships with your clients, offer advisory services with the support of Hindsight’s tips, and to charge a fair rate for the value you deliver. 

To find out more, please click here.  

Why small businesses need accountants and how you should pitch your services

Temporary periods of success or failure in how a client is running their business can be determined quickly by an accountant reviewing their Xero account. Sales minus expenses and taxes, is the amount left in a client’s bank account going up every quarter or is it not? 

This is the most simplistic measure, of course, but the analytical skills of an experienced accountant can reveal so much more to a client. 

You can use statistical analysis to give clients an idea of the size of forthcoming tax liabilities and whether they have the cash to afford them.  

You can interrogate last quarter’s figures and compare them with the same quarter in the previous year to examine whether turnover and profit margins have increased, remained stable, or declined. You then share with them the course of action they need to take to make more money. 

With nearly 6,000,000 businesses out there in the UK and 16,000 accountants competing to serve them, how do you position your practice to win as much business as possible while charging a rate that’s fair and commensurate with the effort you put in? 

To do this, you need to get your marketing and selling right. Marketing is the activity by which leads are generated and sales is the activity by which leads are converted into paying clients. 

Before any lead is generated or package sold, clients need to perceive and appreciate the value of what you’re offering them. That’s because, without the perception or appreciation of value, there will be no lead or sale.  

Why small businesses need accountants 

Small business owners need accountants to prepare their tax returns and ensure that those tax returns are submitted on time to HMRC and/or Companies House. 

When preparing their tax returns, clients need the re-assurance that their accountant is doing as much as they can legally to reduce their liability to HMRC. 

Clients also expect accountants to be able to answer their questions on the methodology used to calculate the amount of tax due and on other day-to-day accounting questions. 

These are the main reasons why small businesses need accountants and you’ll notice that, above, what we’ve covered are essentially only your legal requirements. 

What small businesses want from their accountants 

But clients today actually want much more than that and the way you’ll be able to charge a fair fee for your service is by appealing to and following up on clients’ actual desires. 

According to ClearBooks, 68% of clients want an accountant who’s in regular touch with them, someone they can get along with easily, who’s down the road from where they are, and who has a bank of knowledge they can tap. 

For only one in five clients, price is the most important thing – this means that, for four out of five of the potential clients you pitch on average, they’re after something more but what exactly? 

When questioned by surveyors, the type of assistance clients want the least help from is on tax – only one in 25 were particularly interested in that. 

42% of respondents said that the assistance they wanted the most was on business strategy and general financial advice – a clear indication that they’re after a partner on a journey of company growth where you can help them make the greatest return possible while being exposed to the smallest amount of risk. 

One in four respondents wanted advice on budgeting – they’re looking to you to help them save money on their fixed and variable costs. They might not really be particularly bothered about growth – instead all they want to do is make more money from the same amount of work they’re doing now. 

Around one in seven want help with payroll – that’s great for you because it’s another service you can charge for. 

From the results of the survey, it’s clear that your clients want you to be more than a filer of tax submissions – they want you to be a lot more to them and you have every right to charge more for your time and expertise. 

Being selective about who you work with 

Your accountancy practice is your business and, in the way you’re in charge of the terms and conditions of doing business with you, you’re in charge of the type of client you work with. 

One quarter of businesses still rely on paper-based accounting. Around one-third use non-cloud software (like Excel) for financial recordkeeping. 

These types of clients will be more difficult to manage unless you can sell them on-site bookkeeping services as part of your monthly fee structure. 

Very small businesses may use Xero or another online bookkeeping package but they tend to have the same person responsible for doing the books, managing the day-to-day of their company, human resources, and a lot more. 

Some clients, like these, are more difficult to service than others.  

If you feel that a client won’t update their online bookkeeping platform regularly enough or you feel that there would be too much work for one of your bookkeepers to manage two systems at once (for example, a paper system plus Xero), are you sure that you want to take that work on? 

Likewise on turnover. Two companies turning over £1,000,000+ may require very different levels of management from you and your team if one sells high-ticket items and the other fast-moving consumer goods. Do you have the capacity to manage a client with hundreds of weekly transactions and aggregated payments from multiple sources which need careful bank reconciliation? 

The type of client you want to attract will dictate the marketing and sales approach you take so we would strongly advise you to think about who you want to deal with first before you find yourself with a dozen or more clients who take up an inordinate amount of time for little or no extra recompense. 

Marketing your accounting firm 

Once you’ve decided on the typical client you wish to work with, you then need to know which services they are likely to want the most and ensure that, when you sign them up, you’re capable of delivering those services to them. 

Those services should form the core of your marketing message as they will demonstrate the value you offer to future clients. As mentioned earlier, if a recipient of your marketing does not see the value in your proposition, you give them no reason to contact you. 

There are three main ways to market your practice other than networking and word-of-mouth: 

  • online marketing – optimising your website for Google, adding articles and blog posts to your website, collecting email addresses from visitors not ready to become a client yet, 
  • social media marketing – building an audience on LinkedIn and Facebook through daily posting and creating downloadable content in exchange for contact details, and 
  • direct marketing – unsolicited contact by email, phone, and mail promoting your services to the audiences you target. 

Selling your accounting services face to face 

Pre-COVID-19, most clients signed up with their accountant following a face to face meeting. Although this has been temporarily replaced by Zoom and phone calls, we’re certain that face to face meetings either at your offices or at your clients’ premises will continue post-pandemic. 

As you do already, make sure that you listen to the client with a view to understanding their business as much as possible, gaining an insight into what personal and professional success means to them, and assuring them that you’ll successfully serve them in the ways they desire and they perceive that their current accountant is letting them down. 

Let your client know as much in advance about what you’ll expect from them with specific mention of keeping their online bookkeeping platform up to date as possible. 

You may choose to take the approach that, because of the extra backlog created by clients who don’t keep their financial records up to date as much as you’d like, you will only be happy to serve them if they employ the services of one of your bookkeepers to visit them once a month, fortnight, or week. 

In sales, you achieve more by being absolutely clear on the value that you offer and by assuring the client that they will get the service promised as long as they carry out their promises to you. 

Adding Hindsight to your practice as your workload grows 

As you sign up more clients, it’s important to make sure that they use the bookkeeping package you supply them with. By doing that, the work required by client is much more evenly spread out during the year and it avoids you and your colleagues having to deal with near-impossible backlogs at key times of year. 

The Hindsight plug-in to Xero has been designed to do just that. 

Instead of you and your colleagues logging in periodically to each client’s Xero account and running multiple and various reports each time to analyse each client’s key metrics, Hindsight does that automatically every morning. 

You and your colleagues are then presented with a list of tasks and insights related to both financial recordkeeping and business performance for each client. Better still, there are notes with each task on how to explain the importance of each message so that it makes sense to the client. 

Clients particularly appreciate accountants who they believe are monitoring their performance, know their businesses well enough to suggest improvements, and intervene to stop them making mistakes. 

To find out more about Hindsight and how it frees up your and your colleagues’ time and delivers a better service to clients, please click here to arrange a phone call with our team. Alternatively, please click here to email us. 

How an accountant can help a business succeed

Gone (thankfully) are the days of clients dropping in dozens of plastic shopping bags containing the year’s outbound and inbound invoices in no particular order a few weeks before the submission deadline. 

In recent years, this annual ritual has been replaced thanks to the widespread adoption of online bookkeeping and accounting platforms. 

The theory goes that, every morning, your clients will dutifully sit at their desks inputting their invoices and receipts onto these online platforms. 

When period end or year end comes, waiting for you is an accurately-filed and up-to-date set of financial records whose information you can use to complete HMRC and Companies House submissions. 

That’s not the case however most of the time. Sorry for stating the obvious. 

Three types of client, one shared perception 

Some clients rarely update their online bookkeeping platforms meaning that, in essence, you and your colleagues are involved in a similar scramble to complete submissions on time like the old days. 

With other clients, they have kept their records up-to-date to a fashion but entries are misclassified in many cases and getting the entries to reconcile with the bank account takes hours of your and your colleagues’ time up. 

Finally, with a handful of clients, the quality of their bookkeeping is thankfully nearly there and the amount of work you and your colleagues need to do is minimal. 

