If in doubt – imagine you’re advising a loved one

One of the pressures that all ambitious accountants endure is the need to advise on issues that do not arise every day. The more experience you have the more confidence you gain to know whether or not you have enough knowledge to give the advice without double checking it’s right.

Double checking might simply involve checking the rules in a book on the shelf, online, asking a colleague or going outside the firm to an independent specialist.  There is no shame in not knowing. You cannot know everything and it’s a mistake these days (and probably always was) to claim to be the font of all knowledge on any accountancy or tax related subject. None of the real experts would make such a claim so why should a ‘generalist’ feel it necessary to do so?

If you’re not sure though, here’s a simple test.  Pretend the client seeking your advice is a close family friend, your mother, brother or someone else you really care about.  Would you be happy for them to act on the basis of the advice you are giving?  If you’d want to double check before letting them follow your advice then you know you should double check regardless.

And if you don’t know where to turn when you require specialist tax input, I’d have to recommend the Tax Advice Network.

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Referral marketing for accountants (part two)

In a recent post I introduced the concept of referral marketing for accountants and set out the main reasons why many accountants don’t explore this low cost marketing technique.In this post I’ll highlight some of the key issues and in part three I’ll address explain ways to overcome any reluctance to adopt this approach to seeking new clients.

So – why is that so few accountants have embraced the concept of referral marketing? By which I don’t simply mean asking clients who they can think of from amongst their friends, colleagues and others they know who might be worthwhile prospects for the accountant.No, I’m more focusing here onencouraging happy clients to know that you encourage and value referrals.In the final part of this series I’ll suggest that there are other people who could support your efforts to secure more clients through referral marketing – other professionals and suppliers to your target clients who will pass on your name (refer you) when the opportunity presents itself.

Some people undertake referral marketing without a specific plan or focus. I’m also seeing an increasing number of accountants who include a reminder that they grow through referralsas a ‘ps’ at the end of letters and emails. This can work well but it’s best if both the accountant and the recipients of the message are clear as to what sort of referrals are sought. Does your firm have a focus? A specialism? Something that will help people to refer to you as being distinct from all of the other accountants they know.

Which of the following 3 firms would you want to be with if clients from each of them were talking about you and two others to a friend who wants a recommendation to a new accountant?

“I’m pleased to recommend my accountants, ‘Wee Count Alot & Co’ who’ve looked after me for years”

“My accountants are great as they’re always saving me tax”

“I just let my accountants sort everything out for me, they save me tax and seem really focused on issues that matter to [businesses like mine]”

At least the first one knew their accountants’ name but the endorsement (referral) wasn’t particularly strong as compared with the other two, was it?

So one key action is to consider how you want to be described, what you can do to influence that and also to consider whether you intend to focus on a specific client type or service area.Until you are clear as to what you’re seeking in terms of referrals you are unlikely to get them. Much the same as shooting an arrow in the air is unlikely to secure you a bullseye if you have no target it mind.

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Finance for accountants and accountancy firms

In preparation for a talk  I sought information from a number of banks as to their attitudes towards accountancy firms. I’ve sought to paraphrase what they told me without attributing specific comments where I was asked not to do so. (The information below was current in 2008 when this post was written. Readers should seek out current deals before taking any action)

Lending to accountants remains a sector of interest to many banks

Some firms looking to buy property/other businesses will be able to obtain 100% funding from LLoyds. The firm would need to be able to show a clear facility to service the loan and be able to provide full value security.

Interest only lending is also available from Lloyds but only to partnerships of 2 or more with keyman insurance in place.

Lloyds will also provide Equity loans, preferably secured but possibly unsecured, subject to:

  • minimum 2 partners in an existing partnership
  • loan used solely to acquire capital
  • the firm’s accounts for the last 3 years show satisfactory trnds in fee income, growth, profitability and liquidity
  • maximum 25 year term or to retirement age – whichever is earlier
  • undertaking from the firm/LP to maintain various covenants

The days of base rate plus 1% have passed such that base rate plus 1.5% is more the norm now.  However firms can still obtain fixed rates, caps and collars as appropriate to help mnage the interest rate risk – although with rates set to fall….

Coutts Bank offer what they call Partners Equity Participation Loans (‘PEPL’). Whilst these are typically taken up by the larger firms, they are also available to smaller firms that meet key criteria and where the total exposure to partners in the firm does not exceed certain criteria.  These loans are in the partner’s own name and as long as the funds are immediately injected into the firm and used for business purposes the full interest charge thereon will be deductible from the partner’s taxable income.

