Firms in the spotlight
There are highs and lows in running any business and in each edition of the Digital Accountancy magazine we are going to deep dive into some of the tech-focused accountancy practices to learn a little more about the team and how they operate, the background on the business and their future goals and aspirations.
In this edition, we spoke to Accurox and NH Accountancy and Tax Services to learn some more about the founders behind the firm and how they juggle their work and family life.
Naveed Mughal is the founder of Accurox, which he founded three years ago. Specialising in working with clients in the construction sector, Naveed has established and grown his firm with a team located overseas, with ambitious plans to grow the business further over the next three years.
Tell me a bit about yourself and how you started in accountancy.
I was kind of thrown in at the deep end. The firm I worked in at the time had two partners who had a massive fall out. I was tired of trying to prove myself to the partners so I decided to take a leap of faith and jump into starting my own firm. I was driven and willing to learn. Three years down the line, I am still learning and willing to be challenged on my thinking and open to more. Why did you decide to set up your own firm rather than move to another practice?
I decided to set up a firm after getting frustrated with the lack of innovation within practices. I decided to create a practice where client care was at the heart of our success. I felt that there was never enough time within accountancy practices for that sort of thing, so I wanted to create that time and capacity in my business in a way that would not only be beneficial but also enjoyable.
Similarly, I felt that accountancy practices didn’t pay attention to the cultures of the firm and the people. Whereas I wanted to build an inclusive culture where the team is directly contributing to the success of the firm.
How big is your firm now with regards to the number of clients and the size of your team?
We do not have a team in the UK and instead, we have a virtual team of 10. They are all located overseas. Client wise, we have about 150 clients in the UK and about 150 clients in Dubai.
What are the primary services do you provide for your clients?
The main services that we offer are compliance, forecasting, management accounting, business advisory and growth strategies, funding options.
The split between compliance and advisory is 80% compliance and 20% advisory.
In the future, I feel that we will be moving towards setting up a separate team for advisory work who will be supported by myself and our offshore team. I feel that for our advisory service to really scale properly we will have to separate it from our existing accounting team.
Your team is not based in the UK but they are all offshore. Where are they located and why did you decide to have a team there?
I have an offshore team in Pakistan of ten people.
In my first year of business, my wife and I were expecting our first child. I soon realised that I would need extra help and used my previous offshoring experience to make some contacts to set up our own offshore team. This allowed me to focus on things which were important to me such as family life and being a Dad alongside work. At the same time, this allowed us to scale our business very quickly.
Did you build this virtual team from scratch?
Yes, I built the team from scratch. The first year was very difficult. I had to understand the culture, work ethics and people management and how to manage remote teams. At the same time, I had to ensure that team stayed motivated and understood the long-term vision of the firm. I had to focus on building an inclusive culture within our firm.
What work does your offshore team undertake?
Our offshore team does everything from bookkeeping, accounts, payroll, CIS, Personal Tax and Corporation Tax, management accounting and forecasting.
We have invested heavily in the training and development of our team. We have created a continuous learning culture within our firm which means that we continuously identify learning needs and commit ourselves to continuous learning and development.
Have you found clients are happy for their work to be undertaken overseas?
Yes, most of our clients know that I have an offshore team who liaise with clients when needed. We have introduced scalable processes within our firm which allow us to create client contact even from Pakistan.
How do you monitor the progress of the work and what tools do you use for internal communication?
We have a Slack channel for our internal communication. Weekly 30-minute team meetings also play a crucial role.
We plan our work up to 4 months ahead at a time. This allows us to deliver a timely service to our clients.
To monitor the progress of work, practice management (especially Senta) is a focal point of our firm and making sure that tasks, projects and deadlines are captured correctly. We have created a delivery only culture within our firm which allows us to focus on the important stuff and work together as a team.
Systems and processes must be very important for your firm to ensure it all runs efficiently. How did you set these up and did you do this before you started the overseas operations?
Yes, I looked into all the available technologies when setting up the firm’s overseas operations. We had to ensure that the systems we introduced were scalable and cost-effective. We even had to ensure that our telephone lines are connected to our Pakistan team. At this point, we decided to become a Xero specialist firm and decided to use and scale our firm around Xero.
We had to ensure that client records were kept safe and data was shared with our team hence we used cloud-hosted desktops and OneDrive share points to start managing data between teams.
We created a delivery only working culture. First-class timely client service is very important to us. Hence, we have created a culture where we focus on the efficient delivery of the service. This also allows us to introduce flexible working where the team can take time off as long as all objectives were met.
With your team overseas, it must be important to track how they are performing. Do you monitor any metrics on productivity?