The problem is however that each of the three types of client believes that they have taken a lot of the donkey work away from you because you sold them an online bookkeeping platform as part of your service, regardless of whether they regularly use it or whether they use it correctly. 

Nature abhors a vacuum. 

Clients expect you to replace that time by providing extra value to them even though, in some cases, the amount of work you have to spend in time and wages sorting out a client’s shoddy financial recordkeeping might be more than is greater than the fee income you receive from them. 

If they don’t perceive the value in the services you deliver them, then they’ll happily drop you for another accountant providing their services for £50 a year less. 

This has led to a race to the bottom for fees and no-one wins when this is the case. 

The problem with online bookkeeping platforms 

As accountants, we do save varying degrees of time spent on most clients’ accounts because the vast majority of clients do use the bookkeeping platforms we sell to them albeit not particularly well. 

As a result, the early promises made to us by the online bookkeeping platform salespeople did not come into full fruition. 

More often than not, these platforms are built for the benefit of the small businesses and not their accountants.  

When we as accountants log into client’s online accounts, they’re not always the way we need them to be for us to do the work we need to do. 

Many of us found this out too late though. 

The supposed extra time we would benefit from through clients’ use of these platforms led to many of us rapidly doubling or trebling the number of clients we served because we thought we’d have the extra capacity to do so. 

We didn’t and, as a result, this led to an unexpected and unwanted decline in the standard of service we provided to clients because there just weren’t enough hours to complete the work we needed to complete. 

Particularly at those times of year where there are spikes in workload, it’s very difficult to manage an estate of 100-500 clients even with bookkeeping software because we’re working to immovable deadlines. 

The opportunity with online bookkeeping platforms 

However, online accounting platforms actually hold the key to successfully charging more per month for our services as well as giving us the time to find opportunities for additional work. 

The key is automation and workload management. 

Whether you have 100 or 500 clients, you should make a checklist of points of concern or points of opportunity for each. From that checklist, decide what it is that you need to see when you log into your clients’ accounts which would qualify as a point of concern or a point of opportunity. 

Share the points of concern and opportunity with your members of staff.  

Set a timetable for you and your colleagues to log into each client account once a month – more if possible but once a month at least. If you have 500 clients and 5 members of staff, each member of staff would only need to check 5 client accounts each day during the month. 

Areas to look out for include: 

  • changes in transaction volumes, 
  • when the last invoice was issued, 
  • changes in average invoice value, 
  • last bank reconciliation and the number of unreconciled transactions, 
  • high credit card or overdraft levels, and 
  • size of bank balance. 

Your staff can check whether there is a problem with an individual client by using the guidelines you set for each one and by running a handful of reports on the online accounting platform. 

The 21st century accounting business model 

Taking this approach solves a number of issues. 

For clients, this is the added value. 28% of clients look for a communicative accountant – a professional who knows them and their business well.  

By examining client accounts for problems or opportunities once a month or more, reasons to communicate regularly with the client present themselves. 

And through that communication, you deliver what clients want the most – business strategy, budgeting advice, and more. 

Your client gets the chance to talk with you or your colleagues about themselves and their businesses. Through these conversations, you get to better understand what they want and you can adjust the definition of “problem” and “opportunity” accordingly when later logging into their online bookkeeping platform to check the health of their businesses. 

In addition, by helping clients better use their online bookkeeping platforms, the amount of remedial work you’ll need to do at period end or year end will be far smaller and the results you deliver to clients when measured by tax saved will be greater. 

For members of staff, you vary their workday and you have the opportunity to train them. 

Behind the financial records of a business are the hopes and dreams of a client. Teach members of staff not only what these numbers mean from an accounting perspective but from a business perspective. 

You and your members of staff can share ideas during these client conversations and ask your clients for feedback. 

36% of accountants admitted they were unhappy with their working environment, reports the ICAEW. 

42% of unhappy accountants said they were unhappy because of a lack of opportunities for development. 

For junior members of staff, behind every accountancy degree is a £21,000 price tag in tuition fees. 

Encourage your junior and senior staff to look past the numbers to see the person and, by doing so, you’ll demonstrate the true value of the work they do for clients. 

Share your knowledge, be generous with your experience, and make sure as much as you can that your staff do not feel neglected by giving them a wider variety of work to do and the knowledge they need to do it well. 

For you, the change will be profound. 

Yours will be an accounting practice which takes a bookkeeper’s approach. You’re not just there at period end or year end, you’re there once a month. 

Unlike other firms, you and your team will truly be in command of your workload – not the other way around. 

Certainly, there will be pressure points, particularly in January, but, because there has been active management of each client’s account, it will be a much less intense time. 

Value, for the owner of a small accountancy practice, is not just measured in the money you pay yourself or the number of clients you have. 

The real value in running a business is freedom. 

By installing a system which keeps you and your colleagues up to date with every business on your books and which delivers opportunities for your colleagues to make meaningful, regular, and helpful contact with each client, your business will not need as much of your time and effort as it did before. 

You won’t have to compete on price either – you can be the accountant which chooses to model their business around looking after 200 clients superbly for £750 a month rather than barely coping managing 750 clients for £200 a month. 

You’ll have a well-motivated and well-trained team your client base values – they won’t see speaking with one of your colleagues as being fobbed off speaking with a junior. 

This is the 21st century accounting business model which makes for higher paying and more loyal clients, a settled and happy workforce, a supremely-manageable workload, and an owner who can lead more effectively but have the option of stepping back every now and again. 

This is how an accountant can help a client’s business succeed and their own business succeed. 

The app supporting the 21st century accounting business model 

We believe in the potential offered by online bookkeeping and accounting platforms but we’re not blind to their problems either. 

We built Hindsight – Hindsight logs into each of your clients’ Xero accounts automatically and flags up what you deem to be potential client problems and opportunities automatically. 

As well as saving you and your colleagues the time needed to access each client account and quickly run reports, it also provides users with prompts on how to speak with the client about the issues or opportunities uncovered. 

You can divide responsibility by client and by issue/opportunity raised between you and your colleagues and, at all time, you’ll have full visibility on how each client and each issue/opportunity is being managed. 

To find out more, please click here.  

The most common mistakes accountants make in clients’ eyes

There are plenty of articles on the internet advising accountants on the most common and simple mistakes they should avoid. 

They all dispense good advice. 

Bill Tsotos writing for Accounting Today’s advice is particularly sage – failure to understand a client and their business and industry is a very bad mistake as is not differentiating yourself sufficiently from your competitors. 

Not billing what you’re worth is very prevalent in the industry at the moment but it’s understandable in a marketplace which has been defined by downward price pressure for nearly a decade. 

Of Bill’s reasons though, I’d like to focus on “not being proactive” because I have found that’s the biggest problem facing accountants in the UK today. 

For the purposes of this article, “proactive” means getting in touch with your clients with actionable and useful information as well as inviting feedback. Email is fine for contacting clients but people buy people first so it’s even better if you can be “proactive” face to face or over the phone. 

Lack of proactivity is the main reason behind the downward price pressure in the sector and it explains why a client turning over £1,000,000+ a year would gladly jump into the arms of a competitor to save £50 a year. 

What do 68% of accounting clients want? 

According to ClearBooks, 68% of clients want an accountant who: 

  • is in regular touch with them,  
  • they can get along with easily,  
  • is down the road from where they are, and 
  • has a bank of knowledge they can tap. 

For only 21% of clients, price was the most important aspect when choosing an accountant. 

If this is the case, why is there such pressure on accountants’ prices at the moment? 

It’s because there is a fundamental disconnect between what an accountant thinks a client wants and what clients actually want. 

Clients want far more from their accountant than accountants believe. 

The big picture from the perspective of an accounting client 

Your client has both short-term and long-term needs of you but you might be only pricing for the long-term needs at the moment. 

A client’s long-term needs generally are to have the reassurance that they won’t miss any HMRC or Companies House deadlines and that they won’t pay any more in personal or corporation tax than they need to. 

And the likelihood is that your practice is primarily structured and staffed to adequately meet those long-term needs. 

There is probably some additional slack within your practice to represent a client if someone has approached them to buy their business and they need you for the due diligence process but not much more. 

There is well-known expression that journalists write the first version of history and, much later on, a historian then summarises the events the journalist was writing about but from a much broader perspective. 

