Business intelligence: Do all accountants have it?

There is a difference between number crunchers and Accountants.

Most Accountants in practice will offer options based on their own and others experience. Not every business fits certain boxes so options might be different even for the same trade.

Unfortunately, due to 13 years of nanny state and the American tendancy to sue over every little fart, a lot of very experienced Accountants will shy away from giving any sort of advice.

Whichever category your practice falls in, it pays to surround yourself with experts.

Your experience with, or knowledge of, other experts in their field can be of great value to your existing and prospective clients, who may only need that specific service or product once.

Just the fact that you can give your client a few recommended (local) options, can save them a lot of time and hassle. It can also be a very profitable client-retention tool for you and an easy way of adding value.

As you work with a bigger range of businesses over time, your gathered knowledge of 'best practice' processes may enable you to suggest that a particular client explores certain improvements without obligation or prejudice.

We have referral relationships with many types of professional service providers who know their limitations. This type of partnership / networking is often a win-win-win for all the parties involved.

 Having worked in commerce and in an accounting practice (as principal) I would agree that accountants trained in a practice tend to have a narrower vision more audit/compliance orientated. Having little experience, if any, in commerce, practice trained accountants in my experience tend to shy away from areas which many view as outside their competency. Unless their mindset is commercial in approach their advise that is at times limited in scope and seen as too technical or theoretical.

Thinking and acting commercially cannot be obtained from books. Many clients which I gained commented that their main complaint against accountants was that they do not understand business. This is not to say accountants in practice are not knowledgeable. On the contrary, when it comes to tax and compliance issues they often are far superior in their advise than commercially trained ones.

But accounting practices can overcome this perceived weakness by partnering with a commercially trained accountant who can address issues arising out of the accounting process. Either bringing one into the practice or using an independent one.

Its all about added value to the client and how can it be best achieved with the limitations we may experience.

Much of the services and advice that accountants provide is based upon their own experiences.   The main selling point of many accountants is tax advice.   The skills required for that are very different from the more commercially orientated support. 

Last year I carried out some financial due diligence on a small business acquisition. The vendor's lawyer (and friend) was a matrimonial lawyer - the deal nearly fell through because the vendor's lawyer was struggling and in any event the legal costs for both sides increased significantly.  Similarly I have spoken to a number of lawyers who complain about the poor standard of DD carried out by some smaller accountants.

A few months I spoke to an insolvency practitioner, who said that his best source of referral is smaller accountants who don't give advice (although playing devils advocate smaller clients are inherently more likely to go under).

I spent many years as a partner in a traditional practice, however my experiences were very different to many of my partners and most practice accountants.  I have for 6 years been independently providing financial management support to businesses (and also due diligence services) - I have no desire to provide tax advice or compliance services and will collaborate with people with those skills. 

I collaborate successfully with a former partner and a few years ago I approached a number of other firms about cco-operation and also posted on Accounting Web - however this fell on deaf ears.   Whilst it is pleasing to see the comment about collaboration - does it mean that if something has changed or is it an exception that proves the same old rule?

David Lewis

www.camroseconsulting.co.uk

An interesting phrase! The advice or options that an Accountant may offer might well not fit what the client wants. That doesn't mean to say that it hasn't been given without DD. A normal engagement letter would contain what is expected, anything outside that scope could be mere speculation or bouncing ideas around. Again what might suite the client now may not be true next year or the year after.

The realtionship between Accountant and client is very important and should not be manipulated in any way by "tricks" or any other method of so-called fee enhancement.

John

You have made a good point.  The needs/requirements of clients change as their businesses grow, sometimes they outgrow the skills of their accountant.   However owners often place a high level of trust in their accountant and if they are not made aware of the limitations of the services on offer it becomes  a case of "what they've never had they've never missed".  In my view ( & I believe also the insolvency practitioner's) if growing businesses are without advice/ hands on support on things like planning, cash management and having fit for purpose processes & information then the risk of failure increases.

(You mention due diligence - your use of the term seems to be in a different context to mine (which is a review of a business's financial position prior to acquisition or funding).)