I wanted to create a culture where people enjoyed what they did and achieved results mutually. We monitor a few keys metrics with the focus on WIP. Also, we deliver our jobs within 6 weeks of receiving client record and finish our year-end accounts within 4 months after the year-end. Last year we completed 80% of the self-assessment tax returns before December!
How easy was it to recruit a team overseas?
It can be very challenging as we have to recruit quite ahead of the curve. Also, we recruit not just on qualifications but based on attitude, team dynamics, future plans and ambitions.
We created a 2-step recruitment process: one face to face meeting with the operations director in Pakistan and one Zoom meeting with myself in the UK and this has worked well.
Technology is important to you. What are the key software tools that you use in your practice?
We are a completely virtual firm so the technology has to be right!
We use quite a lot with the main ones being Xero, Senta, Practice Ignition, Fluidly, Syft Analytics, Slack, Skype, Hubdoc, Clarity and Capitalise. We have hosted desktops. Onedrive and VoIP telephone systems too.
We also have a lot of clients in the construction sector and use Simpro and Tradify a lot with these clients.
You have acquired a firm in Dubai recently. Why did you decide to buy one there?
It was a strategic move and it made sense for us to do this without back-office operations.
Dubai and other gulf countries are slowly embarking towards introducing more regulation in their financial and accounting systems hence we decided to be part of that journey in the early stages.
Have you moved this firm onto the same software and apps as the team use in Pakistan?
Yes, the firm already used Xero for client work and used Microsoft One Drive which was a big tick for us.
What are your plans for the future of the firm?
I wish to grow more than a million-pound firm. We are also looking to complete further two acquisitions in next 3 years. We are then wanting to create multiple offices in other strategic locations across the U.K.
What has been the hardest part of building your firm and, if you could do it again, would you go about it differently?
I would invest heavily in a sales and marketing programme. I would also take more time to make sure that we recruit the right people and spend more time in getting the firm positioning and branding right.
If one of the readers was thinking about starting their own firm and were looking to outsource the work overseas, what would be the top tips that you would give them starting out on this journey?
- Having a clear plan and strategy is very important. Saving costs can’t be the only motivation.
- Identify where you need help and how outsourcing is going to solve that problem.
- Create a clearly defined process and outcome by working closely with the outsourcing firm.
- Treat and work with your overseas team in exactly the same way you would with someone sitting in your office.
- And lastly, don’t be afraid... :-)
Nicola Hageman is the founder of NH Accountancy and Tax Services based near Bedford which she founded in 2015 in order to fit around her family life. Recently Nicola has purchased another accountancy firm in order to help her grow her business and we caught up with Nicola to find out a little bit about the acquisition and how she is managing to integrate it into her firm.
Nicola, thank you for chatting with us today. Can you please tell me a bit about yourself and why you decided to set up your own firm?
I set up my firm in 2015 when my eldest started school. At the time I was working in London and just couldn’t manage the logistics of school and nursery drop off and pick up.
At the same time, we were expecting our third child so, when I was on maternity leave, I started the business so it would work around the kids.
We have an office just outside Bedford but the team also work from home a day or 2 a week -under non-covid!
How big is your firm now with regards to the number of clients and the size of your team?
I took on my first team member in September 2018 and we are a fabulous team of 9 now!
I took on 2 apprentices during lockdown which has worked out really well. We made sure that we had constant communication with them during the time and they are now a great addition to the team!
We also recruited just as lockdown was ending so interviews were online but their first day was with everyone back in the office which was a lot easier.
Client wise we look after 190 limited companies, about 90 sole traders and 140 individuals.
What services do you provide for your clients?
We provide a full outsource function to those who need it so we do everything from bookkeeping, VAT, management accounts, year end etc but we have a range of services across the business.
We are not a fully cloud based firm but we try to be and encourage all clients to be cloud-based. We will only now take on new clients who are happy to work on cloud software but some older (and some from the ones from the newly acquired firm) are still paper based.
You recently acquired another accountancy practice. Had you been looking for a long time?
I had been keeping an eye out and had registered interest with a few brokers but I only really looked at their newsletters and checked if anything local came up.
Why did you decide to buy rather than grow the firm yourself? Was this part of your strategy for your firm?
It has always hard to know what to do with this! On the one hand, we were growing and taking on good clients but I felt that the business needed an injection of size so an acquisition seemed like a good idea if one came up.
I kind of just wing these things so I didn’t make a conscious decision to actively look for one, but was happy to consider it when a local one came up!
Ideally, we were looking for limited companies who currently only had year end services that we could bring onto cloud and bookkeeping etc within our business. But that was really very much wishful thinking!!
Tell me a little bit about the firm you bought.
