Compliance is Far from Dead!
In the accountancy world, we often see the statement that “compliance is dead”. Realistically, this will never be the case. We will always need to file tax and accounts information for clients in the future. It is true that the formats and the criteria may change, but the fundamental situation is going to continue and this will be a service where businesses will require accountants.
What is clear, however, is that the technology that exists today is creating a new opportunity for accountants to provide a value added “advisory” service which can command higher fee income. Also automation means that the time taken to undertake compliance tasks such as filing the VAT return and preparing the annual accounts, is now reduced. Due to the traditional way that accountants base their fees (that is on a time taken basis) this reduction in time taken often leads to the client’s expectation that the fees will also reduce. As a result, accountants are keen to move into a more advisory role but many do not know where to start.
Get the Basics Right
Before you can move into advisory services, you need to make sure your practice is running efficiently and that you are using the technology well for your compliance work. The core clients you have are most likely your compliance clients so you need to make sure you retain them and then you can offer them advisory services in the future.
There are a number of apps that now exist for practice management for accountants which are all cloud based so all this information is easily accessible. These tools have numerous features and it is important that you take the time to decide what you need from a practice management app and then test the app before you choose one.
The workflows and CRM functionality are the core functions of these apps and can be hugely beneficial for accountants to manage their workload and resource planning. Often this is something that has not been achievable in the past and this now allows firms to see where they have staff shortages and they can then recruit accordingly.
In firms that bill by the hour, the monthly billing process can take days each month – is this time well spent when you could be spending this on revenue generating advisory work? A move to a fixed fee basis for invoicing is not something that will appeal to everyone but it is becoming more and more popular. As a result, a recurring invoice is automatically issued each month and substantial time savings are made.
It is still often necessary to assess profitability and monitor time taken on jobs (for example to monitor if transaction volumes are increasing) and so many firms still want to record time.
This is a feature of many practice management apps and this, in turn, allows practices to quickly and easily identify where they need to speak to clients and increase fees.
Proposals and Engagement Letters
The time it takes from meeting a client to issuing a proposal and letter of engagement can be the determining factor as to whether you win the work. The use of apps such as Practice Ignition and Go Proposal ensures that delays are avoided and proposals can be issued in minutes and not in days.
The set up of these apps is what takes the time as it is essential to revisit how you base your fees and to then assess what you charge for all your services. Whilst this is a time consuming task, this is a well worthwhile process as it often will result in firms identifying areas where they have been undercharging and thus should bill more.
Keep The Books Up to Date
It is essential that the bookkeeping on all your clients is kept up to date. Without this, how can you offer additional services such as cash flow forecasting and detailed management reports? To create and maintain up to date accounting records, it is essential to implement processes that you follow for all your clients.
Enforce the process with your clients from day one and take the first few months to make sure the process is running smoothly. Most importantly, do not deviate from the process as it is impossible to efficiently manage a different process for each client. In order to create a streamlined approach, they all should adopt the same approach.
Statutory Accounts and Tax Returns
There are now a number of accounts and tax production tools that integrate with the bookkeeping software for the production of year end accounts and tax returns. These tools will create the accounts and tax returns more quickly, in the right format and also complete the XBRL tagging too. As a result, the time saved can be substantial.
Many have the ability to electronically issue these documents for e-signing by the client – compare this to a few years ago when they had to be printed out and sent in the post to the client for signature.
There are also new products such as Xero Tax which is the Xero tool for accounts and tax production and this is fully integrated with Xero. This means that you can complete everything within Xero itself and there is no need for a separate piece of software. This is still in its early stages but Xero Tax is one to watch in the future.
The filing of the annual Confirmation Statement along with completion and submission of Companies House forms can now all be done on line through company secretarial apps. These apps also include automated reminders to tell firms when a confirmation statement is due which is a very useful feature.
The apps link to Companies House and ensure submission of forms are secure and Companies House records are updated quickly. The software also stores information on shareholders so, if they later buy more shares, their details are automatically completed which, in turn, saves time and reduces error.
By ensuring the practice makes use of the tools available, becomes more automated and improves its efficiency, this will then ensure that the building blocks are in place for them to offer more advisory services. Their compliance clients will be more likely to be retained as they are now getting a superior service and this, in turn, will then build a stronger relationship with their accountant.
Also never disregard the compliance work as this will generate income for the firm and it is the building blocks for additional services.
The next task is to identify those clients who will benefit from advisory services such as budgeting and cashflow management. This will then allow you to offer new revenue streams and become the trusted advisor for many of your clients.