David Lewis

I've been on both sides of the fence. I left practice to become a company accountant some years ago because I felt that I could not be involved in the interesting bit, helping the actual business. This was parltly because, in general, we did not get to see what was happening in the business until it was history i.e. we were preparing/auditing year end accounts some months after the year end, meaning that the business being examined was often as much as 18 months ago. To be able to give effective advice one needs to have quite an in depth knowledge of what is happening in the business in the present and be looking forward rather than back. This can be time consuming and therefore expensive for the client.

Although  feel that my experience in practice did help me 'add value' as an accountant in business in a number of ways perhaps we need to be careful about what is meant by 'advice'. I would think most business owners would resent an accountant telling them what to do with their business. However since it is essential that any business make money accountants do have a central role to play in ensuring that financial systems and reports etc. give good up to date business information for ongoing decision making and are able to evaluate the financial implications of future business strategies. Thus an accountants skills are vital in presenting the business with the information to enable that organisation to make more informed business decisions.

Years ago Accountants would provide all sorts of services - mortgage, Insurance etc. Nowadays these are passed on to "partners" for an introducer fee or whatever. This leaves the Accountant more time to concentrate on the business in hand. Cashflows etc. are a normal part of Accountancy functions but to urge Accountants to advise clients to institute strategies that they might not even understand is not good practice. Normally the client will be well aware of what is going on in their particular trade and doesn't need marketing gimmicks and heavy fees to tell them what they already know.

I would nearly always put my faith in my clients' ability to decide how to run their business rather than outside influences.

I agree that it is inappropriate to introduce strategies that clients don't understand.  However if the strategies are beneficial then isn't it inappropriate to ignore the need?  Sometimes  cost effective support can be provided through the design of process, education and mentoring (or alternatively through external courses).  Where clients don't have the mindset to deal with the strategies then ongoing outsourced support may be appropriate (perhaps for a day or two month) - however this requires a different cost base and charging structure to a traditional accountancy practice so that it is affordable -it is only an expensive gimmick if it is not right for the client or outside the accountant's skills set

As regards telling clients how to run the business

• when businesses reach a certain scale owners need good information to help them make decisions and sound processes to manage cash and control the business.  If the client or their staff have the skills and experience then fine  - but a large number of businesses don't and it is helpful for the owners to have the tools to make decisions.
• if one's experience suggests that the client may be making a mistake does one stand idly by and watch or does one at least speak to the client and flag the issue?  I agree that ultimately the client should know their industry and should have the final say, however forewarned is forearmed.

I understand where you come from. Watching x factor gives an idea of how marketing and manufacturing can really work and create something out of nothing as long as there is a bit of talent.

If this is to be applied to business then the banks are going to have to come up with some hefty loans and that is where most of the problems with expansion and marketing are.

So normally us Accountants have to work within the constraints of what is available so any advice comes with caution. We are not salesmen!!!!!!!!!!

I also dislike X factor and spinning something out of nothing.   Personally I feel that it is important to mentor clients so that they as far as possible they are empowered to do what they can in house, although will also provide skills that they don’t have themselves when they are needed.  Not every company requires outsourced support and it is important to be up front where this is the case.   In my view it is unprofessional to “manufacture” fees out of nothing, and the suggestion that this what I am advocating/doing is incorrect and completely out of order - you don’t know me and I really don't think you understand.

You refer to expanding businesses, however all businesses need to manage within the resources available, to manage their working capital effectively (including freeing up cash locked into other assets), have good information to support decisions and understand where the business is heading financially. This is an area where many SMEs need help and it especially so when finance is restricted.  There is an excellent article by Liz Loxton on page 44 of July’s Accountancy magazine, talking about bank finance and what banks are looking for. In broad terms it can be summarised as:1.     A cogent and professional business plan that will stand up to due diligence (that phrase again I’m afraid!)2.     A management team that is experienced in a range of disciplines (this includes a robust finance function)3.     Alignment of interests with the lender, ie: comfort that someone else is taking some risk, eg: personal guarantees (outside the scope of this discussion). 

