What is the real reason you are in practice as an accountant? This is a question many accountants struggle to answer when I ask them.
Why do you do what you do?
What is the first thing that comes to mind as to your motivation to be in practice as an accountant? Is it perhaps because you enjoy:
- helping your clients?
- making a profit?
- being your own boss?
Perhaps you are in practice as a step towards fulfilling your ambitions to:
- grow a bigger firm?
- build an accounting empire?
- build your reputation?
- provide for your family?
- earn enough to pay the bills?
Or maybe it’s simply that you trained to be an accountant and you enjoy what you do – most days.
Or is it more true that you don’t feel particularly motivated but can’t afford to quit and can’t imagine finding a job that suits you any better.
I have heard many variations on the above. Few, if any, of these answers actually tell us anything about the motivation to be in practice as an accountant.
What I have also noticed is that no one has ever told me they are in practice because they love doing compliance work. You know what I mean: the recurring compliance reporting work that you do for most clients while helping them to fulfil their legal obligations. Indeed, most qualified accountants will point out that they didn’t really learn how to run a practice or do day to day compliance work during their studies. And many accountants will distinguish their role from that of a bookkeeper, whilst others admit to doing a lot of bookkeeping for clients.
Back in the 1970s I chose to train as an accountant as I didn’t know what I wanted to do career-wise. Accountancy, I was told, would give me broad business skills and the world would be my oyster once I qualified. Also, I was likely to find it easier to earn a living this way than if I tried to turn my hobby into a career. I have always been grateful for the advice NOT to become a full time magician!
The idea of securing a good business based qualification still drives many people who choose to train as an accountant. Often they choose to then work in industry, in public finance or to run a business. Others stay or move into practice and it is the motivation for this that I am curious about.
I ask the question in the light of some of the concerns I hear about the impact of cloud accounting.
At best much compliance work is being commoditised and this trend is set to continue. At worst many smaller clients will choose the DIY route as they are perfectly capable of inputting data into their cloud based bookkeeping system. In a few years time, possibly sooner, increased machine learning and AI will further reduce the need for an accountant’s input before clients’ figures are submitted to HMRC every 3 months (as will be required under MTD).
There is understandable concern that, as a consequence of all this, the fees you can charge for compliance work will fall. And it will probably become even harder to secure new fees from new clients to plug the gap. Competition will increase and this will also push fees down.
The obvious way to avoid this scenario (in theory) is to stop focusing primarily on the provision of compliance work. Instead you want to encourage more clients to engage you to give them strategic business advice. You know, the sort of advice you originally trained to give clients.
This explains the big focus in the media and at conferences on building your skills to provide billable business advice.
And yet, accountants across the UK are expressing concerns that their clients don’t want and won’t pay for such advice. This may be true for some smaller clients. But sometimes this reaction is more a function of the accountants’ own limiting beliefs. They may have the necessary knowledge but they have yet to build up their skills to promote this service, to deliver such advice effectively and to ensure that clients recognise the value they have received.
Returning to my opening question, congratulations if you are happy with the type of work and advice you currently deliver on a day to day basis. If the real focus of your practice is largely compliance work, well done if this gives you all the satisfaction you require from being practice.
In the near future, many clients will want more help with compliance work to meet the demands of MTD. And yet, many accountants recognise that their clients won’t want to pay more than they do now. So, at best, it will become more challenging to work for these clients and earn a good fee for the work you do. Maybe the additional time required for quarterly reporting will be balanced by the time savings of a new (cloud based) bookkeeping system. Maybe. If you’re lucky.
But, maybe, now is the time to be thinking about why you are in practice, what sort of practice you want to be running, what sort of work you want to be doing and what sort of a living you want to earn from that work.
Somehow I doubt that a continued focus on compliance work will tick all of those boxes – if it ever did. Normally that focus just sort of happened.
Clients know they need help with demanding reporting and filing obligations. They go looking for accountants to help them. Fewer go looking for someone they can pay to give them advice on a regular basis. YOU have to promote the benefits and value of this, to people who are likely to respond positively. It’s not easy and demands a different style and approach that you may need to learn.
Or, you can carry on spending most of your days focused on compliance work for an inevitably shrinking client base.
If you’d like to have a chat about how you could transition away from focusing on compliance work, do get in touch >>>