You, the accountant, are a client’s historian and you provide historical summaries of events and financial transactions which happened between 9 and 21 months ago in the form of HMRC and Companies House submissions. 

However, clients more than ever want reporters on the ground as well as historians to help them understand: 

  • how their business is doing today and  
  • how close they are to achieving their personal and professional financial goals within the timeframe they set for themselves. 

The pros and cons of bookkeeping packages 

In the past, clients were generally satisfied with working with a “historian” because there wasn’t really an alternative. 

Since then, the Internet and online accounting and bookkeeping programmes have appeared and they’ve fundamentally changed clients’ expectations. 

Whenever an accountant sells his or her practice’s services to a client, they now almost always come with a bundled online bookkeeping programme. 

And each existing and new client knows that, once they’ve given you permission to log into their platform, you have the ability to monitor how they’re doing at a time of your choosing. 

Nearly every client then convinces themselves that you will be some sort of benevolent, overseeing eye checking in multiple times a day just to make sure that everything is on track. 

What the client doesn’t realise though is that, along with their log-in details, you have the log-in details of hundreds of other clients. 

What they also don’t know is how long it takes to log in to account after account and how long it takes to run multiple reports to assess the health of each client’s business. 

Nor do they appreciate how so few clients using online bookkeeping packages update them regularly or correctly which cumulatively creates a tidal wave of additional work for you and your colleagues. 

Online bookkeeping programmes do save accountants time but not nearly enough and, together with accountants having more clients than ever before, there are not enough hours in the day to provide the type of constant oversight that a client wants. 

But what if there was? 

The importance of immediacy for accounting clients 

If there was a way to use online bookkeeping packages to… 

  • monitor clients’ ongoing financial performance, 
  • alert you and your staff to when there was a problem or an opportunity, and 
  • provide you with the guidance you needed on how to help your client make the most of the problem or the opportunity 

…you could then start to provide clients with their short-term needs, demonstrate your value to them, and charge them more. 

Time after time, it’s what clients tell accountants and pollsters what they want. 

According to ClearBooks, clients value communication over every other aspect when they’re deciding which accountant to use. One in five also want an accountant whose personality agrees with theirs. 

What do they want from this communication? 

They want your help in formulating future strategy for their business (32%) and on budgeting (23%). Only 4% want assistance on tax. 

So while an accountant sees their core job as helping clients save money on tax, what clients actually want from you is for you to be a general sounding board and a trouble-shooter – they want to be able to access your experience in helping them make more money or save money. 

Welcome to Hindsight 

Hindsight is a plug-in app for Xero designed to allow you to offer the services clients actually want and are willing to pay a premium for. 

Hindsight logs into each of your client’s Xero accountants every day and monitors each one to provide you and your colleagues with instant information on how well each client’s business is doing and how well they’re using Xero. 

As well as providing you and your colleagues with generic flags (signifying a threat or an opportunity) on each client, you can also program in client-specific flags covering 12 distinct areas of financial performance and Xero usage. 

Better still, accompanying each flag are instructions for your staff (which you can customise) on how to solve the problem, what it means in both financial and business terms to the client, and what to say to the client to deliver extra value. 

So Hindsight constantly monitors clients’ performances, it attributes responsibility for dealing with certain issues and clients to the colleagues you choose, and it trains staff on the consequences of each red flag and how to explain them to your clients. 

Hindsight offers on the ground reporting as well as the information you need to file clients’ accounts and submissions to HMRC and Companies House. 

 
To find out more, please schedule a call using the panel below or email us by clicking here

Why small is often much better than big for accounting clients

Until you own a business, you don’t quite realise how personal it is and how competitive it makes you. 

For owners of small accounting firms looking at their bigger local rivals with five times or more clients than they have, it’s OK to occasionally think that “it must be nice to be in their shoes”. 

But before you feel tempted to punish yourself because they might be a better businessperson or a better accountant than you, you need to look a little closer, with respect. 

Headache or hangover from hell? 

Having 200 clients gives you and your team an occasional headache especially as year ends, period ends, and Self Assessments loom closely on the horizon. 

As the owner of your company, the responsibility rests on your shoulders to make sure that you and your team get through the workload in time saving your clients as much money as possible. 

Management of other staff is difficult at the best of times. And in the worst of times when the pressure is really on, management of staff under stress prone to occasionally emotionality because of that stress would challenge even the most patient and wise of us. 

The owners of larger local rivals with significantly higher client headcounts than your firm go through what you go through to a much greater degree. 

If having 200 clients is an occasional headache then having 1,000 clients is the worst and most persistent hangover imaginable. 

“Ah”, you might say, “but the guy/girl running the practice with 1,000 clients has five times the number of staff I have so they’ll be able to cope”. 

This is a fair point but you must also remember that the management stresses you feel at pinch points during the year will be greatly magnified for them.  

In addition, it’s a truism that the more number of people you employ, the less influence and control you have over each of them individually. 

So, for owners of large accounting firms looking at their small local rivals with a fifth of the number of clients to deal with than they have, it’s OK for them to occasionally think “why the hell did I let it get to this size?” 

Your size is your greatest strength 

It’s the greatest strength for you because, although you feel the pressure, it’s not always overwhelming. 

For your staff, there are probably less clients to deal with per head than at your larger local rivals. They don’t realise that they’ve actually got it pretty good in comparison and, later on in this article, I’m going to suggest a way to make their lives and your life a little easier. 

Your customers also benefit from dealing with you personally. Your practice, as it is now, will face many of the same issues and challenges as your clients’ businesses. 

This gives you something in common with clients – this is important because people buy from people they like and they buy from people like them. In other words, to them, you’re just like them. 

This gives you a competitive advantage over your bigger local rivals where client accounts are much more likely to be handled by someone without the experience of running a business or working for a smaller business. 

Now how do you take advantage of this so that you, your staff, and your clients benefit? 

Turnover is vanity, profit is sanity 

Your bigger local rivals’ turnover figures will look meaty and impressive but the people who own these practices will pay a heavy physical and emotional price for this measure of “success”. 

If you’ve ever helped a client sell their business and you’re helping them through the due diligence process, you know, the buyer knows, and the buyer’s accountant knows that turnover is important but not in the way that the seller of a business thinks it is. 

For a buyer, the turnover of a company they wish to purchase gives them an indication of how much extra profit and value they can squeeze out of a business after they’ve bought it and re-organised it. 

The seller will not get the price they want or believe they deserve for two reasons: 

  1. in the mind of the buyer, the seller has run it poorly and 
  1. the buyer has to spend his or her own time and money on putting it right. 

Likewise, an accounting practice with 1,000 clients making the equivalent of £250 a year net profit from each client is intrinsically worth less than an accounting practice with 200 clients making the equivalent of £1,250 a year net profit from each client. 

Despite both companies making the same net profit, the buyer of the smaller practice is taking over a much better run, well-organised money generating machine whose processes are probably much more automated and efficient and which requires less management time or post-purchase investment. 

The smaller business is much more likely to have chased profit than chased turnover during its development. 

Not only is that the type of accounting practice someone would want to buy but it’s also the type of accounting practice which is much more pleasant and enjoyable to run. 

So how do you turn your current accounting practice into one which is much more profitable, much more pleasant to run, where the staff are happier, and where you can sell add-on services to appreciative clients? 

Accounting is a process so make the process as simple as possible 

Because the general operating rules of accounting are so well-established and because, when working on clients’ accounts, we’re also following clear rules set down by HMRC and Companies House, our day to day work, although mentally challenging, is not particularly innovative. 

If all of the entries in a client’s financial record are properly recorded and attributed, we can’t save our clients any more in the tax they pay than our local rivals, whether they are large or small. 

To prepare a client’s accounts and the year ends/period ends, you and your colleagues need to perform hundreds or sometimes thousands of relatively simple tasks over a given period of time. 

In many accounting practices, this process of undertaking these hundreds or thousands of relatively simple tasks takes place in the two to three months coming up to year end, period end, or Self Assessment. By taking this approach, the eight to twelve weeks prior to the 31st of January is hell for many small accountancy practice owners and their colleagues. 

But what if those tasks were much more evenly spread over the course of 12 months using the financial information recorded on Xero? 

