The end of accountants?

In early 2013 Professor Richard Susskind published a new book, ‘Tomorrow’s lawyers’. This included some updated observations of the views expressed in his previous book, published in 2008: The End of Lawyers? Rethinking the Nature of Legal Services.

As I share many of Professor Susskind’s views I thought I would pick out one theme for this blog. He has been suggesting that technology and standardisation would make lawyers less important. Even five years ago, in 2008, he felt that this was already having a major impact on the structure and future of law firms. Professor Susskind was clear that he thought the same principles would also apply to other service professionals. Could the same be true of accountants and tax advisers for example?

Professor Susskind effectively urges readers to ask yourself, with your hand on your heart, what elements of your current workload could be undertaken differently – more quickly, cheaply, efficiently, or to a higher quality – using alternative methods of working? The challenge we face is to identify what distinctive skills, talents and capabilities you possess that cannot, crudely, be replaced by advanced systems or by less costly workers supported by technology or standard processes, or by lay people armed with online self-help tools.

Professor Susskind’s view is that the market is unlikely to tolerate expensive advice that can be better provided through automation, low cost online facilities and the support of modern systems and techniques. I would agree. He also suggested that the legal profession will be driven by two forces in the coming decade:

  1. by a market pull towards the commoditisation of legal services, and
  2. by the pervasive development and uptake of new and disruptive legal technologies.

Again, similar changes have been impacting the accounting profession over the last five years. However I don’t think the changes have yet been as dramatic as Professor Susskind was predicting. But in essence I am sure he was right and that there lessons here for ambitious accountants.  I’m not sure that ‘technology and standardisation’ are making accountants less important but the role is evolving – in much the way that some accountancy commentators have been predicting for a lot more than five years.

As I have long maintained, most accountants evolve and change only when they absolutely need to do so. This often means that the extent of the changes are only obvious when we look back and think how different things were even just a few years ago. If you don’t think much has changed then perhaps your memory is playing tricks on you. Or are you resisting the impact of ‘technology and standardisation’? How much longer is that approach sustainable I wonder?

I am relieved that Professor Susskind believes that there will continue to be a market for bespoke advice and that many people will continue to be willing to pay for expert judgment, intuition and the application and communication of complex expertise. I was relieved to hear that in 2008 and I think it is still true now. After all, that’s just what the Tax Advice Network is all about!

Like this post? You can now obtain my ebook containing loads of valuable insights, short-cuts, tips and advice for accountants who want to STANDOUT and speed up their success. You can buy the book or download a summary for free here>>>

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The only six ways accountants can increase their own profits

Over the years I have been refining my presentation (now called) “Make more profits from your smaller clients (without fancy schemes)”*

It seems that I have yet to include on this blog the opening summary in which I share what seem to me to be the only six ways in which accountants can make more money from their smaller clients:

You can:

  1. Increase your charges for doing the same work (which often means increasing the perceived value of what you do);
  2. Speed up the collection of your fees (this includes adopting more commercial billing strategies);
  3. Reduce the time you spend doing the work but keep the fees the same;
  4. Provide more services and charge accordingly for these;
  5. Encourage existing (good) clients to introduce new prospects (just like them);
  6. Sack the duff D-list clients who get in the way.

Of course this advice can be adapted to help clients make more profits in their businesses too. But it would be a shame to do this before applying the advice to one’s own practice wouldn’t it?

 * Variations on the same talk can be presented under a variety of titles, either in-house, at conferences or seminars, as required.

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Are your fees high enough?

Let’s start with a truism. No accountants complain that their clients are paying them too much. Conversely there are four main reasons why accountants think their clients are paying too little:

1. They haven’t put the basic fee up to a commercial level;
2. They don’t charge more during their busiest period;
3. They haven’t asked their clients to pay for ‘extras’;
4. Their clients won’t pay higher fees or for ‘extras’ even when asked

If your basic fees are too low then now is the time to consider how to break this to your clients. And you need to decide whether this is necessary as regards all or just some of your clients.

In an uncertain economic climate you would be forgiven for thinking about again holding your fees at the same level as last year. And that may be the right decision for some of your clients. Only you know your clients well enough to know if that will make sense and whether you need to adopt the same position for all of your clients – even the ones who are more of a problem than a pleasure to deal with.

When things are tough the chances are that you will lose some clients – and those that you can’t afford to spend time with are probably most at risk. Either they pay you more or they should move to someone else who can provide the level of help they need at a lower fee. What you want to avoid is hanging onto such clients and then suffering bad debts (which would include building up work in progress that cannot be billed because the client has gone out of business).

I suggest you book a chunk of time in your diary to plan how you will do this and maybe to brainstorm some ideas that will work for your practice and your client base. In my experience whilst there are plenty of issues that are common to many firms, everyone is different so what works well in one firm is not automatically right for another.

I normally suggest that accountants start by focusing on how much they want to earn from their practice. Then you can determine what they will need to do to achieve that ambition. If it’s more than you currently earn you will probably need to consider a mix of increasing the fees paid by  existing clients, increasing the services you provide to existing clients and charging extra for these and generating new fees from new clients. Only you can decide what you want and how you’re going to get it.