An issue some banks are seeing more and more is the need within firms to reduce that level of capital for new partners. This could be due to a reluctance on their part to take out substantial business borrowings on top of their mortgage. It’s important that firms inviting younger people into partnership take this into account when setting the terms.

It’s long been common for firms to offer a facility for newer partners to build up the level of their capital over a period of time.  This may not be ideal when the senior partner is looking to retire and wants to extract his capital from the firm (financed by the new partner’s capital).  In such cases it may be possible to secure a facility that provides long term ‘evergreen’ debt to the firm itself, leveraged against the balance sheet. By lending to the firm, a requirement for additional capital contribution from the partners can be limited.  I should stress that this facility is only likely to be available to firms with longer standing relationships and where they can evidence strong income generation to service the debt requirements.

Banks will always want to see good credit control, a well diluted debtor book with good quality names and good credit management with little evidence of bad debts.

Reducing lockup by shortening the period between doing the work, billing it and collecting payment is clearly cheaper than any other option when a firm requires additional finance.

Asset Finance:

On a related topic, the question should be asked  – do you need to own the physical assets used by the firm?  Some firms will qualify for the initial investment allowance on capital expenditure of upto £50,000. Beyond that level however some form of leasing or asset finance could be more cost effective and will certainly be easier on cash flow. These days, asset financiers will fund a whole variety of assets in addition to the traditional tangible ones – software – office refurbs, PI etc.A refinance of a firm’s asset base could create an injection of capital.

What experiences do you have of banks’ attitudes to lending to accountants an accountancy firms in recent weeks?


Accountants need to show they really are business advisers

I’ve just been reading in Accountancy Age about how a senior official at HSBC considers that Accountants are better at advising distressed businesses than are banks.

Piyali Williams, head of professional proposition at HSBC is reported to have also said that:

“Accountants are in a better position than banks… We’ve always viewed them [accountants] and our customers have always viewed them as a more trusted source of…independent advice.”

That shouldn’t surprise anyone of course.  It’s as much a reflection on how business people view their bank manager – even assuming they know who it is.

My first question for readers of this blog however is what are you doing to build on this presumption?

Here’s a few more:

  • Are you continuing to run your practice as you did before the credit crash?
  • Have you sat back and considered what the impact could be on your business?
  • On your clients’ businesses?
  • What additional demands will they make?
  • What additional services will they expect?
  • Will you provide these within your standard annual fee?
  • What will clients pay extra for?
  • Can you get in first and make clear that additional services are available for an additional fee?
  • Can you highlight the benefits of them engaging you to provide those additional services – and sooner rather than later?
  • Are you really a business adviser or ‘just’ an accountant who records, reports and focuses on what’s already happened?

As the economy moves into recession I believe we will see a sharp contrast in the way that accountants evidence their skills.  Will everyone whose business cards describe the firm as Chartered Accountants and Business Advisers be able to evidence the truth in that description?


Blogging myths for accountants

There are so many misconceptions about blogging and I am frequently surprised when I encounter bloggers who seek to encourage accountants in general to start blogging.  I would stress that I enjoy blogging.  This blog now has almost 250 posts on it – built up since 2006. I also write a tax insights and commentary blog for the Tax Advice Network and have a third blog on which I share Accountant jokes and fun.

But I’m not in practice. Given that I’m an enthusiastic blogger and spend a fair part of my time helping accountants to build more successful practices you might expect me to also advocate blogging by accountants. But I don’t.

Here are 5 blogging myths – ie: reasons often given to encourage people to blog regularly and why I think that accountants are different:

Build your credibility – This only works as regards people who see and read your blogs. Most accountants in practice are not seeking to build credibility across the UK, let alone the world. Their target audience is more local than that. Will your target audience (prospective clients, advocates and potential staff) find your blog and read it sufficiently to be influenced?

Enhance your SEO – This refers to ‘Search Engine Optimisation’. How easy is it for your target audience to find you on the web? Not the people who know your name or the name of your practice but those who don’t know you and are looking for someone just like you. Might I suggest that the best starting point here is to arrange for your website to be Optimised before you start blogging – if this is your objective.

It’s fun – I’d agree with that. But then lots of things are fun. How many fun things can you fit into your life? It’s also time consuming.  Is it enough fun to warrant the time and effort?