If you and your colleagues logged into each account once a month to check on how each client’s business was faring and how well they were keeping their financial records, you’d be able to spot many of the issues which cause such stress when submission dates are approaching. 

If there was a particular issue – too many unreconciled transactions, low cash balances, clients’ customers taking too long to pay them – you or your colleagues could alert your client. 

Not only will that mean that there’s a better chance that your clients’ bookkeeping will actually be usable but also your client is more than likely unaware that there is a problem. 

One of clients’ major issues with their accountants is a lack of contact.  

A monthly mini-audit gives your practice a reason to get in touch with your clients to let them know how they’re doing. Take each of these opportunities to learn something new about the client and their personal & professional financial ambitions. 

If, following multiple contacts from you or your staff, the client does not mend their ways regarding the standard and/or frequency of their financial recordkeeping, let them know that, to continue with your services, they have to allow your bookkeeper in once a month or once a fortnight (for an additional fee) or that you will be unable to service them. 

It’s unfair on you, your staff, and your other clients if one particular client takes up a great deal more time than is necessary and your practice is not being compensated fairly for it. 

This is your business – it’s your practice. You decide which clients you take on, you decide the terms and conditions of trade, and you decide what is acceptable behaviour from clients and what isn’t. 

The Hindsight app is built for just this 

I realise that, with the way in which many smaller accounting practices organise their days, the idea of a monthly short audit of each client’s account will seem almost impossible to fit into your existing schedule let alone the support call you make after. 

However, when clients know what is expected of them and you share with them the reason why things need to be done in the way you prescribe, the workload for you and your staff actually decreases rapidly because clients now have the confidence to do what you’re asking them and they can see the value in it. 

The Hindsight plug-in for Xero is something which my team and I have been working on for 18 months. 

It’s the tool I wish I had when I ran a small accounting practice. Every morning, it automatically logs into each client’s Xero account and runs a series of insights. You can either choose to go with the generic insights for a client or customise in your own (we’re on hand to help you do that if you need us to). 

When you and your staff open up, it presents these annotated insights to you and your colleagues – you can assign insights to team members by task, by client, or both. Along with the insights, Hindsight will provide guidance on what to say to each client in each situation. 

You’ll find that, within weeks, the workload on you and your colleagues will be smooth rather than lumpy at particular periods of the year. 

Your staff will enjoy work with much of the pressure off and, for junior accountants, the ability to assign certain tasks to them is the equivalent of learning on the job and this exposure to different responsibilities will make them and your more senior members of staff more agile in times of extreme pressure. 

And for you, the accounting practice owner, you have the benefit of retaining many more of your existing clients through enhanced communications and the ability through your deeper relationships with them and the extra time you have during the working well to sell on additional services. 

Please click here to arrange a phone call with our team or, alternatively, please click here to email us. 

How much do accountants charge?

Most visitors landing on this page are potential clients seeking information on how much accountants charge. If that’s you, I’m sorry but this page is not for you. 

We’ve written this article for accountants who want to benefit from an alternative view of charging clients more for their services. 

Why is this? It’s because there has been significant competition in recent years within the sector leading to constant downward price pressure. 

If you run a small accounting practice and the previous enjoyment and satisfaction you may have derived from being your own boss is rapidly dwindling because you feel you’re working too hard for too little reward, welcome (and I’m sorry you’re feeling this way). 

We’re Hindsight and we’ve spent the last 18 months building a Xero plug-in specifically designed to give you and your staff much more time and space to do what you do better and charge a fair price for it. 

The perception of value 

To understand what you should be charging your clients, you need to be able to understand what value is in the mind of your clients. 

Without potential clients perceiving value in your services, you’re just one accountant among thousands of others and you’ll end up competing solely on price. 

Your current clients – the companies paying you a direct debit every month – will be more likely to leave you if they can’t perceive any added value in your services compared to your competitors’ services. 

But what do clients want to read on your website and hear from you in person or over the phone when they’re choosing an accountant? 

How the accounting market has changed 

The clients of today are different from the clients of 10 years ago. 

In the last decade, there has been the following two significant changes: 

  1. the move to make payment to accountants by monthly direct debit and 
  1. the widespread take-up of online bookkeeping and accounting platforms like Xero. 

Although they may seem like two distinctly separate things, they’re actually very closely related. 

Prior to online bookkeeping and accounting platforms, it’s fair to say that most accountants had a strong bookkeeping element to their service. 

That bookkeeping element would be charged in one of two ways depending on the clients behaviour. You would either: 

  1. make a charge per hour on top of your normal accounting fees because the client sent in their invoices and receipts once or twice a year by post for you and your team to sort out or 
  1. you would charge them a fixed amount per month for a bookkeeper to visit your client’s premises, input and classify all the invoices and receipts onto a spreadsheet making sure that what was on the spreadsheet reconciled with what was in the bank account. 

Many accountants decided to drop bookkeeping support entirely or significantly as they were encouraged by the online accounting packages to sell their software to clients. 

It made sense even though, in a way, it severed a major part of the connection they previously had with their clients through being involved in the ongoing updating of financial records.  

These new online packages were designed to shift the burden of regularly bookkeeping from you and your staff to the client. 

This removal of workload from your practice might free up 20-40 hours’ worth of work per client every year – time you could instead spend expanding the number of clients you had on your books. 

And that’s what many accountants did. They believed that they could replace the 20-40 hours’ worth of work they were going to save per client thanks to online bookkeeping platforms by signing up one or two more clients. 

When accountants were selling their services to clients, they promised faithfully and honestly that theirs was not only an accounting firm but a consulting and advice firm too. 

They weren’t there to just do the books – they were going to be a partner on their client’s journey until the time they achieved what they considered personal and professional financial success thanks to the regular supply of information they got from Xero, Quickbooks, and the like. 

The penny began to drop 

As existing and future clients were transitioned to online bookkeeping platforms, a number of problems began to emerge. 

First, clients weren’t actually very good in the main at using the platforms. 

They didn’t appreciate the importance of allocating every invoice they received and paid correctly – but why should they? It had never been their responsibility before and, if push came to shove, the accountant would just do it anyway as part of their monthly fee. 

If a client took in payments via debit or credit card, it was difficult for them to figure out which invoices had been transferred into their account via the daily settlement from their merchant provider and mark them as such on their online accounting platform. 

Bank reconciliation is difficult for accountants but, for many clients, the process was baffling. 

A combination of these factors and others meant that the software was not used correctly or often enough. 

Clients began to struggle to see the value in their online bookkeeping packages as well as wondering why you recommended to them in the first place. 

Second, accountants became frustrated with the software because they were more designed for small business owners and not accountants. 

Because many took the opportunity to increase the number of clients they served, they didn’t have the time required, particularly at certain points during the year, to make sure that their clients were using the software properly. 

Within a few months and on a seeming continuing basis since, accountants found that, as they prepared clients’ year ends and period ends, the volume of work was daunting because of the remedial repairs which had to be made to each client’s bookkeeping records. 

While that remedial work was less than the remedial work needed by the type of client who brought their invoices and receipts in once or twice a year in plastic bags, they had two to three times the number of customers to deal with than before. 

Small accounting practices soon entered a constant survival mode which came at great cost to: 

  • clients who were oversold the level of service and insight they could expect, 
  • members of staff whose workloads were so high that, when they came into the office each morning, they felt crushed by the pressure, and 
  • owners whose dreams of providing the service they wanted to clients were unrealistic given the workload. 

Clients, particularly those who had been in business 10 or more years, complain about the quality of their accountants much more than they did a decade or more ago – they’ve noticed the change and it’s not been for the better. 

70% of SME owners would not recommend their accountant to other business owners – 39% of millennials are unhappy and this is the next generation of fee-paying clients. 

Over a quarter said they are likely to switch accountants, according to research by Xero. 

No-one is winning in this situation. 

I know – I sold my old accountancy practice because I hit many of the same brick walls as you might have done. 

But I still have a love and affection for the industry so I spent the following 18 months creating a plug-in to Xero with the features I would have really wanted as a small accountancy practice owner. 

Discovering your true price point 

Let’s start this discussion from a base point. 

When I was running my own small accountancy practice, I became slightly obsessed by the number of clients I served as I considered it a mark of the success of what I was doing. 

