Should clients sack their accountants?

Mark Lee interviews Robert Craven who kicked off a storm of comment when he suggested that companies should sack their accountants if they were not contributing to their business growth.

The AccountingWEB posting Is Robert Craven right when he says clients should sack their accountants? created a quite a stir. As luck would have it, I roomed with Robert during Netski 2011 so was able to get him to explain the thinking behind his remarks as quoted by Steve Pipe.

I first heard Robert speak when we were both on the programme at last year’s annual conference for CIMA members in practice. I was impressed by his commonsense approach. For those who don’t know him, Robert has been described by the Financial Times as “The Entrepreneurship Guru” - though that may enough to damn him in some people’s eyes before he’s said a word!

Steve Pipe quoted Robert’s comment that “If you are not delighted and ecstatically happy with your accountant, and you don’t think your accountant is helping you to get more customers, get more sales, get more profits, get more cash into your business then you should change accountant. It’s as simple as that.”

For many accountants this statement was a bit like a red rag to a bull.

In Craven’s view there is only one direction for successful companies - and that’s forward.

“It’s why start-ups often succeed at first – they are focused on their future, on their destination – and it’s also why so many companies stall after a few years, losing their momentum, and focusing on the past more than the future. (“Business was really good a few years ago”)

“That’s why all companies, especially owner-manager businesses, need help to maintain a forward direction and focus.

“So the question is this: How many accountants really help their clients grow their businesses?”

The answer to Craven’s question, of course, is that some do and some don’t. During Netski 2011 he told me about his struggle to find a decent accountant himself. He has formed the opinion that there are essentially two very different sorts of accountancy firm: accountant historians and accountant entrepreneurs:

Accountant Historians (AHs)
“As their name suggests, these people focus on the past, on analysing it and preserving it. But what do they then do with that information? Often, very little. When asked by clients what the figures might mean for the future, they don’t feel comfortable making predictions – and rightly so. In truth, they know very little about their clients’ businesses.”

Craven continued, “To be fair, that works for many companies – and many firms of accountants. It’s horses for courses, but the fact is that clients tend to hold AHs in comparatively low esteem. They want to minimise costs, so AHs get paid less. What’s worse, the AH service is commoditised – “anybody can do that” think the clients, so will go to a cheaper competitor. Not only do AH’s, therefore, earn less, their clients churn more rapidly, and they have to spend more time and money winning replacement clients.”

I’m not sure that the churn is typically as bad as Robert suggests. If it were I think more accountants would embrace the advice that Steve Pipe and many other marketing professionals promote. But it is certainly wise to think in terms of the lifetime value of clients.

Craven agreed: “The ideal is long-staying, high-spending clients, and the nightmare is low-paying, short-staying clients.”

Accountant entrepreneurs
“Are a very different kettle of fish with very different attitudes towards the contribution they can make to their clients’ businesses. They do the basics as well as anybody else, but they know information is power, and use it to help their clients – and earn themselves higher revenues. They use their knowledge of many companies to provide a real world, really current perspective for clients. They know what has worked for other companies – and what hasn’t. They earn the respect – and the fees – accordingly.

“They earn more, and keep their clients longer, so the average lifetime value of their clients is considerably more than the AHs. They also get new business opportunities, and tend to be retained even when companies really take off.”

Given Craven’s focus on advising entrepreneurs I wasn’t surprised that this word figures in one of his two categories of accountants. And I could also anticipate the answer to my final question. Can an accountant historian ever hope to become an accountant entrepreneur?

“Absolutely. It is a matter of attitude, of a little training, some practice, and the enthusiasm born out of successful attempts to change the way you approach clients,” he replied.

And of course I agree. We can all change, if we want to and we receive the right training and support. The question, as I suggested above, is whether we want to change. If you were losing loads of corporate clients you would either look to secure that training and support or you’d get out of the profession. But how true is that - what would you do?

Mark Lee is Consultant Practice Editor of AccountingWeb and Chairman of the Tax Advice Network. His personal website and blog are at www.BookMarkLee.co.uk.

Robert Craven works with the ambitious directors of fast-growing businesses who feel that they could be doing even better. Find out more via The Directors’ Centre or his personal website

Continued...

» Register now

The full article is available to registered AccountingWEB members only. To read the rest of this article you’ll need to login or register.

Registration is FREE and allows you to view all content, ask questions, comment and much more.

Comments
info.woods-squared.co.uk's picture

Agree completely

info.woods-squa... | | Permalink

I would have to say that I agree with the view of Robert Craven.

Anybody that advises a business should add value to that business and I would defintely say that if your accountant is not doing this then the business should look elsewhere.