Emphasise your niche – If you have one. During my talks for accountants I often stress the benefits of focusing on a niche and of highlighting a specialism.  The strength of the argument for doing this sometimes comes as a shock after years of trading as accountants to anyone and everyone. But if you do have a niche then the same points apply in the ‘credibility’ para above.

Distinguish yourself from the others – I’m a great advocate of the idea that it’s ‘more important to be different than to be better.’  But those features that distinguish you need to be evidently of benefit to your target clients. Being 7 foot tall and always carrying a bright green briefcase will make you memorable but do those differences benefit anyone? In the same way, will anyone feel that they are getting more value for money or a better service simply because you are a regular blogger?

The other side of the coin

I’ve been blogging here for over two years now. The frequency of my posts varies but it seems to average about 3 per week. I get to post my thoughts and ideas here to help readers and I am then able to collate the posts to create articles for the press and for other websites.  I also often adapt my blog posts to create supporting material for my courses and seminars for accountants.

I am aware of a relatively small number of accountants in practice who seem to enjoy blogging. I know of far more who gave it a try and then gave up. The benefits didn’t live upto the hype.  I don’t think that’s a reflection on the accountants. I think it’s more to do with the hype.

What do you think?  Please add your views as comments to this post.


Now is the time to invest in your staff

I often receive calls from recruiters asking me if I know of anyone who might suit this vacancy or that opportunity.  In recent weeks I’ve been telling them that I’m aware of far more vacancies than potential candidates.  Few people are looking to move from one firm to another in the current economic climate.

In one of my posts last year I asked whether you Hope, Pray or Train key staff?  I made the point that:

Employers will spend a fortune in an effort to ensure that ambitious professionals keep upto date with technical developments. But when it comes to maximising the professionals’ potential to do their job, to progress and to get more done, little time or money is invested.

One reason for this is the difference between a short term and long term perspective. Everyone needs to be uptodate with their knowledge of technical developments.  The alternative is to risk the provision of out dated advice with  all the adverse consequence that can then ensue.  Thus there is a short-term need to train staff in technical matters.

On the other hand, the development of personal and management skills is something that has more of a long term impact.  Until quite recently many partners in accountancy firms were concerned that such training would simply help key staff to become more marketable. In effect there was sometimes a fear that the firm’s investment might not be worthwhile as it would benefit a future employer.

There are still plenty of opportunities for good accountants (especially those with specialist skills (eg: tax).  The difference today though is that staff are far less willing to risk a move to a new employer during what are perceived as tough economic conditions. They are likely to stay put if they can.  I remember making much the same decision during the last recession.  Better the devil you know….

What this means is that firms can afford to invest in their staff more now than ever before. Not only will the staff value the support but the firm will gain a longer term benefit from the investment.

And at this stage I should of course draw attention to my white paper on Personal development for ambitious professionals.


WikiJob – for ambitious accountants

I came across an intriguing website recently that is worth referencing on this blog.

It will be of interest to ambitious accountants seeking a new job or who work in one of the larger firms.  One of the guys behind  WikiJob tells me that:

We challenge large accountancy employers by offering their employees and prospective employees (students and graduates) the chance to rate and discuss them and their recruitment procedures.

The list of around 70 firms’ profiles discussed on the site already includes most of the ‘usual’ suspects and some smaller ones too – including a fair few that are NOT centred on London.

The Wiki profiles are open for anyone to edit, which means the information inside them has been written by both candidates and companies. For those whose only knowledge of a Wiki is Wikipedia it’s worth noting that a wiki is a collaborative writing effort where users can create, edit and publish articles. Wikipedia is simply the most well known wiki.

Here’s a great 3 and a half minute video that explains what a wiki is in Plain English and how it works. It’s very clear – if you can bear the heavy american accent.


I think I would have enjoyed contributing to such a site earlier in my career. I would probably also have  benefitted from using it as, over the years I was in practice, I worked for or had interviews with many of the firms listed!

Have a look at  WikiJob if it’s of interest and do please provide some feedback here by way of comments on this post.


Accountancy firm alumni lists – do the rules make sense?

I went to a Chantrey Vellacott alumni ‘do’ recently.  I had a most enjoyable time although it felt a little strange as I never worked for the firm – but I had worked for one the predecessors.  I even managed to find a couple of faces I recognised from those dim and distant days; I left shortly after passing my ACA exams in 1982. I have fond memories of my ‘articles’ (as that training period was called in those days).