I was wrong. 

If you don’t have the internal infrastructure and working procedures to cope, 100 clients is a challenge and 500 clients is a nightmare. 

Every new client you add does pay money into your bank account but they also represent an incremental magnification of the problems you and your staff are already going through. 

If I had my time over, I’d concentrate on providing the best possible service and adding the most value to 100 customers for £500 a month rather than providing a poor service and adding very little value to 500 customers for £100 a month. 

So how do you get from one point to the other? 

First, only take on the customers you want to take on. Do you get on with the other person? In 6 months’ time, would you and your staff enjoy speaking to them on the phone? 

Second, charge your services out per transaction and not by anticipated time taken or turnover.  

One business turning over £1,000,000 a year might issue 100 invoices at an average order value of £10,000 whereas another turning over the same amount might make 10,000 sales at £100 a time. 

Set a base price per transaction that you’re not willing to go under and stick to it. If they want a Rolls Royce for the price of a Lada, send them respectfully elsewhere. 

Third, view your clients’ online bookkeeping systems as an early warning system and not an enemy. 

One aspect we’ve built into Hindsight is the functionality to log into every clients’ Xero account each morning. 

We have introduced generic warning flags as well as the ability to create individual warning flags on the plug-in to let you know if a client’s bank account balance is too low, their debt too high, it’s taking too long for their customers to pay them, and more. 

Four, share your knowledge and spread out responsibilities among your staff. 

This will vary their working day and it’ll provide you with an opportunity for short daily one-to-one training sessions as you explain the business significance behind the numbers on the screen. 

With degrees costing £50,000 or more, the barrier to entry to becoming an accountant has never been higher so channel your junior staff’s desire to learn and to justify their investment in themselves by giving them a grounding in dealing with clients. 

Better still, by logging into clients’ accounts regularly either via Hindsight or manually, colleagues will be able to tell who is struggling to use the system and they then have the chance to talk them through what they need to be doing.  

If the client still doesn’t follow through, there’s an opportunity to earn extra fees for your practice by selling your bookkeeping service. 

By making sure clients’ records are up to date, this will greatly reduce pressure points at year end, period end, and at Self Assessment time. 

Five, try to really sell your colleagues’ expertise and experience to your clients so that they don’t feel as if you’re too important or busy to talk to them when there’s an issue. 

Other than calling clients to teach them how to use their online bookkeeping better, you and your colleagues should find some reason to get in touch at least once a quarter – good by email but even better by phone. 

Every interaction makes your service and your input more vital to the client as well as creating a clearer picture in your mind and your colleagues’ mind what would make each individual client happier. 

Building a team and exploiting the information provided to you by clients during conversations and via their online bookkeeping platforms gives you the opportunity to create added value

You and your team will be seen as a partner and a consigliere to your clients – the burden of responsibility will no longer solely be borne by you as principal. 

The level of dissatisfaction with most accountants right now is at a peak level and there is an opportunity to win higher value clients, share responsibility with newly-motivated and engaged staff, and remove some of the pressure from yourself and your team. 

Selling additional services 

The inverse law of sales is true in every profession. 

It roughly states that the lower the order value, the more likely the client is to be an arse if things go wrong. 

That’s because their money is a lot tighter in general and they need to see the value in your services much more than higher-spending clients. 

By serving a smaller range of clients better and faster, you’ll be able to use the trust they’ve acquired in you to sell higher-value ad hoc services like business plan preparation, IHT planning, R&D tax credits, patent box credits, and more. 

And you’ll have a much better idea of which clients need what because of the constant communication you and your staff have with them. 

Find out more 

I’d really appreciate the opportunity to speak with you to find out more about your practice, the types of client you serve, and what you want for your practice and for yourself in the coming 3-5 years. 

My team and I have created Hindsight with the sole purpose of providing the infrastructure a practice needs to operate at its most efficient and to better utilise the time and talents of you and your staff. 

To find out more, please click here to book an appointment time or email us here

Does your practice have a people problem, a systems problem, or both?

An accountant’s practice is, like every other business, dependent on the people and systems it has in place to deliver the desired result to the client. 

Since the widespread adoption of accounting packages though, there is an additional factor to consider within your practice’s modus operandi – client input. 

Under encouragement and reward from online accounting software providers, we have transferred much of the bookkeeping responsibility we used to charge for to our clients. 

Most of our clients were not trained as bookkeepers.  

When confronted by their online accounting platform to reconcile their bank account, at first they’re impressed by the way in which it can connect to their bank account. 

The feeling of being impressed quickly subsides when, after two weeks of not reconciling, they are faced with potentially dozens of transactions they need to pair when they revisit their online accounting platform. 

Matching up bank transactions to invoices and receipts is difficult enough for many of them. 

This is further complicated particularly when payment is received from a third party like a merchant service provider which bundles multiple transactions up into one daily settlement transfer. 

They’re unsure how to reconcile this figure because, after fees, the total doesn’t add up to the invoices issued if they can even identify the invoices. 

Added to that, they’re unsure how to handle payment fees in an accounting sense from those merchant services providers. 

With the greatest respect to clients, it’s rubbish in and rubbish out. 

Your clients are the first part of your system problem 

If you sell an online bookkeeping package to a client and just expect them to use it, you will get a lot of rubbish coming your way and your staff’s way. 

It’s not the fault of your client. 

It’s like going to a garage only to be given a Hayes Manual by the mechanic and told to do the donkey work yourself. 

Inevitably, the person visiting the garage will make dozens of mistakes when they’re trying to repair their own car because they lack the knowledge and experience required. 

They will inevitably fail and the work they have tried to do to it may even have exacerbated the original problems. 

By subcontracting the initial responsibility to the customer to fix their own car, the workload of the mechanic may actually increase.  

If the customer needs the car back by a particular time and it’s had to go back to the mechanic to fix, the mechanic is also operating under a time pressure which they would never have exposed themselves to if they’d just done the job in the first place. 

Accountants expecting to subcontract all or most of their clients’ financial recordkeeping to their clients are setting themselves, their staff, and their clients up for a fall. 

You can’t just hand powerful accounting software to someone who doesn’t know their liabilities from their assets. 

Relying on clients to do the work you used to do is creating extreme workload pressure points 

Does this situation sound familiar? 

Two or so months away from a client’s year end, period end, or Self Assessment, you and your colleagues come to the realisation that you’ve not heard from them for months. 

Tentatively and with some hope, one of you logs into your client’s Xero account hoping to find an orderly set of financial records requiring little attention. 

As you go past the log in screen, the page seems to be taking longer than you’d expect to load and, when it does finally present itself, it’s a car crash of unreconciled transactions, massively overdue invoices, low cash balances, and more. 

As you survey your entire estate of clients, you find that there is a significant amount of work to do to bring order to chaos. 

If it had just been this client, that would have been a pain but it would have been manageable. It’s not – there are dozens of accounts just like it.  

Dozens of accounts which each may require a few hours, a couple of days, or even a week to put right. During the time it takes to correct, you and your staff know that you’ll have to contact your clients multiple times for more information in the full knowledge that each additional contact will irritate your client more. 

Why? Because, in your clients minds, you should have been on top of this. Why is your client transferring money to your account via direct debit every month if this is the best possible way you can organise your practice? 

And do you know what? They have a good point. 

The time leading up to January 31st is always a major pinch point but, at every practice, there are multiple pinch points throughout the entire year with period ends.  

If your practice manages 200 limited company accounts, that’s an average of just under 20 period ends you’re dealing with a month. 

It never stops and there’s an inner part of you as the accountancy practice owner which might apportion some of the blame to your members of staff.  

That’s understandable but unfair. 

We’ve identified two major errors in the processes governing the way your practice is run: 

  1. rubbish in, rubbish out from clients who don’t know any better and should be expected to know any better – they’re businesspeople, not accountants, and 
  1. you and your colleagues may not be monitoring how often and how well clients are using their online bookkeeping platforms enough. This lack of attention eventually creates mountains of complicated, fiddly, frustrating, and boring administrative work across the practice to be completed within very tight timescales every month across dozens of accounts. 

On the second point, you dictate to your staff what they do every day – not the other way around. 

So what should you do to get rid of the mountains of last minute work every month? 