When your fees go up you will invariably lose some existing clients but even if you do, overall you are likely to end up with more fees and more time – a win-win situation. And if you also make a reciprocal fee arrangement with a smaller accountant to whom you refer your ‘lower value’ clients you can ensure that everyone is happy.

I’ve addressed related points in many previous blog posts including:

Are you charging enough?

Clients will pay high fees for good advice

What is a fair fee?

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How do you bill for extras over a fixed fee?

We’ve all done it haven’t we? Estimated a fee (or maybe even quoted a fixed fee) for a specific piece of work and then the scope of the work has changed slightly. And then a bit more. Perhaps we’ve delegated the work and have not kept in touch with how much extra time the ‘tweaks’ have involved.

And then we see the WIP reports and realise that the cost over-runs are more than we anticipated and certainly more than the client might have expected.  So what do we do? Swallow the ‘loss’? Promise ourselves to be more on top of things next time? Or do we write a bit off and then approach the client with what we consider to be a reasonable amount to bill them on top of the expected fee.

If we’ve taken the coward’s route we await the dreaded phone call or letter; and if we hear nothing for a few days we relax. We got away with it!  We can bill the extra and we’ll get paid.  Of course we still don’t know the client’s reaction. They may be fuming and bad-mouthing us all over the place. We promised one fee and then charged a higher one. It’s not good PR.

I’ll admit that, in the dim and distant past, I pursued that approach.  I later learned that although a letter/email may be a good way to broach the subject it is critical to proactively follow up with a prompt phone call. Much better than simply to just wait for a reaction.

I recently found myself on the other end of such an arrangement. As a result I am now more convinced than ever before as to how important is that timely follow up call.

If you’ve underestimated a fee and want to increase your prospect of recovering more than the expected amount you MUST take the initiative. Set out your justification and plan your approach to the client. Don’t just send the bill. Don’t even send the bill if you hear nothing back after sending the client a note of the proposed additional fee. Even if it gets paid you cannot assume the client is happy. They may well be looking for a new accountant.

You will only know what your client thinks if you SPEAK to them – and you trust them to tell you the truth!

How do you deal with such situations in practice?

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Apparently this is one of the Top 30 accounting and finance blogs

Last month I received what appears to be a genuine endorsement of all my work to make this blog useful, relevant, commercial and valuable to ambitious accountants.Best Accounting and Finance Blogs 2012

I was initially a tad cynical but this blog really is the fourth in a list of the Top 30 Accounting and Finance Blogs of 2012.

The note I received last week from Tina Ray, editor of BestAccountingSchools.net, said that:

“Of the hundreds of blogs we reviewed, yours was selected as being among the most helpful and offering the sharpest insight.”

If you scroll down you will note that I am now proudly displaying the award badge on the right hand side of this blog.

For the record, Best Accounting Schools’ mission is:

“To help you in your quest to become an Accountant or advance in your career in Accounting. We do this by providing high quality resources about how to get started in this field, along with information about the best accounting schools and degree programs available.”

It is an American focused resource which is ironic as my focus is UK based accountants.

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What are your options if you want to charge more then your fee quote?

We’ve all done it haven’t we. Estimated (or maybe even quoted a fixed) fee for a specific piece of work and then allowed the scope of the work to evolve slightly. And then a bit more. Perhaps we’ve delegated the work and have not kept in touch with how much extra time the ‘tweaks’ have involved.

And then we see the WIP reports and realise that the cost over-runs are more than we anticipated and certainly more than the client might have expected.  So what do we do? Do we:

  1. Bill the full time costs regardless of the quote we gave?
  2. Write-off a bit and then approach the client with what we consider to be a reasonable amount to bill them on top of the expected fee?
  3. Write-off everything over and above the quoted fee? or
  4. Speak to the client to discuss what happened?

Some will say it depends on the circumstances, on the reason the work went over budget, how much of this can be attributed to the change in scope of the work and how well we know the client and can anticipate their reaction.

If we’ve taken the coward’s route we follow options 1 or 2 and then await the dreaded phone call, email, letter or visit. If we hear nothing for a few days we relax. We got away with it!  We can bill the extra and we’ll get paid.

I’ll admit that, in the dim and distant past, I probably pursued that approach.  I later learned that although a letter/email may be a good way to broach the subject it is critical to proactively follow up with a prompt phone call rather than to just wait for a reaction.

More recently I recently found myself on the other end of such an arrangement and am now more convinced than ever before as to how important is that timely follow up call.

If you’ve underestimated a fee and want to increase your prospect of recovering more than the expected amount you MUST take the initiative. Set out your justification and plan your approach to the client. Don’t just send the bill. Don’t even send the bill if you hear nothing back after sending the client a note of the proposed additional fee. Even if it gets paid you cannot assume the client is happy. They may well be looking for a new accountant.

You will only know what your client thinks if you SPEAK to them – and you trust them to tell you the truth!

I welcome your comments and ideas as to how you deal with such situations in practice.

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