Many clients look to their accountant (their trusted advisor) as the first port of call for advice. What happens when the client  doesn’t have the skills that the banks are looking for in house?  Clearly those clients that have accountants with the skills (and flexible business model) to help are well served; as are those clients with accountants that appreciate their own limitations and collaborate with others. Unfortunately those clients with accountants who don’t take on board their own limitations and give a steer in the right direction are more likely to be at risk.

David LewisCamrose Consulting

Great article, thank you Mark.

I trained and qualified as an ACA working in practice.  However I was fortunate enough to have a very business-savvy mentor who drummed into me the importance of "thinking commercially" and considering the client's business as a whole, rather than just coming to it 6+ months later and churning out a set of accounts which the client had little interest in.

I'm now working in industry and becoming more and more convinced that this is the place for me.  I'm really enjoying learning more about financial risk, strategic decisions etc.

Does anyone know of any short courses that help practice-trained accountants get more business-savvy?  Mark, do you run any at all?

M

On the contrary, I fully understand hence my first post - The difference between number crunchers and Accountants.

Perhaps the problem is that you move in circles of number crunchers and not Accountants.

The Accountant in practice will have a much broader knowledge base than those in industry (that's not to say they are better). It's the nature of the job.

In certain circumstances there can be good use of marketing - Sugar/Sinclair, springs to mind.

My view is that on a normal business level the Accountant and client will have far more  knowledge of what is needed without missing "a valuable trick".

Having spent 25 years in a traditional (ICAEW) practice  (17 years of which at partner level) I think I have the benefit of a reasonable knowledge base upon which to express my views. 

I missed your disparaging view of accountants in industry.  While there are accountants in industry who are just number crunchers there are others that add real value - if you really believe that all accountants in industry are number crunchers then you quite clearly "don't get it" and may have less experience than you claim.  (Incidentally there are also accountants in practice who are just number crunchers.)

Does a qualification route like CIMA, ACA or ACCA lead to a difference?   Well I haven't met them all so don't profess to know!   But I think Mark is being unduly harsh in claiming that non-CIMA accountants, and especially smaller practices, see business advice as a no-go area.   In fact I think you are being disingenuous and deliberately inflammatory Mark!  But hey, anything to get a response, eh!

Being able to give relevant, pragmatic and useful business advice (and hopefully proactively) is a great skill.  But just like any other skill you have to start off learning it and keep practising it.   Having had the opportunity to develop it, I now practice it whenever I have the chance - but from what I see, a fair proportion of professional accountants don't have it.  But like Mark I also think it is a skill that as a profession we should have and foster.  

I guess the problem is that the word accountant means lots of different things to different people.  To some people it means a bean counter who just plays with numbers in a spreadsheet all day and to others it means someone who should be able to help with this sort of advice.   And to be fair the profession needs both skill sets and expecting each accountant to do both might be asking too much.

Systems and processes that you buy in are a good way to start to develop this skill, as is personal experience gained from previous work, or experience gained under a mentor.   But the key issue is that to do anything well you have to be interested (passionate even) about developing and using that skill.   You also have to be confident in your ability to deliver it...and not every accountant is able to present themselves in this way, which is another thing that should be part of the training syllabus.

Mark, you really must read what other people post and not summise. there are number crunchers in industry and practice. These Accountants do not normally get involved in "business intelligence". My training was in the mid 60's with a medium sized practice. This enabled me to get a feel for the client and their business. This is very important when making decisions that could change the way they operate. Obviously outside factors will have some influence.

I think you will find that most Accountants in practice who shy away from too much "business intelligence" is because they are experienced and put the needs of their client first. (No I am not saying that you don't, it's just that we have a different perspective and this is a subject that you can't catorgorise).

Maybe my experience comes from working with more commercially aware practices, but why do accountants put themselves down so much? Isn't running an accountancy practice just running a different type of business? We do all the things our clients do - hire people, rent premises, buy in goods and services, struggle with working capital issues, etc. As such we have to make business decisions on our own business all the time.