There are two ways to sort this out 

First, you could sell the services of one of your bookkeepers to your clients.  

That way, you’ll know for certain that, at the end of a company’s financial year or on April 6th, your clients’ financial records will be in such good order that your accounting team will be able to handle the work with relative ease. 

Second, you could perform monthly mini-audits of each client’s Xero account. 

 
Once a month, you and your colleagues log into each client’s Xero accounts to check how often they’re using it and how well they’re using it.  

Run a series of reports into the financial performance of their businesses as well as how frequently they’re using Xero and whether their recordkeeping is to the required standard. 

This will identify problems early on and give you and your colleagues a chance to rectify the situation with the client. 

A monthly mini-audit will also allow you and your colleagues to tidy up clients’ online bookkeeping accounts on a regular basis shifting work which would normally have been done under pressure from a slew of looming deadlines to the present. 

It will also give you and your colleagues the opportunity to be in regular touch with your clients and survey after survey has found that, more than any other service feature, clients want their accountants to be in regular touch with them. 

And because you’re in regular touch with them, you get to know them better and, with the time saved by regular account maintenance, you and your colleagues will have the opportunity to sell them more profitable bespoke ad hoc services. 

So far, all I’ve mentioned are system problems 

The performance of any business, including an accountancy practice, is governed by: 

  • the specific tasks you place on the people who work for you, 
  • the quantity of tasks you expect staff to complete within a given timeframe, 
  • whether you have provided the training to your staff required to complete the work efficiency and correctly, and 
  • whether your staff feel motivated to complete the work given to them efficiently and correctly within the time scale given. 

Deming’s “95% rule” teaches us that “the performance of an organization is attributable to the system (processes, technology, work design, regulations, etc.) and [only] 5% is attributable to the individual.” 

Imagine a test between two equally experienced, knowledgeable, and skilled accountants preparing the year ends for the limited company. 

Accountant 1 has well-kept and regularly updated financial records to work from. 

Accountant 2 was presented with a bundle of invoices, receipts, and bank statements instead. 

All things being equal, Accountant 1 will complete their task more quickly and accurately than Accountant 2. 

Accountant 1 will have enjoyed the task much more than Accountant 2.  

Accountant 1 will have more time to devote to other work their practice requires as well as partaking in continuous professional development. 

Accountant 1 is far more likely to stay with their practice than Accountant 2 whose working days are, more often than not, frankly miserable. 

Ultimately, the person most responsible for the creation and management of systems others rely on to do the work they’re tasked with is also the person responsible for the performance of those staff and of the practice as a whole. 

The systems you put in place for your practice determine: 

  • how much you enjoy running your own practice, 
  • the level of care and attention your staff put into the work they do, 
  • the productivity of each member of staff, 
  • the amount of tax you’re able to save your clients, and 
  • the likelihood of your clients continuing to subscribe to your services. 

Physician, heal thyself 

I made many of these mistakes running my own practice for a number of years – so much so that I resolved to sell up. 

I love accounting and I love accountants but not so much that I was willing to carry on barely getting by every day personally and professionally. 

I did sell up and I’ve spent the last 18 months creating Hindsight, a plug-in for Xero designed to address all of the issues above and more. 

I’d really welcome the opportunity to speak with you about it. 

Please click here to arrange a phone call with me and the team. Alternatively, please click here to email us. 

What does an advisory accountant do?

For small business owners to have the greatest chance of growing their companies with exposure to the least possible risk, they need the services of an advisory accountant.

Similar in many ways to a part-time financial director or non-executive director but without a position on the board, an advisory accountant’s role is to help an owner and the senior management team navigate the obstacles and exploit the opportunities presented on their journey to their target destination.

Unlike a part-time financial director or a NED however, an advisory accountant is also responsible for the provision of their client’s accounting services.

You’re responsible for the financial recordkeeping of the business and you’re also responsible for dispensing advice based upon the information and insights contained within the financial records.

There is significant fee earning potential as an advisory accountant and, as your role develops, you can share some of the responsibilities with other staff within your practice – an ideal training and development opportunity for your junior accountants.

Over time, your practice may well become known as the practice whose team has a proven track record of helping its clients to achieve the goals they set for their business.

With this reputation, the chances of our practice landing larger, higher-paying, and wider-ranging accounts from ambitious and well-funded companies increase.

Who needs an advisory accountant?

The clients who need an advisory accountant the most are those clients who feel that their businesses:

  • are currently treading water,
  • are in a downward spiral,
  • are benefiting from increasing turnover but this is not translating into enough additional profit,
  • should be more efficient than they are now,
  • are profitable but which can’t generate enough free cash flow to expand, or
  • have gone far enough under them and they wish to exit.

Every client is different and you should use your knowledge of your existing clients to determine which ones are most likely to benefit from advisory accountant services.

The best way to win this work is to be in regular face to face or telephone contact with clients where you have full, in-depth conversations during which you can explore clients’ real feelings on their businesses and the progress they feel they’re making or failing to make.

Am I qualified to become an advisory accountant?

Yes – absolutely.

We understand why even many experienced accountants initially baulk at the idea of adding an advisory capacity to their roles other than lack of time.

Perhaps the most significant reason for this reticence is the feeling that they are not good enough businesspeople than they are because their client’s turnover is higher, sometimes much higher.

This reluctance is understandable, of course, but ultimately misplaced.

You too are a businessperson and you share many of the same challenges as your clients.

Like them, you need to make sure that you price your services correctly, you make the highest possible margin on your work, you have the money to meet your obligations when they’re due, and more.

You have a much deeper understanding of financial performance than your clients and you’re able to perceive in a way your client can’t what is working well and what is not working well from a spreadsheet.

For a £1,000,000 per annum turnover business, your ability to shave 2-5% from their fixed and variable costs would make a significant difference to their level of profitability, the amount of cash they have in the bank, and their attractiveness as a takeover proposition.

Your clients may not have the ability to first interrogate a spreadsheet to see potential cost efficiencies let alone know how to exploit them.

Never underestimate your own business and financial acumen – after all, your clients have already seen this in you and signed up to your services as a result.

What sort of services would I be expected to provide?

Advisory accountants offer four main types of value added services to clients and they are as follows:

1. Financial

Using historical financial performance figures, you can look for efficiencies or savings from your clients’ different cost centres.

We all know that, as long as the cash in the bank is rising quarter to quarter in a company’s account, senior decision makers within businesses often de-emphasis ongoing forensic examination of outgoings until there is a fall in sales.

An advisory accountant can set budgets for each department or for the purchase of raw materials, goods, and services required when a sale is made.

Allied to these savings, an advisory accountant can also produce turnover and profitability forecasts against which the owner and senior management team can measure their performance.

Within the B2B sector, late payment is rife and an advisory accountant can assist with improving credit control and cash flow planning.

2. Process

How much does it cost to generate a lead or a sale? Which members of staff are involved in the marketing, sales, and fulfilment process? How are after-sales complaints handled and are there failures in that system which lead to refunds and client dissatisfaction?

Process advisory accounting examines the labour and the assets involved in the everyday functioning of a company with a view to assessing whether:

  • certain processes can be streamlined to create extra profit and
  • additional investment is needed in other parts of the business to prevent undesired outcomes.

You clearly define each task within a business which needs to be carried out and how many people are needed for this function. You then examine how each task relates to the adjoining task to ensure that mistakes are not made when servicing a client before, during, or after the sale.

This clarity in job function allows staff to know better what they’re doing and for management to better identify which processes are going wrong and who’s responsible for it.

Often when a business grows very rapidly, the owner and senior management don’t change the internal infrastructure quickly or effectively enough creating extra costs and bottlenecks in production and fulfilment.

When a company is operating at or near peak efficiency, costly mistakes are greatly reduced and senior management have much more time available to plan the future of the business.

3. Compliance and forensic

Again, when a company expands, its ability to achieve timely and accurate financial compliance is put under severe strain as the owner and senior management are occupied with handling the business’s inevitable growing pains.

Compliance advisory accounting involves planning and implementing a system for use by your client’s employees and your staff ensuring that all necessary regulation is adhered to and that adherence can be checked instantly if necessary.

Forensic accounting is particularly useful in businesses prone to theft and fraud from both employees and customers.

