I’m told that this is the view of a senior Insolvency practitioner. What does that say about the advice being provided by accountants? Are they just missing out on opportunities or are they failing their clients? I’d like to hope that this doesn’t apply to any of the regular readers of this blog (if there are any!)
In a recent posting on this blog I suggested that: Accountants need to show they really are business advisers as we move into recession.
Let me take that idea further and offer a theory I have developed. It’s drawn from conversations with many accountants over the years. It’s not a universal truth but it may explain the statistic above.
Most business clients go to an accountant because they want to pay less tax not because they want a set of accounts. To the extent that the business owner wants the accountant to do accountancy work it’s largely because they need their accounts for the bank, for their funders and for the taxman. And many accountants are happy to focus on providing these backwards looking tax and accounting services.
The challenge is for the accountant to help their business clients appreciate the need for effective financial management before it’s too late. If you look at accountancy firm websites and promotional material however this is not an area on which many of them focus. And they aren’t well placed to ‘sell’ such services to new clients as an additional spend over and above the quoted fees for the traditional compliance work – unless the business is already in financial difficulty, in which case it could all be too late.
Many accountants would prefer to focus on providing the traditional services that they have always provided year in and year out. Expanding into the provision of additional services might mean first devoting time to developing additional skills so as to be confident that the advice they provide will be worthwhile.
When clients require tax advice that is outside of the accountant’s area of expertise they can involve external specialists (eg: at the Tax Advice Network). But what about when a client needs solid help to implement effective financial controls? Rather than ignore the situation the accountant could outsource the provision of advice in effect by engaging an independent specialist who has the expertise, experience and time to work with the clients who need help. My friend David Lewis for example.
I should also stress that even when the accountant offers to assist in the preparation of regular management accounts this is still not the same as helping the client implement effective financial management controls and procedures.
It seems likely that far too many corporate insolvencies can be attributed to poor financial management (whatever is the true statistic). Are accountants to blame or are they simply missing an opportunity to help their clients and to earn valuable additional fees in the process.
What do you think?
Mark
Many thanks for mentioning me.
I would like to add that the earlier that potential problems are flagged, the more likely that a solution can be found – so good early warning systems are essential.
Banks don’t like last minute nasty surprises and businesses without good financial management and early warning systems are the ones that will more likely to be in trouble.
Intuitively businesses will be looking to cut back, but if there are weaknesses in areas such as finance or marketing then some investment may be needed. I’m very happy to discuss the very real benefits with readers that care to contact me.
I would suggest that businesses that genuinely can’t afford to fill a skills gap at present and have declining revenues may well have a serious problem – they should be obtaining immediate advice from their accountant.
Finally, there ARE some opportunities out there, but “an ostrich with his head in the sand is as blind to opportunity as to disaster”.
If there are any regular readers of this blog?
Mark you insult me!
M