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Lazy accountants cost small firms £1.8bn

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13th Dec 2011
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Sloppy, short-sighted accountants are making costly mistakes and harming small businesses, according to a new report authored by Mark Wickersham and Steve Pipe.

The study by The Accountants Club found that accountants frequently make mistakes including:
  • not considering incorporation for sole traders
  • allocating illegal dividends
  • failing to claim capital allowances properly
  • not claiming R&D tax credits
  • failing to undertake inheritance tax planning
  • not reviewing tax credit eligibility
The report says there are two types of client: "overlooked" clients and "valued" clients, and that there are many instances where partners lavish outstanding service on a handful of favoured clients, while at the same time cutting budgets so drastically on the affairs of other clients that service is inevitably compromised. 
Mark Wickersham, one of the report's authors, said: "Large parts of the accountancy profession are costing clients a huge £1.8bn in poor advice. The entire profession has to sit up and do something about this as a matter of urgency."
The study suggests that accountants are making mistakes with 40% of the 4.5m private sector businesses in the UK, therefore affecting 1.8m clients. In many cases these mistakes will cost those clients many thousands of pounds each, so factoring in an average cost of £1,000 is unlikely to be excessive, the study claimed.
The report labelled accountancy as a "two-track profession" made up of "stars" and "laggards". Laggards who fail to provide a full range of services and advice to their business clients make up the majority of the market. Star firms that pick up the mistakes other accountants tend to miss only make up 27% of the industry.
Star firms are also more likely to leave client meetings more profitable because they are: 
  • more proactive
  • more likely to share ideas that can generate significant additional amounts of cash for the clients
  • more likely to link the fee to the value so that the client can’t possibly lose
  • Make it easier for the client to say yes by offering client satisfaction guarantees
If all accountants followed the example of Star firms they could get better results and small business could save billions, the report claimed. 
The Accountants Club and AVN are putting on the National Accountants Conference 2012: 'The year of excellence in accountancy', taking place on 27 June 2012.

Replies (73)

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Replying to jcace:
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By ryedaleman
14th Dec 2011 15:18

Kick off it did

Before we have to do it for you... We were aware when we posted this item that it was likely to "kick off", so please don't live down to our worst expectations.

 

So why let it be aired it is just a commercial anyway

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Replying to jcace:
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By andy.partridge
14th Dec 2011 16:49

Wind-uppers

John Stokdyk wrote:

 

We're getting negative comments from other members about this thread, and if this continues we will have to pull down the thread, which hardly helps the cause of reasoned debate.

Does anyone really care if this thread gets pulled, when it is stuffed full of flagrant advertising by the usual wind-up merchants? I can only assume Peter Saxton is on holiday! 

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By Bob Harper
14th Dec 2011 17:08

Just checking
Is Aweb just for accountants who just want to pack themseleves on the back without any criticism?

Bob Harper

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By hclairesavage
14th Dec 2011 18:51

is it just me?

.........or wasn't this 'article' just an advert from the start for Steve Pipe? Otherwise what was the point of the posting 'PS. the article is called ..".

 

 

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By paulwakefield1
14th Dec 2011 19:04

Being lazy is ethical

for time based fees.

For those of my clients who are not fixed fee, I am far too lazy to want to spend time working so it is in my interest to get them involved and trained and for me to do the job efficiently in the minimum time.

Works for me.  :-)

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By dbowleracca
14th Dec 2011 22:51

Let's get back on topic
This wasn't about bob, book-keeping or value pricing.

It was about the level of service some accountants provide, and mistakes they make, which costs clients money.

I don't think that it is laziness that causes these mistakes to happen, but a lack of awareness of the opportunities available - such as research and development tax credits, advanced tax planning, maximising the benefits of incorporation etc.

And to just answer black knights question regarding the £5k tax saving and how much I would charge - if it was simple and hadn't required me to be proactive then £200 would be reasonable. But if I had done lots of research to see of they would benefit and looked at this for all clients, and this was a proactive piece of work that the client wasn't expecting and that many other accountants may not consider then I would charge them between £1,000 and £1,500.

I want to be a star - whatever criteria you use to define this - so I will do some of the things in this report and lots more besides. And I know that not all businesses will value this and I will have to say fair enough and move on.

The question is this - do you want to earn £250k a year, be the most highly respected accountant in your area and have a practice full of happy and successful clients?

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Replying to Anthony.Evans82:
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By User deleted
15th Dec 2011 16:37

The answer is

dbowleracca wrote:

do you want to earn £250k a year, be the most highly respected accountant in your area and have a practice full of happy and successful clients?

No, there is more to life than money, I think more and more are realising this and your attitude is probably the out-dated one.

It would be nice to be respected, I never had the childish "mines bigger than yours" mentality to care if I was the "most" respected - it's not a competition, but I prefer that to be because the clients think it, and not because I have told them I am.

To answer this, you need to define happy and successful - but mine seem satisfied!

 

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By Bob Harper
15th Dec 2011 07:24

Nit picking
@Stewart - that pretty much sums it up. Accountants being accused of costing their clients billions and you are picking me up on a speling mistake.

@dbowleracca - correct, this isn't about me and the reason I refer to bookkeeping and value pricing is because article talks about the cost to the client but that is just the symptom, the underlying issue is the mindset.

