Archive for the ‘Achieving success’ Category

Talking with an accountant recently I learned that he regularly receives phone calls from people who have found his website or phone number. Sounds good?  Yes it does and it’s not at all uncommon. Many accountants get such calls.

He was complaining actually that most of the callers were after some free advice. And if the matter is quite straightforward he gives them the advice they require. These calls typically take 5-10 minutes.

Why do you do that I asked?

He told me that he quickly establishes that they have no immediate need of his services and doesn’t want to waste more time than necessary dealing with these callers. He sees it as good PR and marketing. On what basis I asked?

“I hope they’ll tell someone” he said.

I pointed out that what he was really doing was:

• Hoping that the caller would remember who they had spoken with
• Hoping they would remember his firm’s name and/or contact details
• Hoping that they will tell other people about him
• Hoping that they will think of him at some stage in the future when their circumstances change and they need a (new) accountant.

And that they would do this regardless of how much time elapses after the phone call.

I’m all for being positive and hopeful. But I think that he’s hoping for a bit much on the back of a 5-10 minute phone call with someone who has found him on the web. I shared some ideas as to what he could do to get more from the calls.

What about you? Do you just ‘hope’ or do you do something to turn your hopes into reality?

I was reflecting on this idea the other day. The MD of a big IT software supplier was telling me how surprised he was that so many accountants had yet to pick up on the new obligations to file iXBRL tagged accounts. This will be relevant to all accounts filed from April 2011 re accounts for accounting periods ended after 31 March 2010.

It occurs to me that many accountants in practice cope very well despite putting off changes until the last possible minute. Accountants managed with the switchover to self assessment in 1997, the introduction of online filing, of quarterly instalment payments for corporation tax and so on. Indeed there have been 3 Companies Acts during my career, numerous accounting and auditing standards, Budgets and Finance Acts every year as well as pronoucements from (what is now) HMRC and so on.

And maybe that tells us why many accountants tend not to spend loads of time planning ahead in their practice. The rules and environment are constantly changing every year. Consciously or unconsciously accountants know that there are always more changes to come. Accountants are typically NOT early adopters. They know that they can adapt, learn and evolve their services to cope with anything. They always do. C’est la vie.

Agree? Disagree?  I’d love to know what you think.

I’ve often mentioned that clients like to think that their accountant is on their side. That their accountant is not simply entering figures into a computer programme and reporting on the outcome. That their accountant is taking active steps to reduce the tax payable.

I’ve just found the sentence below which I had set up as a draft blog post. I don’t recall if I read it or made it up myself during a seminar perhaps. It’s possible. But, in case not, my apologies if I should credit someone else. It’s worth sharing though.

I think that this or something like this would go down really well with many clients – assuming it’s true of course. Remember clients won’t know that you’re helping them to pay less tax unless you tell them you do it. And given it’s the service that most clients typically value more than any other……

How about including the following sentiment in your letters  and emails when you write to clients each year?

We’ve taken all the steps we can to reduce your tax liability – this is all the tax you will now have to pay.

If you have any similar ideas or related thoughts please share them as comments below.

Talking with a tax and financial adviser recently he told me that his firm is a heavy promoter of tax schemes. “Not a great fan myself“ I said. His reply was almost the complete opposite of what I had expected:

“I’m not surprised” he said. “Few people actually go ahead and implement the schemes.”

“So why do you promote them so heavily?” I asked.

“Simple. It gets people through the door. We tell them what they could do and then when we explain the risks they just don’t have the appetite. But they like our approach and become clients anyway.”

This reply reminded me of the conversation I had in the Spring with the head of tax at a reputable tax consultancy. After he has explained the detail of a tax scheme to his clients they invariably say:

“Now I understand it properly, why would I want to go into a scheme like that?”

I explained this further in a post on the TaxBuzz blog: “Have a look at this scheme and tell me what you think”

Coming back to my tax advising IFA. Would you feel comfortable leading with a superficially attractive service offering if experience tells you that most prospects will reject it – albeit they may choose a different service?

This is a follow up from one of last week’s blog posts. Here I’m looking more at the extra time and effort involved in complying with the new iXBRL efiling obligations.

Clients will only agree to paying additional fees if they perceive that additional work is being done and that this benefits them in some way.

