Whilst there is some debate as to the degree that individual accountancy businesses will be affected by changes in the marketplace relating to taxation returns, financial advice and superannuation fund audits, you would be a very brave accountancy business if you elected to reject “fee slippage” out of hand!
“Fee slippage” is a relatively new problem for accountants. “Fee slippage” is caused by a number of factors including:
- Australian Taxation Office changes to tax return lodgement process
- “commodity” status of tax return work
- outsourcing of work to lower cost countries
- “Digital disruption” is driving manual and repetitive tasks out of accounting.
There are numerous examples all around us about changes that are occurring in the business community – think about:
- video stores
- travel agents
- retailers – now competing with businesses such as Amazon and other Internet organisations.
It is fairly easy to calculate “fee slippage” because the group of clients that will be most vulnerable to “fee slippage” are those that currently pay accountants less than $3,000 per annum. These clients probably do not receive any additional services other than the preparation of income tax returns.
The Benchmarking.com.au analysis of accountancy businesses in Australia – 2016 identified that in the “average firm” (“all firms average”) 77.1% of the average firm’s clients paid less than $3,000 per annum with the average fee in this category being $1,246.
The “average firm” had a total income of around $2.1 million, with a contribution from the under $3,000 billing segment of $579,263.
This is the group of clients from which you are most vulnerable to incurring “fee slippage”!
If the “average firm” was your accountancy business how would you develop strategies to offset this “potential fee slippage” which many commentators believe is inevitable in the changing Australian Taxation Services market?
Why not utilise the “Potential Fee Slippage and New Opportunities Calculator”, developed by ESS BIZTOOLS, to determine what your potential “fee slippage” could be?
There are services that you can offer your clients to offset the “potential fee slippage”. These services include:
- Debtors Management review
- SME debtors systems manual
- Virtual Chief financial Officer services
- Preparation of Business Plans
- Budgets and Cash Flow Forecasts
- Proactive Assistance in the Identification of Government Grants for Individual Clients
- Personal Property Securities Register Due Diligence Review
- Succession Planning
- Corporate Governance Reviews
- Preparation to assist a company to raise capital
- Early Stage Innovation Companies
- crowd funding equity raising (expected to be legislated for shortly)
- Section 708 capital raising
Benchmarking.com.au “all firm average” indicated that the average fee being paid in the $3,000 – $10,000 category of clients was $6,637 from 101 clients – there is very little likelihood that any Business Advisory Services tasks would be included in this fee.
You will now need to identify how many of these $3,000-$10,000 category clients you believe you could market additional services to:
- How many of these clients have asked you to perform additional services over the last few years that, for various reasons, you have not been able to undertake?
- How many of these clients are always keen to try something new?
Based on this review I expect you to identify that 20% to 30% at least of your clients in the $3,000-$10,000 category bracket are worth talking to about the introduction of a range of services to assist them in their day-to-day business operations and to add value to their businesses.
You will then be in a position to calculate what the new revenue streams could be to your firm.
A few years ago Deloitte produced a report “Digital Disruption – Short Fuse Big Bang” recommended that businesses (including accountants) that believe they could be confronted by “digital disruption” should develop strategies to create “new revenue streams”. This is what the “Potential Fee Slippage and New Opportunities Calculator” will assist you to do – identify where you can create “new revenue streams” for your accountancy business primarily from your current clients.
You will need to ensure that your team has undertaken some training; your accountancy business has appointed “product champions” and “industry champions” and you have identified services that your clients will be interested in acquiring from you.
By utilising the “Potential Fee Slippage and New Opportunities Calculator” you will be able to identify those clients that, if you took the time to talk to them about the additional services that you are providing, would be prepared to commission you to undertake those services and pay for them.
This is negotiating “the next level” within your accountancy business.
A complimentary copy of the ESS BIZTOOLS “Potential Fee Slippage and New Opportunities Calculator” is available. CLICK HERE TO DOWNLOAD
Peter Towers | Managing Director | ESS BIZTOOLS