Unfortunately the accounting profession is split into many sections and all too many are comfortable dealing with matters of the past rather than helping business owners plan for the future.

 

Accountants are suppliers

Robjoy | | Permalink

The mystery is why the idea of finding a replacement for a poor-performing accountant should be controversial.

I had hoped that the charge-you-£50-to-say-good-morning, won't-warn-you-about-the-impact-of-new-legislation, insists-you-use-Sage breed of accountant I used to meet in the 70s and 80s would die out under the pressure of younger, more imaginative, customer-centric practices. But it would seem that there's still a lamentable inability to recognise that accountants are suppliers of services, just like plumbers, and need to compete on the basis of value for money and quality of service. I wouldn't keep using a plumber who failed to warn me that my central heating was going to blow up, why should I keep an accountant who fails to warn me that my business forecast is seriously flawed?

Paul Scholes's picture

Where to start?

Paul Scholes | | Permalink

I received an email notifying me that Mark "grills" Robert and, thinking "about time", logged on to find that the headline did not reflect reality. Which just about sums up my views on the whole waste of data space.

Firstly (as I said in the original comment) the use of words like "delighted and ecstatically happy" just don't fit with the reality of dealing with clients or even (in my case) anyone else I come into contact with, life isn't like that (outside Hollywood).  Is it just me or is anyone else laughing or irritated by this rubbish?

Then once you get past that waste of text you get to the main theme (I hope) which I think is suggesting that we should seek to do the best that we can for clients with a view to improving thier prospects & wellbeing.  Is that it or have I missed something?

Hardly mind challenging stuff but we are then treated to headline soundbite stuff that demotes accountants into two tone robots (historic or entrepreneurs) who are there purely to serve clients with no thought to their own wellbeing and demotes clients to a one tone amorphous mass that all see there accountants in the same way.

Enough

Clients can be a pain to help

mwaccountants. | | Permalink

As we know in more cases than not, we find out what the client has done after he/she has done it.

This makes it impossible to help them.

When we do find out and tell them that they should have done something differently they ask why we did not tell them.

Sometimes you tell a client what to do and they go and do something different.

You can take a client to water, but you can't drown them!!

 

Andrew

West London

vowlesj's picture

Historians v Entrepreneurs or mechanics and consultants?

vowlesj | | Permalink

 I quite agree with Robert's point - for years I have been telling clients that some accountants are mechanics (great at number crunching and not a lot else) and other accountants are consultants (do the number crunching and then will give you information, help and advice that you need to grow your business).   That Robert Craven has said it in an article is great - now we have confirmation and know that good clients think that as well.

Andrew - Some clients only want a number cruncher, which is a shame because a entrepreneur or consultant accountant can often make a huge difference.  Yes, some clients are a pain.  My advice is, if they are too much of a pain, sack them and get better clients.

Paul - Your reply shows that you are disappointed in the article and were maybe expecting something else.   Can I ask would your clients describe you as a historian or mechanic accountant or an entrepreneur or consultant accountant?   I think my clients would describe me and the services of my firm as a entrepreneur or consultant accountant!

To be honest, if you think the article is pointless or negative then I think that shows which side of the divide you sit on and I'm glad that I think like Woods Squared or like Clear Vision and like Robert Craven.

Jonathan

PUREaccountants's picture

Tell clients?

PUREaccountants | | Permalink

 I would hope mw that you wouldn't "tell" clients anything. Nobody likes to be told how to do things. Case in point - client has two revenue streams, accounting for roughly 50/50 of gross income. Onr half of income is loss making, growing debtors list (equivalent to 1/3rd or income and all over 120 days). (the business could easily be split in two with regards to staff etc).

Easy solution, ditch income stream, arrange collections of debt, concentrate on second income stream (original business). 

So why doesnt that work - because the client feels as though they have failed. He knows that it sint working but fears failure. 

Solution? Talk through pro and cons, give outside view, ask what impact that may have on future business, new opportunities. 

Result - client now has a smaller business, slowly recovering debts, improving business and feels like they have acheived a gigantic step forward. Client now asks advice before any decision is taken, I receive substantial monthly retainer, client happy me happy. 

This works becuase the client feels as though they are the ones taking the decisions, had the chance to step back from the sitiuation, take the bigger picture and plan a little. They are in control. I never tell a client what to do, I just ask the questions, provide the options. 

Having turned to accountancy from a sporting, sales and small business owner in the past I am constantly amazed how many accountants are stuck in the " i can turn out this tax return for £xxx " bracket. There are thousands of them, many of which are substatially more "qualified" than myself. My business works as I work with my clients, or at least those who want to. Over the past year I have been moving on the tax return clients and focusing on those who want to improve their business. There is room for both types and it ultimately comes down to the client which one they wish to employ. Cheap accounts/tax return or someone who can genuinely prove that they can improve a clients wealth. 

