Accounting services are in high demand, according to many accountancy firms surveyed by CommBank.
That’s certainly good news. But don’t breathe that sigh of relief too soon.
When we look in-depth at the results, we find that those high demand services as per surveyed accountants projected over the next 6 – 12 months are in specific areas.
So, let’s take a look at what those areas are…
The key area of interest is Corporate Finance (including M&A). This is a specialty that smaller and mid-sized practices may need to consider developing some interest in.
Other accountancy groups, involved in providing their SME clients with Business Advisory Services, reported:
They were enjoying the best business conditions in 7 years;
They see endless opportunities going forward; and
They are confident in increasing their fees because of the quality of services they provide.
This survey involved 45 firms of various sizes from all around Australia.
The responses confirm that the surveyed practices are confident in their ongoing success, despite the tough financial times that are predicted over the next two years.
Their only concerns are being able to attract the right sort of talent to their firms, and keep them.
Most of these accountants are confident that the type of work they are now providing for their clients offers career interest that will keep their in-house team members engaged and away from those “Help Wanted” ads. We all know how expensive and frustrating constant recruitment can be.
They also say that an increasing number of SME clients are looking to them to provide additional services and they’re more than willing to pay for them.
Are some of your SME clients crying “help” because they’d like to receive additional commercial services from you to help them add value to their businesses?
Australian Tax Commissioner, Chris Jordan, has issued a blunt warning to the accountancy profession, saying: “You must understand that if your business model is high-volume, low margin, simple tax returns, your business will not be viable in 3-5 years.”
Commissioner Jordan urged accountancy practices to diversify to remain viable for the longer term.
“Focus on becoming a brilliant and trusted advisor” he said.
If your accountancy firm is in that low margin category described by the Commissioner, it’s time to start implementing your exit strategy now!
That way, you’ll be well established in a more profitable segment of the accountancy market before the new technology, to which the Commissioner referred, is fully operational industry-wide.
If you’ve already recognised that risk category and started to make plans, but you’re not yet servicing your business clients beyond an annual set of accounts, Balance Sheet, a taxation estimate and, perhaps some information supplied to your client’s bank, then you need to take some positive steps.
Over the next couple of years, you’re likely to find yourself in a tough battle to keep some of your SME clients.
As the Tax Commissioner says, you need to become proactive, or the future is going to be here before you know it.
Look seriously at proposing virtual Chief Financial Officer (CFO) services to some of your SME clients. You may be surprised how open they are to the suggestion.
In that role, you can introduce “Financial Forecasting” to your clients as the key product.
If you don’t step up proactively, you run the real risk of your competitors starting to contact your clients.
In recent weeks, we’ve looked at what US Accountant Adam Hale, a Partner of Summit CPA, had to say about the success of using the “Financial Forecasting” model when his firm introduced their clients to virtual CFO services.
Adam indicated that he had no trouble finding clients, getting paid – his firm’s average virtual CFO fee is US$80,000 – and they get paid weekly by a direct drawdown. Happy days!
He also indicated that they have no problem attracting or retaining high quality talent to their firms because the accounting team love performing the virtual CFO role.
Getting in now and offering virtual CFO services will give your firm a distinct point of difference in your marketplace.
So, how do you start the process?
Well, begin by analysing your clients and asking yourself a few questions.
Who amongst my SME client base is operating a growing business?
Who aspires to operate a growing business?
Who needs ongoing financial advice?
Quite frankly, most SMEs need a “sounding board” – someone to talk to about their business on a monthly basis.
The next step is to determine what services your firm can offer. You may be amazed at the breath of services you have experience in.
Based on the US experience, our suggestion is that you’re upfront with your clients.
Tell them that your virtual CFO package has to be on at least a monthly basis, but they can elect for your services to be weekly or bimonthly.
An integral part of those services must be “Financial Forecasts”. If you’re providing virtual CFO services then these forecasts need to be compulsory for all clients or you won’t be able to do your job effectively.
Adam Hale has told us that when they decided to make “Financial Forecasting” a compulsory component of their virtual CFO service, they expected to get some push-back. Instead, they were pleasantly surprised to have virtually no rejections when they outlined all the elements of the package to their clients.
“Financial Forecasts” include:
- Developing an understanding of the “business of the business”, just as you would if you were the full-time CFO – this is very important if you are going to be the key financial advisor to your client.
- The budgetary process – includes preparing budgets for each individual business unit within the business, not putting all transactions into one profit and loss account.
- Effective budgets require key drivers to prepare a range of supporting schedules. These will directly link to the key documents within the financial forecasts – budgets – projected cash flow – projected balance sheet.
- The projected cash flow forecasts prepared on an overall business basis and need to include all transactions that you expect to be processed through the business’s bank account.
Our recommendation is that the projected balance sheets should be prepared out to 5 years. This lets you act as the “Financial Storyteller” for your clients, so you can show them how the results of decisions that they are making today will affect the future financial position of the business, including the valuation of goodwill.
The “Financial Forecasts” product package offered by ESS BIZTOOLS includes a subscription to PlanGuru – a full suite of affordable budgeting/ forecasting software that gives advisers the optimal approach to build three-way forecasts for their simplest to their most complex clients. With QuickBooks, Xero and Excel imports available, a fully-structured three-way model (with KPIs) can be set up in a matter of minutes. Then with 20+ pre-built forecasting methods, debt modelling tools, and KPI predictors, you’ll be able to create multiple scenarios that will help your clients make better, more informed decisions.
We’ve negotiated a special deal from PlanGuru.
Subscribers who take on the “Financial Forecasting” package will be licensed to provide unlimited information to up to 10 clients, rather the standard 3 that comes with the normal package. If you want to add more than 10 clients to the package, you’ll have to pay an additional fee for each.
The “Financial Forecasting Package” also includes special training and support services being provided by Beyond Accounting Technologies, CEO Paul Barnaby FCA.