Ask the owners of 25 small firms and you’ll get 26 views on the future of the accounting profession. Introduce the subject of declining fees and people get passionate. Introduce the subject of advisory services and some claim to be already doing it, and some say it’s not needed. Then you find that most of those who claim to be offering advisory services are not charging for them, or only have a tiny portion of their income from advisory services. But, is it time to change?
Are advisory services the future, has compliance work had its day?
Very early the other day I was walking through the park in the fog, as the graveyard peered out of the fog at me. My pulse quickened, it’s daft really, I knew it was there but still didn’t want to see it. By not looking at it, not trying to make out the eerie shapes I could convince myself not to be scared. But I still had to walk that way to get home! My immediate future meant dealing with what I was trying to ignore. How daft!
At several accounting conferences over the last few years I’ve heard comments about moving away from compliance accounting (“the institute has been on about this for years and it’s not happened, so I don’t need to worry”). So, do you need to adjust your strategy or not?
Are you peering into the future and trying to avoid the eerie shapes it makes?
So, what’s changing?
- Making tax digital: The ground will change as MTD takes hold, as many more small companies will start to do their own books using cloud services. They may, or may not, want to use you to finalise them. But most small companies won’t want to pay you’re the same rate, when they/ their software, does more of the work.
- Technology: Software like ReceiptBank, Xero and many of the other alternatives are growing in popularity. The ability of younger ‘digitally native’ entrepreneurs to manage their business from their mobile phones has and will grow. How has that changed the landscape so far? What will happen in the future?
- Competition: Increasing competition rarely means fees maintain, and normally leads margins downwards.
- Client requirements: Increasingly people want to see answers in almost real time, and clients desires have moved from just returns. Clients might not need so much help making the numbers, but will want to have more conversations about what the numbers mean.
Companies that don’t want to change
You and I know that some companies will not want to change and would like you to enter their shoe boxes full of receipts onto a system for them. But as cloud account and technology like receipt bank makes that cheaper to do, will these same companies be able to afford your fees when you need to do it four times a year for MTD? How many of them will, unhappily move over to a technology answer?
So, can you make money with compliance work, yes probably. Some firms have an older partner base, with older clients and maybe they don’t want to change things before the sell up and retire. Are you one of those firms?
Introducing something valuable into the services you offer your clients makes sense, and many firms have already started to move in this direction.
You are already trusted by your clients, so what can you do that will help them more than just entering data and making reports? Transforming information into insights is at the core of what your expertise can do for them, and I’d call that advisory services. What services will you add, and when will you start to move your firm’s fee basis?
You might like to read some of the following related articles:
- Selling advisory services – click here
- Defining advisory services – click here (published 28th march)
- Restructuring your firm for advisory services
- Recruiting better staff, more easily
These discussions about changing the profession have been going on for longer than I have been coaching Accountants. But is it now time to think about when you will change, or why you are not going to change.
Your clients will start thinking about it soon, if not already, what about you?