Tagging company accounts for the taxman, using iXBRL tags, is going to be obligatory from 2011.

It seems that plenty of accountants have yet to determine exactly what they will be doing to ensure that their clients’ accounts are  compliant. I’m not sure how late you can realistically leave it before you find out what is going to be involved here. You’ll want to do this both to ensure that you are able to comply with the new obligations AND to manage your clients’ expectations.

Most importantly is the need, from a commercial perspective, to ensure that you only devote extra time and effort to tagging each client company’s accounts etc if you are sure you will be paid for doing so.  Asking for additional fees only after the event is unlikely to be very remunerative! Is it ever?

As software evolves to meet new legislative requirements so accountants assume this will be built into the price they pay for their software.

There is little prospect of accountants asking clients to pay extra – or of them securing additional fees if they did ask!

Equally, accountants will not willingly pay extra for updates of their software if these simply enable them to ensure that clients comply with their legal obligations. Thus suppliers will have a hard job on their hands to persuade existing accountancy users to pay extra.

In practice the only community who can seriously be expected to bear the development costs, if not the developers themselves, will have to be new users; – perhaps those who migrate away from competitors , as well as those who are computerising for the first time.  This is unusual as normally it is the pioneers who pay a premium for the privilege of being the pioneers and at the forefront of new developments. Have newer users in recent years been paying as much as those pioneers for their accounting and tax software? I guess not. So can those who have been putting off their move to online filing be expected to pay more so that the software developers can recoup their investment? Or will the only losers be the shareholders and owners of the developers? They have no choice but to invest in the new developments.

I said earlier that few accountants will successfully persuade clients to pay a surcharge to cover the costs of introducing new software. Some firms tried that in 1997 when self assessment was introduced. In most cases clients rebelled and accountants had to absorb the cost of introducing new software. This time round it is likely to be the software suppliers who bear the costs. Sorry guys!

What do you think?

It seems that many in-house Tax Directors do not use their auditors for tax work and advice.This is one of the conclusions from Winmark’s third benchmarking survey of in-house Tax Directors.

Out of over 100 respondents to the Tax Director Network survey, only one-third use their auditors for corporate tax planning, and only a quarter use their auditors for international tax planning or even tax disclosures in the accounts.

Many Tax Directors also made clear why they prefer to obtain advice from other Big 4 firms. Tax Directors cite conflict of interest, the need to obtain audit committee approval and the level of fees involved. Higher costs arise when the auditors have to obtain second opinions where they cannot audit their own firm’s advice and that advice could have been obtained at lower cost elsewhere.

Two-thirds of the Tax Directors who responded to the survey use external advisers other than their auditors for corporate tax planning. Even more use other Big 4 firms for VAT advice and over half use other Big 4 firms for international tax planning.

When I was in practice, all the talk was of ‘cross-selling’ additional services to audit clients. Clearly this no longer a worthwhile use of time and effort – at least as regards larger corporates.

Are FDs in medium-sized companies (ie: those without in-house tax directors) as reluctant to seek tax input from their auditors I wonder?  If that were the case then what is the future for firms outside the Big 4  who expect to cross- sell to their audit clients? Should the focus be on other services rather than tax advice?

There is an ever increasing need for auditors to be seen to be independent. This survey suggests that the number who are able and willing to audit the impact of advice provided by their tax colleagues will continue to fall.

Copies of the executive summary of the survey report are available on request from Winmark Research. The full report will only be available to members of the Tax Director Network and to others who completed the survey.

A sole practitioner accountant recently asked how could he attract the ‘bigger fish’?
In effect he wanted to know how he could start to attract and win clients who would be prepared to pay bigger fees. He said he wants to more than double his average fee – moving from around £600 upto £2,000.

Here’s my initial reply:

What services do the ‘bigger fish’ look for and that you can provide? Are you looking to attract prospects with more complex affairs or those with more messy records?

What services would anyone want and be prepared to pay £2k for that you have the interest and ability to provide.

When you are networking are your stories and examples about small clients or big clients?

Do the messages on your website and marketing material represent the right sort of bait for the work you want to attract?

I used the expression ‘Halfway house’ firms of accountants for the first time today when commenting on an internet forum. It seems sensible to explain my thinking in a short blog post.