I know which one I'd work with!

Compliancy vs growth

amutyaba.yahoo.com | | Permalink

 I would think the main issue about this question is "we live in a world of compliancy". Most people do things because they were asked to. How many business would like to hire an accountant thinking of growth instead of responding to a notice to file accounts or demand letter from HMRC.

I agree the accountant should sit in the driver's seat to suggest and guide his/her clients but some of them really what a 15 minutes meeting instead of a thorough discussion about their affairs. We always advise our clients when discussing end of year accounts the benefits of management accountants in line with tax planning but when it comes to paying the bill for the service they pull out.

Many people's attitude is towards compliancy but not growth. It is until we change our mindset that we shall see businesses growing! so it will be difficult for people to sack accountants when they do not understand the benefits of accounting information in business growth. Secondly they should be willing to shoulder the costs involved.

Alex

naomi2000's picture

Other ways to add value as an accountant

naomi2000 | | Permalink

I do think that Robert mentions some good ways for accountants to work with their clients.

However, while "accountant entrepreneurs" are invaluable, many clients want to fill the entrepreneur role themselves and are looking for "accountant supporters" to free up their minds and diaries so that they have more time to be entrepreneurial. 

 

 

 

 

 

 

 

 

Paul Scholes's picture

Hi vowlesj

Paul Scholes | | Permalink

"That Robert Craven has said it in an article is great - now we have confirmation and know that good clients think that as well"....bless.

I don't do religion, god knows how he had the time to question all the clients and to ask just the "good ones", maybe it was a selective sample, do you know?

I was disappointed because the basis of what he is getting at is "bleedin obvious" and so to try and then justify it, especially in such a simplistic manner, is silly.

Now the good bit, you ask me what my clients would think of me.  Why not ask Robert, he's probably already quizzed them?

Best description I guess they'd come up with is "human" a real mix of mechanic & out in the fast lane, holding back kinda guy, ready to do and assess last year's accounts as well as review their marketing and business plan, depending on the client and whether they too are human I suppose. 

I did ask one of my clients if there was anything I could do to make him even more "delighted and esctatically happy" and he's popping around later as he said he didn't want to discuss it on the phone....I'll let you know.

 

richardterhorst's picture

Fire the accountant. May be not the right decision.

richardterhorst | | Permalink

 Can't agree.

I am an entrepreneurial accountant and have done historical accountancy roles (Compliance I call it).

They are two different things used for two different purposes. It is rare for any accountant to enjoy (and therefore be good at) both historical (compliance) accounting and entrepreneurial. I struggled always in the first and enjoyed the latter.

I work happily with Hs accountants. Takes strain of me.

Different horses for different courses and as long as the client knows what they need and get it's OK.


Fire the accountant

Oppco | | Permalink

Sir John Harvey Jones (ex BP chair) said there were two types of accountant. Those that grow the business and those that 'keep the score'. There is a need for both of course. Most accountants in practice, me included, are concerned with tax optimisation and all forms of business compliance. Those two in themselves are important and fast moving, often complex, areas. It is a different skill to be able to grow the business. I guess most accountants in practice expect the client to generate the ideas and growth; we are there to keep them on the rails and assist the owners to cost their plans and point out complaince and tax issues

I for one always feel uncomfortable when clients ask me to venture an opinion on a business idea

An interesting debate

MBK | | Permalink

Those who back the "Entrepreneur" accountant model rave about the additional fees that generates - and I don't doubt that is the case. But that ignores the fact that their time is limited and that (unless you are really special) the only real way to make good money in a small / medium practice is by selling the time of staff at a margin - and the more the better. Whilst I enjoy what I do I never lose sight of the fact that what I do is primarily a means to an end - not an end in itself.

So, like all things, the reality is that there has to be a balance. Whilst there will always be some at either end of the spectrum most accountants at partner level I know are part entrepreneur and part historical. Most importantly they know their client, and know whether they want just compliance, or whether they want full entrepreneurial involvement or (as in most cases) something in between.

Exisiting practice models don't evlove by accident. They reflect the reality of the commercial world. Many will not recognise that they mould their practice to fit the demands of their clients - but the fact is that they do it.

I don't say that being an entrepreneurially focussed accountant is wrong or bad - but it is not the way to some kind of special success. There are very few individuals who have the necessary skill set and personality combination to make that work. The rest of us should concentrate on doing what has worked for a very long time, evolving our practices as things change, and making the most of the cost / benefit trade offs that we have to make every day with our clients.