I often tell my people not to think of the firm as "accountants", whatever that means. We're a business that sells accounting services to people who are prepared to buy (and pay for) them. We run our firm very much as a business and I think that qualifies us very well to offer good business advice to our business clients. We also have a wealth of knowledge and experience we can use from working across many sectors in our area, and from working with competing businesses.

Of course, we are very happy that the majority of firms prefer to stick to bean counting and traditional compliance services - it means much less competition for firms looking to offer a wider range of services.

... yes John - ever thought about taking your own advice!?!   People in glass houses.....

My take on this is that many if not most partners provide unstructured business advice. Unfortunately, the majority jump straight in because they want to help their client and consequently don’t build commitment from the client to the solution. 

This means most clients often don’t take action and firm struggles to charge.

90% of the firms that I have come across that go down the systemised approach tend to fail to sell the new services because they approach it like the banks selling products.  

The solution to both the above = sales skills.

@Nigel – I totally agree that accountants do themselves down too much.  Even people like me who believe accountants should be doing less accounting and more consulting get a hard time from other accountants. 

Having said that, most practice owners are engaged in a lifestyle businesses which has different challenges to one where the business is being built and developed so the business owner doesn’t need to be there.  There is also the marketing side where most businesses don't have GRF or customers who must by law buy the service/product.

By the way, I came across a nice quote today from Sir Winston Churchill that “a kite flies against the wind” – this is from the RanOne who I believe call the firms that they work with Kite Flyers.

@M – is all about marketing, sales and people (leadership and management) so I suggest accountants get some CPD in these areas and I am learning all the time.

Bob Harper

Portfolio Marketing

As I suspected it's all down to selling!!!!!!! Your opening comment "missing a valuable trick" says it all.

As soon as banks started "selling" they went down hill rapidly. Now look at them. Yes they are making money so I presume that is the justifiction for sending many good businessess down the swanny.

Mark-assumptions. You assume that because some Accountants do not "sell" business tactics or whatever that they should be catorgorised as one of your "big four".

If you honestly feel that Consultants are better placed to advise business then you are the victim of your own "sales patter".

I'm not rude or impolite. I feel very strongly that if professionals start getting involved in selling "per say" then we are on a very slippery surface.

I do not know of any Accountant who would not use outside sources if they felt it was the right way without the need for any "tricks".

@John – you comments demonstrate that have no concept of what selling is in a modern professional service/knowledge firm.  Go and read Trust Based Selling click here and then come back without your prejudice of the classic expert technician.

Bob Harper

Portfolio Marketing

Mark, you wondered why you didn't get much feed back on your previous post. Let me spell it out for you. Accounting and selling don't mix. Once you start using sales "gimmicks" or "tricks" as you prefer to call it then your relationship with the client will change.

You may say that the change could be for the better and on that we will disagree.

Thanks mark for a really interesting piece.

I am ACCA and I trained and qualified in industry. I do agree that its hard for those like me to make a switch later in life to set up in practice, but no harder than it is for those going in the other direction. Those early decisions tend to direct where our expertise and capabilities lie for much of our career, though i do accet that some do make the transition very successfully.

I have led what I like to think is a successful career in industry over the last 20-something years, from luxury cars to trains, from software to childcare, from consulting to outsourcing and internet to engineering. I've been through restructuring, exits, acquisitions, raising funding, firing, hiring, fast growth, slow growth, no growth, decline, etc etc and its those experiences in industry that I've been through that have led me to start my own business providing the type of business advice that you refer to.

A year and a half ago I setup to offer bookkeeping and other accounting services, as well as senior FD business advice type services. I found that 1) bookkeeping is just too cut throat and you're competing with people out there who havent got a bookkeeping qualification but are still allowed to market themselves as 'accountants' and only charge as little as £12 an hour for dangerously poor service 2) my experiences and connections meant that the type of work I was being referred was for exec level advice and 3) I didnt enjoy accounting - I wanted to help businesses grow!

To cut a long story short, I have tried practice but its not for me. I have realigned and now my business focuses solely on providing qualified, commercially minded FD's to small but ambitious companies on a part time basis.