4. Successor

Succession planning is a complicated area of accounting concerned with the future handover of ownership of a company to other family members or to a purchaser.

The companies most likely to succeed when ownership is transferred (and therefore be more valuable) are companies which do not rely on its shareholding directors to function profitably. In fact, the further the shareholding directors are from the day to day running of the business, the better.

With succession planning, you and the current shareholders identify the areas of business which are the most important and you then identify what skills the person responsible for each area will need to have.

Over time, particularly prior to a company being listed for sale, you and the owner of the business then ready the company’s employees to make it as attractive as possible for a prospective purchaser in addition to preparing and constantly update the library of paperwork needed for due diligence.

Creating time in your practice to offer advisory accounting services

The income opportunities offered to your practice by offering advisory accounting services are impressive.

As well as broadening the fee base of your practice, you also have the opportunity to delegate some of the tasks to junior and senior members of your staff taking the pressure away from you.

Morale is particularly low among many staff working for accounting firms with 42% saying that they were unhappy because of a lack of opportunities for development.

Accounting has meaning and we all look for the meaning in what we do.

Advisory accounting offers staff members, particularly eager junior accountants, additional variety and excitement – a feeling that they’re part of something bigger and more important.

Having the right advisory accounting team makes not only a significant difference to the client but it makes a significant difference to the wider UK economy.

How do you create the time to offer these services given that time and space is at such a premium within most small accounting firms?

Welcome to Hindsight, the new Xero plug-in designed to constantly monitor clients’ business and financial performances using a set of generic and client-specific flags indicating potential threats and opportunities.

With Hindsight, you delegate certain clients or certain areas of responsibility to members of your team.

Hindsight logs into each client’s account every day and, whenever a flag appears, it tells the team member responsible:

  • what each flag means in both a financial and a business sense,
  • how to overcome the issue or exploit the opportunity, and
  • how to interact with the client and deliver value to the client.

We all know that standard accounting is a process – a routine governed by constantly updated numbers on a complex spreadsheet. Hindsight frees up time by automating these process, allocating tasks, and training staff with responsibility for these tasks on how to react.

With Hindsight, you can not only increase the quality of the service you offer to your standard clients but you can also build a motivated and engaged team with the confidence and the knowledge to run the practice when you’re visiting the clients.

For more information on the Hindsight plug-in, please click here. Alternatively, book a call with us by clicking here or click here to email us. 

Why SMEs need management accountants more than ever before

According to the CMA, research shows that owner-managers of SMEs expect, apart from routine compliance services, advice on many broad and specific aspects of their business and these include among others: 

  • financial planning,  
  • management accounting and information system,  
  • forensic accounting,  
  • cost reduction,
  • succession planning, and
  • pricing decisions 

Given that the average price per month for limited company accounts is between £40 and £250 a month, you could successfully argue that owner-managers of SMEs are expecting a lot for their money. 

However, this is reminiscent of a general truth between accountants and their clients – miscommunication and misunderstanding. 

What your clients actually want is different from what you’re offering them. 

This is understandable in many ways. The accounting sector and the companies within it have been subject to severe downward price pressure over the past decade. 

It’s become a race to the bottom. Where the only clear differentiation between accountants is price, then both you and your clients lose. 

The base of any accountancy practice’s services is founded on compliance – making sure that your clients submit their tax returns on time and that those returns are an accurate reflection of the financial transactions they reflect. 

But this should only be the base of what you offer because, if it is, there’s not much room to add value and increase prices. 

Did you know that only 1 in 25 clients believe that advice on tax (a compliance issue) is the most important thing they want from an accountant? 

Nearly two thirds want to receive support on commercial strategy, budgeting, and general business advice from their accountants. These are consultative services where you can add value to your proposition. 

As only one in five accounting clients think price is of particular importance, you should spend your time and marketing budget on finding the four in five who want the additional support identified by the CMA. 

What help do SMEs need other than compliance help?

The number of companies in the UK in almost every sector has climbed substantially in the last twenty years meaning that there’s more competition for custom than ever before. Added to that standard competition is extra competition from freelancers, contractors, and “side hustlers”. 

This, coupled with a borderline deflationary environment for the last 12 years, means that, year on year, SMEs need to sell more products at lower profit margins to maintain turnover levels. 

SMEs face constantly rising input costs – minimum wage and the knock-on effect that has on higher-paid staff, rent, rates, and supplies (especially if they are imported). 

They also face increased competition for staff at all levels meaning that they often can’t get the employees they need and they therefore have to lean heavily on support from owner-directors and senior management. 

And this is before we have factored in the effects of financial, market-based, and industry regulation. 

SMEs have to do a lot more than they did a decade ago with less cash and fewer staff and infrastructure resources. 

What is management accounting?

Running an SME without outside help is like trying to fix the brakes on a car when it is still in motion. 

Whether an owner-director is trying to realise more profit from the same level of turnover or they’re seeking to generate enough cash flow to expand their company, they need better information to work from to have the best chance of doing so. 

At the moment, owner-directors don’t have the time and, in many cases, the ability to analyse their financial records to look for clues on how they can achieve their short- and long-term commercial goals. 

Management accounting allows owner-directors to understand the impact of technology, operational structure, risk, debt, capital, profitability, cash flow, and competition on their businesses. 

Accurate, up-to-date, and comprehensive financial information and expert analysis thereof is the key to unlocking further value and growth opportunities within a business. 

The better the information and the analysis available to an owner-director and their management team, the more likely the correct decisions will be made. 

As your client’s management accountant, you’ll prepare reports about the way their business is operating to help in the making if both short-term and long-term decisions. 

These reports help a business to: 

  • identify and measure key metrics and 
  • analyse the underlying assumptions behind those key metrics with a view to changing KPIs if necessary. 

The reports you produce will aid owner-directors and senior managers to decide better whether they should: 

  • purchase another company, 
  • diversify into new geographical areas and/or new marketplaces, 
  • invest in capital equipment, 
  • continue to work with the same suppliers and more. 

The information you present will allow senior management to better predict upcoming trends, analysing purchasing costs, where revenues will come from, likely future costs, and more. 

In situations where there are multiple options for a business to invest or move forward, the work you produce will allow companies to mitigate for opportunity cost by comparing the likely rates of return on different courses of action and how soon particular projects might take to break even. 

With the analysis you provide, companies will be better placed to estimate the effect of cash flow on the business, set budgets, and project revenue growth or decline. 

Fee opportunities in this area are significant and, by diversifying your range of services to include it, your monthly direct debit clients could take your practice to break even and beyond with the lion share of much larger annual profits coming from management accounting. 

There are many similarities between the role of a management accountant and a part-time FD/NED however the analysis and the insight offered by management accounting is much greater. 

It would not be unreasonable to charge between £500 and £1,000 a day for these services and your core market should be clients whose profitability has suffered and/or whose revenues have grown constantly in recent years. 

The Hindsight app and management accounting 

If yours is an accounting firm whose revenues come mainly from compliance services paid for by direct debit, we appreciate that you and your staff will currently be very busy servicing those clients. 

While you may wish to offer management accounting services to your clients, we understand that you might not be able to see where you and your team will find the time to provide them. 

Accounting is a process-driven industry and, while online bookkeeping platforms offer many advantages to clients and accountants alike, they are not perfect.  

Clients are often slow to update them and sometimes the information they input is not of a high enough quality. 

Rather than save you much of the bookkeeping work, often they add to it as, when year end or period end is approaching, you and your colleagues must undertake significant retrospective work to bring them up to the standard required to produce and submit accurate returns. 

Over the course of 18 months, my team and I developed Hindsight, a plug-in for Xero. 

Instead of you and your colleagues having to constantly log in to each client’s Xero account and run reports, Hindsight does this every day.  

It comes pre-programmed with certain alerts letting you and your team know when you should contact the client – for example, if their clients are taking too long to pay, they haven’t reconciled their bank accounts lately, cash in the bank is low, and so on. You can even program specific alerts for individual clients which reflect potential issues of concern better. 

When an alert appears, so does additional information showing you how to explain the issue in plain English to your client and how they can resolve it. By taking this approach, work to maintain the quality of the accounts is spread evenly across the year and your client gets to know better how to use their online bookkeeping platform. 