In other words, Paul Scholes, you were absolutely right in your first post - there is no magic.

 

 

JCresswellTax's picture

Robert Craven

JCresswellTax | | Permalink

Are you Bob Harper in disguise ?

Jack of all trades , Master ......

Noran Jaffy | | Permalink

As a solepractionner with no employees, I find it difficult to be a "compliance" accountant and "entrepreneur" accountant at the same time.

David Winch's picture

Selling your time

David Winch | | Permalink

@MBK says "But that ignores the fact that their time is limited and that (unless you are really special) the only real way to make good money in a small / medium practice is by selling the time of staff at a margin - and the more the better"

It is your choice whether to sell your time and be in a commodity market with limited earning scope (only 168 hours in a week) or to abandon the notion of time and charge for the value your client gets from what you deliver.

With every incentive to get even better at your job so you can get more done, quicker, you'll get rewarded for it.  If this is "being really special" then I see no problem with having this ambition.  When you charge for your time you've got an incentive to be unremarkable and take as long as you can.

I know my clients prefer to take advantage of the value they get from me as soon as I can possibly give them access to it.  And they are more than happy to pay a premium for the ability to do so.

David Winch, Cambridge

zarathustra's picture

Inherent Paradox

zarathustra | | Permalink

There is an inherent paradox here. The true accountant entrepeneur will be focused on building a business where he is focused on his own strategy, and leaves the servicing of client needs to others. This is ideally suited to the rows of staff selling time approach, just put new work into the funnel.

By spending time working on clients businesses you are not working on your own. The paradox is you cant get entrepeneurial accountants to work for you in your practice and deliver theses service to clients, because they are too busy off doing their own thing, consequently the principal becomes the main source of service delivery. The result - no time to work on your own business.

Paul Scholes's picture

Not sure if there is a paradox

Paul Scholes | | Permalink

Hi Z, I'm not sure I follow what you mean. 

The "simplistic" approach above is to put us all into either a Mechanic or Entrep'r box, whereas, as I say, in the real world we are all a spectrum (love that word) of both and we use each skill sets in varying proportions as and when needed.

With regard to running our own business (or better "looking after number 1") this just adds a third dimention to the above and with experience we, hopefully, learn that unless we do make sure we look after our own wellbeing we are of no use to clients, ourselves or our loved ones.

In my case, because the natural inclination is still to say "YES", practically everything I do is first filtered through "is it really OK for me/us" and then, if it's not, to finding if there's any other way to deal with it or ultimately, whether it's something I can't or won't do.

Again, this is just being human and a person remains healthy by being aware and keeping a balance.

Yes, this is idealistic and I make a mess of it from time to time, but when you get it right, you know it.

Another perspective...

ClientA | | Permalink

I found this post while I was searching online for advice on what to look for in a new accoutant , as I think I'm about to part company with our current accountant.

I was so peed off by some of the comments that I've gone to the effort to register on this site to let you know my perspective.

I'm a client, an owner of a small but growing company, and I need the kind of accountant described in some posts as a "consultant". Someone who answers emails within a day, someone who'll treat my business as though it has potential, and someone whose input will guide our actions and thinking. Oh, and someone whose receptionist isn't rude and treats you like a valued client. Basically, I want the same relationship with my accountant that I hope we give to our clients - listening very carefully to what they do,mwhat they need and then advising how we can apply our expertise not only to get the result they want, but to get their business in good shape for the future.

The nature of the client relationship across all professional sectors has changed. Accountants should bear this in mind. So when I go to my bank, Ifa, accountant - or even GP for at matter, I want them to treat me as a business partner - not as a punter, a muppet or a potential annoyance.

Which means I don't just need my accountant to file vat and tax returns and be uncontactable in the meantime. I need them to be on the case, giving me updates, being available to me to bounce ideas off them and being able to work with the other professionals in my team.

I find it such a pain in the bum that every accountant I speak to believes they do this, but so few - in my experience - actually do. And here's the thing, I'd gladly pay good money for this kind of relationship, because I know it's crucial for the long- term health of my business.

But frustratingly, the norm for me so far has been the avuncular, oh-you-don't-need-to-worry-yourself-about-all-that approach. Blinking nonsense. it does make me wonder if some accountants take their own businesses seriously. Because if my business grows, then so do my fees to you.

So, I've had my little rant. But I really would suggest that if you think you only want to be a mechanic, then tell your customers that's all you offer. And if you don't like your customers, or don't thinks a you have enough entrepreneurs to be a consultant, then go out and find them. Do all the things that people in business do to make new contacts and school and educate the ones you already have.

Great debate

rc@directorscen... | | Permalink

Another great and fascinating debate.

Thank you.

Robert