Indeed, I'm constantly looking for new FD's to join our team, so if you think you're a little bit special, get in touch

Chris

www.mybusinessfd.com

Of course selling and accounting mix. Every business has to have someone selling the product or services, whether its widgets, cans of beans or accounting. Its a ridiculous statement to make. There may be a higher proportion of people in accounting firms, or finance roles, who are not as effective as your average non-accoutning sales person, but thats a different issue and very different from your sweping statement.

What you are very badly trying to describe is when someone sells something that its business can't provide or doesnt have the appropriate experience to provide.

There are plenty of people, some on this thread, that have consulting type businesses who have people that sell effectively because they DO have the experience to back it up and provide quality, informed advice for their clients. It is only a problem when the selling isnt backed up by capability, which is NOT anything specifically to do with accountants and can happen the same the world over in any industry or sector.

I dont get it. Every business sells and if it doesn't it won't stay a business for very long, and if you think that accountants shouldnt sell then it only serves to underline the difference between the 'commercial' accountant and the..... well, ...not.

Chris

www.mybusinessfd.com

Perhaps I haven't made myself clear enough.

Accountants in practice do not need "tricks" to sell their services. By virtue of their business dealings on a daily basis with a wide client base, Financial Institutions, HMRC things happen naturally and in my view that's how business should grow. You stated that you weren't happy working in practice. My son, Chartered, feels exactly the same. He is FD of a large concern. We had many discussions over the whys and wherefores and he prefered to cncentrate all his skills on one concern rather than spread them over many.

I agree with your comments about bookkeepers but funnily enough it is the bookkeeping skills that give you the feel for a business. If you replace that feel for commercialism then the business may not grow to its natural potential.

I have been lucky enough to have been part of an era of business stability. Unfortunatley since the early 90's that is no longer the case. I put the blame fair and square on the financial Institutions. Bank managers would nurture their business clients now all FI's are interested in is selling stuff that most business do not need. Yes selling has a place but not, in my view, to replace "old fashioned" expertise.

As for sweeping statements

In my experience the vast majority of non-CIMA qualified accountants in practice see 'business advice' as a no-go area. Maybe that's a little harsh - perhaps it would be more accurate to say that they fear they lack the necessary experience and/or that clients will not pay 'extra' for the time it takes to analyse the data and provide the advice. Only a minority of smaller practitioners that I've encountered focus on the provision of business advice over the production of accounts and tax returns.

Although Mark has qualified it by saying "in his experience" he is totally wrong, in my experience.

Although younger than you John I am old enough to remember when overt selling was discouraged by the ICAEW.   For better or worse times have changed and many firms have sophisticated marketing, some employing marketing managers and the "tricks" they use are the way of the accountancy world (and have been for some time).

At best marketing/selling can be helpful when it results in the client gaining real added value and benefit.  However there can be unscrupulous marketing/selling  (in my view a real "trick") when it results in the customer/client buying something that is inappropriate for their needs. 

Whilst at odds with John's own experience, not all accountants are multiskilled and sometimes clients really can benefit from help from another accountant (who complements the encumbent).   Is it a "trick" for those accountants to sell their services?; or is it more of a "trick" for encumbent accountants to continue to act whilst ignoring the needs of the client? 

I think that some of the points raised in this thread are interesting in a negative way!  Anyone who works for a business sells (but not all to the same extent).   And what is more any accountant in business who says they don't sell is clearly misrepresenting themselves.    Every time you meet a client or potential client you sell yourself to them - and if you don't you don't get the job or keep the client.   So anyone who has gained or retained a client has by definition 'sold' themselves and is therefore a salesperson.

Therefore, please, no more carrying on about how accountants don't sell.

Also, the tone of some of the posts implies that selling is a dirty word.   I would be the first to admit that I don't start off my day thinking that I am going to sell lots today ... but only because I don't set out to sell my services - instead I help my client's to resolve their problems and then charge them for the amount of help I give them.  I may not call it selling, but that is what it is - good old fashioned sign here please and we will get started and charge you for it salesmanship!  

But selling is a positive and good activity.  Salespeople are an essential and integral part of business.  So for anyone out there who denigrates a salesman for being a salesman is actually displaying a lack of understanding....but then that brings us back to Mark's original point that to use business intelligence and accountants in the same sentence was an oxymoron!

