Accountant's Minute 205
There has been some debate about fee level of services for accountants recently – refer “Accountant’s Daily” article 26 July 2019 “Is $5,000 Reasonable to Pay Accountants Annually?”
There is a resistance from some business operators to paying premium fees for “compliance work”.
Most clients do not perceive that there is any “value add” to them from the supply of compliance services!
To get paid more for additional services accountants need to identify and clearly articulate the benefit from the client’s point of view of any extra services above compliance work that have been provided to the client.
It all starts with the initial client engagement.
My suggestion is that you have a detailed discussion with your proposed client to ascertain what the client’s business is, and identify what the client is preparing themselves relative to management information and then identify the key services that you can provide acting as if you were the employed accountant for that business – supplying a Chief Financial Officer Service.
The first activity to consider is – how many business activities is the client conducting within this business?
For each business activity suggest that a separate department is created for accounting purposes so that in the monthly Financial Accounts the client will receive information on:
Key Performance Indicators could then be defined for each of the business’ activities so that the client is aware of the sort of information that the accounting/management system is going to produce to assist him/her to run a better business.
How are sales being paid for – totally on a cash basis or are some sales on credit?
If you have a client who is offering credit it gives you the opportunity to talk to them about the establishment of a Debtors’ Review System, calculation of Debtors’ Days Outstanding each month, calculation of Debtors’ Aged Analysis and the procedures for following up of outstanding Debtors.
It is also an appropriate time to discuss the potential registration of customers on the Personal Property Securities Register.
Is the business a trade business or professional firm? If so, how is the Work in Progress treated – has the client established a system? If not, this is your opportunity to advise on the implementation of a Work in Progress System that is going to ensure that progress invoices are being prepared and that the results of jobs are going to be determined as quickly as possible and brought to account promptly in the Profit Loss Account.
Does the business have Stock? If so, you could then discuss the establishment of an effective Inventory Management System to review Stock Turn Rates and the level of investment in the various stock categories.
Does the business lease assets to or store assets with other businesses? If so, you could talk to the client about the benefits of registering those businesses on the Personal Property Securities Register.
What Risks are potentially likely to present problems to your client? This could cover matters like Insurance, Workplace Health and Safety, Fair Work Australia. You could advice your client of risk protection mechanisms that could be put in place or alternatively refer your client to an expert advisor in risk management.
If your client is a trades business how were the charge out rates determined?
If they are professional services firm, what has been the basis of determining professional fee levels?
If they are a retail business have they factored in the “sales mix” that is likely to occur in their business and the mark-ups that are being utilised to determine individual products selling prices?
In each of these instances, will the respective charge out rates, professional fees or retail prices enable the business to meet its predetermined profit target? This is a significant opportunity for an accountancy firm to perform a significant “value adding” service for your clients by calculating the appropriate charge out rates, professional fees or retail pricing required to meet a predetermined profit target.
Has the client established realistic Budgets for the next twelve months? If not, why not talk to the client about establishing Budgets and then comparing actual financial performance against the Budgets so that the client is in a far better position to effectively manage his/her business.
The next item to consider is Cash Flow Forecasts. Once the Budgets have been finalised you could then indicate to the client that you are going to prepare Cash Flow Forecasts that are going to take into account investment in Inventory, Work In Progress, Debtors and other factors which will affect the cash flow available within the business.
Most clients are looking for more communication from their accountants relating to assisting them to better run their business. There are significant benefits for clients from participating in a “Quarterly Business Review Meeting” with you as these types of meetings give your clients the opportunity to discuss a range of business related matters basically on a CEO to CFO basis to assist your client to run their business more effectively.
The key to overcoming resistance from clients to pay fees is therefore to clearly identify the extra services that you are proposing to provide to your clients over a twelve month period which relate to “Business Improvement Strategies” to enhance performance of the business.
Identify what you are going to do for your individual client based on your appraisal of your client’s business. Then communicate this to your client verbally and in writing and then have the courage to tell your client what the cost is going to be on an annual basis and to invoice for these services on a monthly basis and then deliver outstanding services to help your client run a better business!
ESS BIZTOOLS produces a range of product packages (over 23 packages) to assist accountants/business advisors to deliver a range of “Value Adding Services” to your clients.
Why not visit our website – www.essbiztools.com.au to review the types of services that ESS BIZTOOLS can provide you. Each of the suggestions that I have made in this commentary can be provided utilising the product packages included within ESS BIZTOOLS.
Why not invest 60 minutes of your time in attending a free webinar “Supply Value-Added Services” on Tuesday, 3 September, 2019 at 12:30pm – to register click here.
If you have any questions on any aspect of the assistance that ESS BIZTOOLS can provide to assist your accountancy/business advisory business to provide an outstanding range of “added value” Business Improvement Services to your Clients please do not hesitate to contact us.
If you have any questions about any aspect of the services provided by ESS BIZTOOLS or ESS BIZGRANTS please do not hesitate to contact us:
Telephone: 1800 232 088
Come to our website to see our “40% Discount Promotion” for the month of August 2019.
Have a great day!
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Episode 205 - Supply “Value Adding” Services!
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