There were no staff and just 1 lady managing the accounts with 10 hours a week external support from a sub-contractor so we took all this into our business.
Client wise, there were 90 limited companies, 60 sole traders and 140 individuals. Some of the limited companies were on cloud software but it has now become apparent that this was not managed well and the retiring accountant hadn’t been proactive with training and ensuring that the accounts were correct in the software.
The majority of clients are paper or excel based but we are hoping to move some of these to the cloud (and already have with a few of them).
There are several older clients, mostly the individuals, who had been with the accountant for 20-30 years. So this is proving a little bit difficult as they are so used to dealing with things by post and sending cheques in for payment so we are having to manage this carefully!
What due diligence did you do before you agreed to buy it?
I had a look at the client list, she went through and explained what they all did and I saw some of the accounts and ensured that I would have access to all backup and prior accounts.
What was the purchase process from when you first found out about it through to purchase?
I first saw the details from the newsletter back in February 2020 and I met with the accountant in the March, just before lockdown!
I put an offer in mid-March but this wasn’t accepted and she decided to go with someone offering a better multiple.
In May, the broker got back in touch as the other offer had fallen through due to Covid and I was still in a position to offer so I extended my clawback period and made another offer which was accepted.
We exchanged contracts on the 5th June and I took over from the 1st July 2020.
How easy was it to onboard all the clients and move them onto your systems? What were the biggest hurdles in this process?
It was very hard!! It was fairly horrific actually as we weren’t able to get a proper database of the clients’ details so I had to spend a lot of late nights trying to piece together data from different sources.
The sheer number of clients to contact made it very hard. I eventually decided to call the urgent and bigger clients for a chat. This was during lockdown when I had 3 kids at home trying to homeschool so it took a long time and it meant actual client work wasn’t being done so we fell behind on that.
I decided with the rest of the clients to send an email with some welcome details and a link to my diary to book a call in if they needed one.
We are still onboarding people now, we still haven’t heard back from everyone and I am assuming a number of these will not be coming over but we are still having to keep them on our radar.
How did you find client have taken to having a new firm of accountants? It must have been even harder as you could not visit them during COVD lockdown.
It’s been tough. Most are ok but some didn’t take to well to “being sold” and some just decided it was the time to leave as if they were changing accountant anyway they wanted to look for one of their own.
We have done several Zoom calls and try to keep in touch regularly but it’s hard with these volumes.
Did you renegotiate fees for all the new clients?
I agreed that I wouldn’t increase the fees for 2 years unless it was to add additional services.
Overall the fees weren’t that bad, maybe slightly lower than I would have quoted as she based it on an hourly rate and a rough estimate of how long it would take. As we have a mixed team it has meant that we can spread the work out so instead of a fully qualified accountant doing the inputting work we have the juniors do this and the accountant reviewing and finalising so it has saved on staff costs.
Is the owner working with you post-acquisition?
Not really but she is around if I need to ask a specific question. She wanted to walk away and retire to France so we are left to our own devices.
What tips would you give anyone else thinking about buying another accountancy firm or a block of fees?
Make sure that you will be provided with the information that you need in a format that works for you. Ensuring that you have a client list with all contact details is essential - I didn’t even get this so it was very hard.
Also, get the details of which clients are related to which companies. I had to work out who all the directors were for myself and this all takes time.
It is essential to get a decent clawback period. I have 18 months and I think that this should be fine.
The client mix we have taken on is not ideal. I think if I went back to day one again I might have had a rethink about the number of tax only clients and maybe see if I could partner with someone for whom this was their ideal client. This would have saved a lot of effort on my part but I just accepted it for what it was.
It is important to look for areas where you can add value and increase the fees. We have already increased the fees for several clients as we have taken over the bookkeeping and put them onto software.
Also, make sure that you have a process in place to get everyone onboarded. You will need admin support to get you through it so don’t feel like you have to do it all yourself!
If you could do it again, what would you do differently?
There are a few key points I would change if I do it again -
- I would have demanded more client details to start with, given the admin tasks to the outgoing accountant to do so that you get all the details that you need so you aren’t chasing for it.
- I would also prepare communication emails to clients to keep them up to date on what was happening.
- Ensure I have had the staff in place to start with so that we could hit the ground running. We are now 2-3 months behind so have a lot of catching up to do.
- Not rush into it quite so fast. I should have given myself another month to collate the client data and taken over a month afterwards. This would have given me more time to prepare myself and the team.
- Finally, I also wouldn’t have been quite so “look at all the great things we can do at our practice” as I think it scared a few people away. I would have played more to the “I know change is scary but we will make sure its as easy as possible and I promise things won’t need to change too much over night”. This would ease them into it gently.