I had in mind those mid tier firms that are largely all but indistinguishable – in the eyes of prospective clients. It’s a harsh truth that is perhaps best evidenced  by the promotional flyer about which I have written in recent blog posts. I also made a similar point when reviewing an innovative online video produced by another mid-tier firm.

It’s partly the difficulty in distinguishing themselves that will be the downfall of many mid-sized (half way house) firms. They struggle to win enough competitive pitches, to attract new clients and new partners with a following and to retain qualified staff. They are constantly fighting to become more efficient so as to reduce costs and maintain, let alone, improve profit per partner.  The recession has reinforced all of these challenges.

The only mid tier firms that will survive and thrive are those with clearly defined niches. By this I mean they are known for having an area of expertise that makes them really stand out from the pack. They recruit staff and partners specifically to bolster this expertise and they don’t waste time and money trying to be all things to all people. And these firms will only survive as regards those specialist areas. The more generic areas of their practices will shrink as partners retire or leave to go to smaller firms with lower overheads and potentially higher profits per partner. The smaller firms will often be less pressurised environments too – especially if they stick to clearly defined, promoted and valued niches.

Those mid-tier firms that have no such recognised niche expertise will face increased pressure from the egg-timer squeeze of both the largest firms and of the smaller more focused and cost-effective firms. The larger ones are perceived as having more credibility for the provision of a wider range of services – when these are needed and valued. The smaller ones are able to provide compliance, advisory and special services more cost effectively.

How many businesses really need to be served by halfway house firms of accountants?

This is a follow up to last week’s post about a poor piece of generic direct mail I received from a firm of accountants. I’ve been asked to spell out what’s wrong with it. So here is my analysis of the letter – line by line:

“It was unfortunate that I was not able to meet with you at the [event].

Was the writer actually there? Were they specifically looking out for me, having checked me or my org’n out beforehand?

I would have appreciated the chance to talk with you about your organisation and gain an insight into how we can work together in the future.

Do they know anything about me or my org’n? They seem to assume that we could work together. And yet the rest of the letter is not about working together but simply describes a typical firm of chartered accountants.

I would like to introduce our firm to you.

And yet what follows is so generic as to be worthless.

[This top 30 firm] is a firm of chartered accountants providing a fully integrated business advisory service across several areas of expertise, designed specifically to save you time, provide you with peace of mind and achieve cost savings where possible.

“Fully integrated” – which means what exactly?

“across several areas of expertise” – do any of them include my business sector?

“designed specifically” – “designed”? what does that mean? And how is that different to what i would expect of any other firm?

“to save you time, provide you with peace of mind” – Even if the specific design assertion was true it would relate to clients rather than ‘you’ (the recipients of the letter).

“achieve cost savings” – Does this mean they’ll be cheaper than my current accountants? (Won’t that depend on who my current accountants are?) Or that they cut their own costs year on year? (unlikely) Or that they focus on reducing tax bills? (in which case, why not say so?)

We pride ourselves on our ability to understand our clients’ issues, working closely with them to identify areas where we can provide solutions that add value to their business and shareholders. In short, we are here to help you.

“We pride ourselves” – Hmm. And this is different or special how exactly?

“we are here to help you.” – Hmm. Communications like this and that contain unusually long sentences suggest otherwise.

Our clients include quoted public limited companies, owner managed and family owned businesses of all sizes, professional partnerships, regulatory bodies, public sector bodies and not-for-profit organisations.

Is there any business or organisation that doesn’t fit their client base? Am I supposed to be impressed that they claim to be able to service anyone and everyone? I’d be more interested if the letter specifically highlighted their expertise in working with other clients like me.

I will contact you in a couple of days to discuss your requirements and how our approach to service delivery could be of benefit to you and your organisation.

And they’re not trustworthy. A week later and I’ve had no such call.

Further information about our firm is available on our website [here].

What exactly in this letter is supposed to prompt me to bother going to their website?

Signatory – name

As noted in my original post, the position and responsibility of the signatory are not stated. Was it an audit partner? The senior partner? A marketing manager? Someone who will genuinely be able to “gain an insight into how we can work together in the future”.  Who knows?

Is this analysis too harsh? If this letter has secured new clients for the firm then clearly my assessment is wrong. But somehow I doubt it.

What do you think?