I also get invited to alumni parties arranged by Deloitte. Again the invitations stem from my time at a predecessor firm – this time ‘Touche Ross’ which is where I started my tax career shortly after I qualified in 1982.

Again I have happy memories of my time at Touche Ross – as I do of most of the firms I worked for before I established the Tax Advice Network.

This is all in stark contrast to one ex employee of a big 4 firm. He had met his wife at a small regional office of the firm. When she left shortly after their marriage she was added to the alumni list. Then he left and started his own small practice. Clearly he wasn’t any competition for the local office of the Big 4 firm. Nevertheless he was not added to the alumni list and his wife’s name was dropped too.

Two years later however he merged his practice with a mid tier firm and after a further two years he left and became MD of a premier league football club.  Guess what happened when his old Big 4 firm tried to tender for the audit!


Four essential elements to service excellence

When I first started this  blog in 2006 I focused on topics drawn from or which were due to appear in my talks, mentoring and coaching programmes.

More recently I have been focusing more attention on the development of my Tax Advice Network.  It contains its own blog containing tax commentaries, ideas, insights and news. In recent months I have noted that the posts on this blog for ambitious accountants have covered a wider range of subjects. The focus is still on helping you to achieve success – in your practice, career and business endevaours. It’s just that now I allow a wider range of issues and experiences to inspire my posts.

This one came about after I was asked if I was the same Mark Lee who asserted that there were four essential elements to service excellence: consistency, attentiveness, recoverability and continuous evaluation.  Now this may confuse the search engines but that Mark Lee is a past President of Singapore Airlines. He is reported to have conducted an exhaustive study in the early 90s to determine the factors that determine success in the airline world.

It was he who concluded that there were four essential elements to service excellence in that world: consistency, attentiveness, recoverability and continuous evaluation.

Before I share my views as to what might constitute service excellence in our world of accountancy and tax, let me ask for your suggestions.  Remember, as I have stressed in previous posts on this blog – what counts are what clients perceive in terms of the services we provide.


“Why I gave up giving tax advice”

Posts to this blog normally contain tips and advice to assist accountants, especially those in practice and /or building up their careers. Today I make an exception.

In July 2008 Taxation magazine published a 4 page lead comment article written by me. I had entitled it, ‘Why I gave up giving tax advice”. The editor cleverly revised that so that the headline became:

“A far, far better thing… that I do than I have ever done. MARK LEE explains why he gave up giving tax advice”

In effect the article explains the reasons for my transition from being a tax adviser in practice (after over 25 years).

The main thrust of the article deals with my frustrations, which have been described as ‘a sad indictment of the tax system’. You can read a copy of the article in pdf format: Why I gave up giving tax advice or on the Taxation website here.

Taxation magazine editor Mike Truman, who commissioned the article, has said “Mark is probably one of the few people who can write about this from the inside, because he is no longer giving advice, yet is still closely involved with the tax scene.”

I have to admit that I found writing the article quite cathartic. It enabled me to get a number of things off my chest.

In the context of THIS blog however, perhaps this quote is the most relevant:

Then two years ago, approaching the age of 50, I had cause to consider what I wanted to do for the rest of my career. Entrepreneurship beckoned. But I wasn’t interested in running my own accountancy or tax practice – for the reasons explained below. Instead I initially created the BookMarkLee ‘brand’, acted as a mentor and business coach for ambitious accountants and continued with my professional speaking engagements.

Despite my ongoing commitment to this blog and to my writing and speaking engagements I also noted that:

this was all moving me away from the world of tax and that didn’t feel right. Then the idea for the Tax Advice Network started to take shape and I eventually decided to focus all of my efforts and activities on this endeavour. Launched at the end of last year, it enables me to play to my strengths, continue with my professional speaking activities and stay in tax. Crucially however it doesn’t involve ME in providing tax advice so I’m not competing with the tax adviser members whose services we promote more widely than they would be able to do themselves.

Edit: It later became apparent that the Network didn’t need me to devote lots of time to it – which is great as I now prefer my other business activities – as set out on this website.

In my conclusion I noted that:

I consider myself very lucky. Not everyone is in a position to choose to review their career and take a new path.

So what about the ambitious accountants who read this blog? Are my fears and frustrations shared by others? Are you also looking for a way out of the profession (or would be but for financial concerns)?