We created Hindsight to better manage workflow within accounting practices and to free time for practices to offer a wider range of value added services to their clients. 

To find out more about Hindsight, please click here to arrange a phone call with our team. Alternatively, please click here to email us. 

Good clients rarely exist, you have to make them

How do you define what a good client for an accountant is? What personal qualities would they have, what type of business would they run, how much (or little) work would they create for you and your team, and how demanding would they be of your time?

Your definition of what a good client is will differ from all other accountants but it’s fair to say that you’ll already have clients you prefer dealing with and other clients who, when they want to speak with you, send an unnerving shiver down your spine.

Client personality aside, a good client is most likely to be the one whose demands of you match your practice’s capacity and ability to deliver.

Know thyself

Perhaps I have been binging on my “Wall Street” Blu Ray too much recently but Sun Tze, the Chinese general, military strategist, writer and philosopher, believes that the idea of knowing who you were was of paramount importance to achieving your goals.

He said that you should “know others and know thyself and you will not be endangered by innumerable battles”.

Historians and scholars have attributed various interpretations to this phrase over the century but the interpretation I personally prefer is that you’ll never be prepared for danger if you don’t know your own strengths and weaknesses.

For the purposes of this article, I’m going to transpose that “danger” as meaning an inability to effectively service your clients in either the way they wanted and/or the way that you promised you’d look after them.

Your practice’s strengths and weaknesses

The only person in this world you can be truly responsible for is yourself.

Likewise, the only person responsible for your practice’s strengths and weaknesses is you – the owner of that practice.

It was your decision and your decision alone which range of services you offered to your clients and the way you described your level of service to clients when you pitched them for business.

Likewise, it was your decision and your decision only to choose which staff (and how many) you would employ to support you and the software with which you run your practice.

When you first met your current clients before you signed them up, how “hard” did you sell your practice and its abilities?

Probably very hard – you wanted the business after all. And I am willing to bet that not a word which passes your lips you didn’t completely believe in.

At the face-to-face meeting, was there a question your future client asked you which you didn’t say “yes, we can do that” to?

But were you describing the services and the level of attention as your practice was then or as you wanted it to be at a future point in its development?

Particularly in newer practices, there is a dash for growth as owners seek to maximise capacity and generate the cash required to build a team around the owner.

In many cases, this means that practices, whether new or old, often have too many clients on their books meaning that their ability to deliver the level and quality of services they had promised at sign-up is severely impaired.

The point I am making is that all of the decisions you have taken to date have created something of value and of worth – that is, your business – your practice.

However some of these decisions will have left you underprepared for “danger”.

The real life consequences of accounting “danger”

For an accountancy practice, “danger” can mean three things:

  • you become distant from your clients,
  • the quality of your work suffers, and
  • you make your professional life and your staff’s professional lives almost unbearable.

First, “danger” might mean that you’re not in touch with your clients as often as you would like or they would like. Survey after survey has shown that clients are more likely to leave for another accountant if they feel ignored or neglected.

With up to 36% of clients looking to switch at any one time, the “danger” to your business is that more than a third of its revenues may disappear over the coming year which you’ll need to replace.

Second, “danger” might mean that you’re working past your practice’s capacity limit – you have too much work on for you and your team to cope with.

The problem here is that you and your team then adopt a survival posture – doing work only when it needs to be done and in a hurry. One example of this might be logging into your client’s Xero account six weeks before the CT600 is due and before accounts must be filed at Companies House.

This creates almighty scrambles for you and your team to improve often inadequate financial records to HMRC’s barest minimum quality level meaning that many opportunities to save clients money on their taxes are missed because of misclassifications of expenditure items.

Last, the third major consequence of operating in survival mode is on your and your team. You’ll be exhausted – account, file, repeat, account, file, repeat – and probably desperately unhappy.

The staff working for accounting firms in general (not specifically at yours) are among the most unhappy employees in the general workforce and, in many cases, it would not take much to persuade some staff to jump ship to another firm in the hope that they’ll find something better, less stressful, and more varied.

If any of this sounds familiar or you could envisage it happening, there will be no such thing as a “good client” or a “bad client” anymore.
There’ll only be “unmanageable clients” and “completely unmanageable clients”.

To find and keep good clients, you need to know thyself

For a client to be “good” and for you to be a good accountant to your client, there has to be a fit.

I’m excepting personality from this discussion – if you’re in a face to face meeting with a potential client and their personality makes your skin crawl for whatever reason or they laugh too hard at their own “jokes” too many times during the conversation, be the bigger person, shake their hands, and walk away from the deal.
Earlier in this article, I mentioned how you and you alone were responsible for your accounting firm’s capacity and its range of services.

If you are finding that you have too many “bad clients”, I humbly suggest that what makes them bad is that they are giving you too much work to do:

  • for what they pay you and/or
  • your and your colleague’s ability to juggle that additional work with your general workload.

There is clearly a bad fit here – it’s not working for you and it’s not working for them.

What’s to blame? In many accounting practices, it’s often the lack of an efficient working routine.

Instead of preparing period ends, year ends, and Self Assessments with six or less weeks to go before the deadline, can you reorganise your practice to split the work over the course of a year?

For example, if there are five of you servicing 200 accounts, you could task your colleagues to log into each client’s Xero accounts once a month to check for certain issues like:

  • cash in the bank,
  • level of indebtedness,
  • average days taken to pay an invoice,
  • when the last invoice was issued, and
  • when the last bank reconciliation took place and how many outstanding items need reconciling.

Each time your colleagues checks into your client’s accounts, task them to run a series of reports. The results of those reports will indicate how much individual attention each client needs to ensure that their financial recordkeeping is up to the required standard.

When issues are spotted, encourage your colleagues to call the client, explain the nature of the problem, and offer a solution.
If those solutions are ignored month after month, put the client on warning that, if they do not keep their financial records up to date:

  • your ability to save them as much money as possible on tax will be compromised and
  • you’ll be closing their account at year end, period end, or at the end of the contract they’ve signed to access your service.

By doing this, the amount of remedial work you and your colleagues will need to do when preparing their accounts or readying their submissions to HMRC or Companies House will be minimal.

If you have five colleagues and your firm serves 200 clients, this means that each colleague will need to log into 10 clients’ accounts every day to run reports. In the early days, this will take up a fair amount of time but, as your clients start to follow your instructions, that workload should decrease month on month.

Your regular communications, if occasionally nagging in tone, will be appreciated by your clients because it actually seems like you’re paying attention to them. You’ll be a “good accountant” to them.

Their acquiescence to your colleagues’ demands to keep their books up to date will reduce the overall volume of work required per client as well as spread that work out over the course of 12 months. They’re now much closer to being a “good client” for you and your team.

The benefits of introducing a more defined and regular structure to your and your colleague’s workloads and to minimum standards of interaction from a client are many.

Instead of being chased by clients for their accounts or to find out their level of tax liabilities, you’ll be able to let them know within weeks giving them time to find the cash – that benefits both of you.

You’ll break the cycle of “account, file, repeat, account, file, repeat” for yourself and your colleagues. There’ll be less general pressure when they come into work and at peak times of year.

And for you and your colleagues, there’ll be much more time to offer a wider range of services to your clients – work which will bring in extra revenue to the practice and work to provide new stimulation and engagement to your staff.

The Hindsight app

I personally know all of that which I described above – that was my old accounting practice once before I sold up.

Since selling up, my new team and I have spent 18 months developing the Hindsight plug-in for Xero.

Why “Hindsight” and not “Foresight”? It’s because the way I would have run my old accounting practice, with hindsight, is how I’ve set out in this article. Client-focused, colleague-focused, and focused on delivering the type of practice I would like to have run.

The processes I’ve described have been coded into Hindsight but, instead of your colleagues personally logging into 200 different client accounts once a month, Hindsight does it automatically every day, runs the insights on your behalf, and then assigns different tasks and/or clients to different members of your team.

If I’d had Hindsight back then, I don’t think I would ever have sold up because the app is capable of delivering what I wanted for my practice. And, after speaking with hundreds of colleagues before and during its development, I know many of you feel the same way.

I’d really appreciate the opportunity to show you around the system.

Please click here to arrange a phone call with our team or, alternatively, please click here to email us.