If the profession embranced Value Pricing the firms would ensure they were aware of all the opportunities. They would also develop better sales and marketing to get that value out to clients and they'd price to capture their fair share. They would manage their people differently and be focussed on being effective. What is the point of doing the wrong work quicker when you can eliminate the work and do something that makes a positive difference.

Bob Harper

Crunchers Accountng Franchise

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Replying to Paul D Utherone:
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By ryedaleman
15th Dec 2011 09:51

@Stewart - that pretty much sums it up. Accountants being accused of costing their clients billions and you are picking me up on a speling mistake.

 

And just for good measure you have made another one

I think if you look back I also made valid points which received support/agreement

 

However you will also be pleased to know I ditched timesheet billing several years ago

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By The Black Knight
15th Dec 2011 09:53

not me gov

@dbowleracca.........That wasn't me ! LOL

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By Bob Harper
15th Dec 2011 10:58

@Stewart - the second spelling mistake was deliberate.

I don't like looking back - traditional accountants can do that. I am focussed on today and tomorrow, like clients are and you will find much more support for your views than mine, like when people started arguing about the world being flat or round.

Good to hear you ditched timesheet billing - do you still record time in the practice?

Bob Harper

Accounting Franchise

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Replying to cheekychappy:
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By ryedaleman
15th Dec 2011 11:17

Surprise Surprise I thought you would say that

No we do not record time 95% of the work is on a fixed price reviewed every 2 years and included in all clients fees is Professional Fee Protectoion for the full gambit of any possible HMRC enquiry

That is our USP

 

Cheers

Stewart

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Replying to cheekychappy:
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By User deleted
15th Dec 2011 16:44

It is

Bob Harper wrote:

@Stewart - the second spelling mistake was deliberate.

I don't like looking back - traditional accountants can do that. I am focussed on today and tomorrow, like clients are and you will find much more support for your views than mine, like when people started arguing about the world being flat or round.

Good to hear you ditched timesheet billing - do you still record time in the practice?

Bob Harper

Accounting Franchise

Flat and round isn't it?

The biggest mistake is thinking all clients are the same, they are not.

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By The Black Knight
15th Dec 2011 16:54

Fat and round ?

It has always amused me that the Greeks and the Romans understood the earth was a Globe pictured/sculptured being carried by Atlas....

then the church decided it was flat....and persecuted anyone within their reach who said otherwise...

Then it was re-discovered.........to be a globe again.

There must be a moral in there somewhere ! LOL

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By User deleted
15th Dec 2011 17:01

That reminds me ...

... he's fat and round and bounces on the ground Sammy Lee, Sammy Lee - lol

May be it was he who ate all the pies?

A pancake is flat and round.

What goes around comes around, and there's nothing new under the sun.

Right, enough for today, off to re-invent the wheel, wonder if a square one would work, certainly wouldn't have to worry about hill starts!

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By Bob Harper
16th Dec 2011 11:54

About time

 

@Stewart - well done on the no time recording thing so how come 5% is not fixed, how do you bill that?

Why you only only reviewed every two years, are the engagements compliance only?

Bob Harper

Crunchers Accounting Franchise

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Replying to SteveHa:
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By ryedaleman
16th Dec 2011 12:07

No Time Recording

Bob Harper wrote:

 

@Stewart - well done on the no time recording thing so how come 5% is not fixed, how do you bill that?

Why you only only reviewed every two years, are the engagements compliance only?

Bob Harper

Crunchers Accounting Franchise

 

If the client does not ask for a price what I think it is worth

Reviewed every 2 years so the client can see a reasonable length of time before any price  increase

They seem to appreciate this aspect

Cheers

Stewart

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By Bob Harper
16th Dec 2011 12:52

Interesting

@Stewart - interesting, I have other questions and thoughts but not sure if you are happy to carry on?

Bob Harper

Crunchers Accounting Franchise

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By justsotax
16th Dec 2011 14:33

OGA....you had me at ....

all clients are not the same.  I do believe that many of the suggestions made by Steve/Mark/Bob work (and indeed I have witnessed it work for other colleagues in the profession).....that is not what I have an issue with....it is the poor blighters who perhaps being a start up business potentially don't fall within the target client profile or indeed just do not have the funds to receive this type of service.  What happens to these people....should we just pretend they don't exist...afterall if we all become 'star' accountants then why would we deal with this type of client. 

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By User deleted
17th Dec 2011 10:58

You could say ...

... the lazy accountants are the ones who try and make one template fit all clients!

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By Bob Harper
17th Dec 2011 11:20

Business model

@OldGreyingAcc - that is a VERY good point although it's not so much a template as a business model and pricing methodology.

The danger with firms joining networks (including MORE) is that they need to fundamentally change their mindset before they can be successful with the product. This is why I no longer "sell" software to firms.

Bob Harper

Crunchers Accounting Franchise

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By MBK
19th Dec 2011 13:43

Shock horror!!

Study finds some accountants are better than others. Well I never!

Is the Pope catholic? Do bears s**t in the woods?

What annoys me is when people who aren't even doing it day to day set themselves up as the arbiters of who is good and who isn't.

Don't forget that the reason the world is the way it is is because of evolution. Sometimes a mutation comes along. Some of those mutations change the evolutionary process. The vast majority don't - they just wither and die. Who knows which is which when you see them?

Value billiing is just as riddled with problems as time based billing. So for the moment I'll stick with the method that has emerged at the top of the pile thanks!!

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