So it appears it is up to the "salesperson", "consultant" whatever to decide what a client needs. I don't think so. An Accountant doesn't "sell" themselves they listen to the client and then offers a service according to their experience and if the client feels that the Accountant meets their needs then a relationship is formed. How that relationship continues is up to the client and Accountant.

If I choose to use my experience to advise a client rather than bring in marketing peolpe I feel that is positive. That is because I am confident that the advice I give will be positive.

You only have to look at the banks to see the negative side of "selling". Not for the banks but for the public.

No doubt I could enhance my fees by using many "tricks" to extort a few more bob out of my clients, however I do not think that would help my business nor my clients in the long run.

I am not quite sure why I am continuing to comment as I am sure this will conclude with us agreeing to disagree!!  I think it is because you are using emotive words like "extort".  

You mention the banks and I previously expressed the view that there are two types of selling.  Like you I dislike some of the products offered by banks.   This doesn't mean that all selling is bad.

As an existing advisor, at a very basic level I assume you would offer to reconcile a client's unreconciled bank account.   Whilst blindingly obvious to accountants that it is needed, it is your knowledge and expertise that would have  identified a need that may not be apparent to the client.  Doing the right thing will result in fees although it would be you who decided there is a need.   (What would your view be of an accountant who said - "I'll leave it because it is a "trick" to extort a few more bob out of the client?" - mine would be highly unprofessional)

The needs of clients change and offering solutions that are of genuine benefit (when not being provided by others) can only be positive.  Who decides the needs - well ultimately the client - although no doubt existing advisors have influence (and as an advisor will think they know what's best0.

With respect you have missed the point.

A bank rec is part of Accounting services - number crunching if you like.

An Accountant who has formed a relationship over a number of years with the client will give advice "naturally" to the point that it doesn't become advice, merely an exchange of ideas.

Selling advice when a relationship of that nature has not been formed may not have the desired effect.

My point about banks is that they used to be a professional outfit which commanded a certain amount of respect. Since they started selling gumph "brand new customers only" etc. etc. that is no longer the case.

I do not want to see the same thing happen to the Accountancy Profession.

The phrase "identifying a need" sometimes becomes "creating a need". 

I'm staggered by the sensitivity to the word 'sell' by some members of this thread.

Also by comments such as ..."An Accountant doesn't "sell" themselves they listen to the client and then offers a service according to their experience and if the client feels that the Accountant meets their needs then a relationship is formed."

I wish all of our business came from such a laid back approach to developing income.

All of the best salesmen will tell you that listening to the client is their most valuable attribute. Listening IS a selling skill and an integral part of the sale process! so you saying that you listen is no different than what anyone else in any other industry is doing.

lets take that a step further; lets say you've listened attentively and then you offer a service, but the client sitting in front of you looks a little doubtful and asks you more questions about your experience in performing such tasks. You would no doubt list several instances and examples of similar work, how it was performed, who for and that those clients were very happy. You may even offer the contact details for one of those happy clients as a reference case. He might also ask you why your firm would be a better choice than Joe Bloggs LLP down the road, and you'd no doubt explain why you're better (without criticising Joe of course!). You will probably get round to talking pricing and you'll make judgements in your head about how much you might need to discount your rates to win this extra work, or think of other tactics to push him over the line.

Now how is all of that NOT selling?

We sell, full stop.

Get over it. (Rant over, I'm ducking out)

Chris

www.mybusinessfd.com

There is a difference in listening to a prospective client with a "sale" in mind and listening to see if there can be a genuine relationship formed. This is not a laid back approach. It is how you want your Practice to develope.

The article is more or less saying that in order to have a profitable business you have to be "sales" minded. I don't think this is good for the Accountancy profession - shimple!

My reply was to Chris and his previous post.

Maybe that's because you have re-read your article and realise that there is a bias towards "selling" because the ordinary practitioner cannot cope.

Perhaps you now realise that the ordinary practitioner copes remarkaby well and has done for many years without "missing valuable tricks".