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Is KPMGs SME service impacting small firms?

Is KPMG's small business service gaining market share at the expense of local accountants?

On previous occasions when I've asked this question the answer has been, not really. Not having received any spam from them lately I thought it might be time to ask again. Now that the Xero based service has been live almost 3 years, has anyone picked up business from clients leaving them, as opposed to losing clients to them?

Earlier this month KPMG were fined a near-record £4.8M for audit failings. Do things like this have any reputational impact on their small business offering?

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By NLB
21st Aug 2017 10:24

Yes, picked up several clients from them. Mainly related to the clients being unhappy about their level of knowledge of their business, mistakes being made and the churn of client account managers who some seem have have change every six months. I am sure there are other clients who are happy with KPMG's service but from my first hand experience it is nothing to write home about and the skill with which they manage a clients Xero account not very impressive having seem it all first hand. Quality seems to vary significantly and I can only think this is down to 'people' which is harder to control and standardise.

Having seen this I think that whilst they may have a national reach and marketing budget their implementation leaves a lot to be desired and just like most things a good small practice has nothing to fear.

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21st Aug 2017 10:25

I have not lost anyone to them nor have I heard of others losing jobs to the service.

I am aware of other people I know who have signed jobs up from them where the work was not great and the Xero needed whipping into shape to get things up to speed.

Locally I don't hear anything of it. It was mentioned a while back that after over 2 years they had only 800 clients which does not seem a lot for the brand name and marketing behind it so I would imagine it has not worked out as well as they hoped.

The last pop up advert I saw seemed to be for a contractor style service at about £120 per month.

I suspect it will just disappear quietly if it is not working out for them.

The fact the once extreme advertising for it seems to have stopped would support this.

They may have gained more traction down South but they don't seem to have done much in the North.

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21st Aug 2017 10:46

Yes, I've picked up a client from them and agree with NLB's comments.

Quality of the bookkeeping on Xero was very poor, client experienced huge turnover in staff managing his account - evidenced by the fact that there were 20+ KPMG staff with user access to his Xero.

Charged extra for every tiny piece of additional work.

When asking relatively straight forward queries was sent emailed links to pages on HMRC site.

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By mrme89
21st Aug 2017 11:00

A former colleague used to work in the small business unit of another very large practice.

The work was completed by juniors that had a set time to complete the accounts – always less than the previous year.

If there were mistakes, or generally just a pigs ear made the year before, you were not given extra time to sort it. This meant unresolved balance sheet items were sat there indefinitely.

If you ran over the budgeted hours, you’d be marched into the partner’s office and given a dressing down. This led to further corners being cut in order to meet the allocated time to the job.

If clients asked questions, you’d have to try and sell them another service, or bat the query away as that isn’t the service they are paying for.

Large practices are just not in tune with small businesses on a service or fee level.

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21st Aug 2017 11:42

About every 10 years the large firms come up with a brilliant idea of how to expand into our end of the market. I think the formula is:

IF((period since last attempt)>(period of their collective memory),expand_into_small_end,0)

It never works out.

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21st Aug 2017 13:36

oop double post

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21st Aug 2017 13:36

I put it to a client (a fellow accountant) who asked me about this a few years back.

"why would you employe the me of 20 years ago with 12-18 months experience to do your accounts, at twice the fee I charge you now" ?

+ of course they would get a new old me every year or two, when the first old me got too expensive or moved on.

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By Tornado
to ireallyshouldknowthisbut
21st Aug 2017 13:42

Me too.

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21st Aug 2017 13:47

Neutral impact (actually zero). No comings, no goings.

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By Matrix
21st Aug 2017 13:51

No one has mentioned them. Small businesses like an accountant who knows their business well, I don't see how that can happen with so many office juniors working on the same books. There must be stuff missed, not just bookings, but tax planning if you don't know the client well.

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22nd Aug 2017 08:31

Thanks for your replies. So it seems there has been no negative impact on local firms from the Big4, would the same apply if the question asked about cloud accounting services from the likes of Crunch, or Cheap Accounting?

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By NLB
to PracticePartner
22nd Aug 2017 09:39

A good follow on question here. Nothing and no-one ever mentions cheap accounting to me however the same cannot be said for Crunch. Due to sheer weight of online advertising (which leads with a price message) they do tend to get mentioned by a few (not a lot) as they tend to drive a bit of market awareness about price.

The lead £29.50 message get Ltd companies excited but then you quickly realise its from £69.50 for Ltd and actually when you add payroll and a directors PTR its £96.50 and that is generally for a micro Ltd company with minimal complexity and certainly no tax planning required.

Therefore as soon as you approach something basic but interesting with a bit of tax/divi/salary planning etc Crunch starts to not make sense anymore plus the software whilst 'ok' is made in house and will always be a bit behind the giants.

I think Crunch generally do a good job of attracting and serving simple micro businesses (I don't think they claim to do anything else in fairness) at huge scale but their fees and offering are again nothing a small practice should be worried about when comparing apples with apples and cutting through the marketing noise.

Even if you were £10-20 more a month like for like a bit of light tax planning sorts that out straight away which I have done for several ex Crunch clients whose needs have got more complex.

No doubt there will be an increase in price transparency online in the future as there will service transparency but there should always be a role and a right client for each small practice in my view. The danger zone in my opinion for a small practitioner is trying to take the lowest market price with the highest personal service and sprinkling with the objective of making a decent profit. That is a very difficult cake to bake!

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22nd Aug 2017 10:45

Cheap Accounting - don't hear anything. I am aware of one of their franchisee's about 25 miles from me (he tried to connect with me on linkedin a few years ago), that's it though.

Crunch - had a prospect (an accounting butterfly) about 4 years ago who was with Crunch and was grumbling about them. He was a prospect again recently had moved on from Crunch as their service was too basic.

Similar to the post above my view is that if you're looking to provide a basic level of service (cheap and cheerful?) and to compete on price then you will probably come up against these two more often.

If you offer a more personal service with some tax planning and business advice you will differentiate yourself from Cheap Accounting/Crunch and also KPMG.

I also find that offering a more personal, rounded service that price is rarely an issue. Sometimes I get comments like 'that's more than I'm paying at the moment but I can see that you'll be doing more'.
But then the reason a prospect is unhappy with an existing accountant and is considering moving is usually either:
i) they're getting a poor service - lack of advice, delay in replies (coming from a smaller/cheaper accountant)
ii) they're paying too much, no continuity of staff (coming from a larger more expensive accountant)

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22nd Aug 2017 13:38

I imagine "cheapaccounting" is great for website SEO as I would imagine it is a well searched key word, they will get a lot of website hits which they will still need to convert.

From an image point of view I am not sure I would want to be known as the "Cheap Accountant" though, or if in fact they are cheap when you sign up with them.

I have signed up quite a few contractor style clients on from on line firms whom they were directed to by the agencies placing them in contracts. They were unhappy with lack of contact and things not explained properly so opted for a local accountant they could meet if they had to.

The big selling point of on line is that it should be cheap, but i suspect it is so competative that they spend a fortune on SEO and PPC that these have increased there costs so much that they are in fact not that cheap any more. If you are a contractor in Newcastle why would you want an accountant in Manchester.

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22nd Aug 2017 19:43

Neutral impact. Lost one to KPMG. He was a real pain. A few months later gained one from KPMG.

As mentioned by others KPMG's work on Xero was a mess. It took time to sort out. We charged him for clearing the mess. He is still with us.

He fell for advisory services talk that KPMG offered. They made a mess of bookkeeping, what would they base their advice on?

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By Maslins
to FirstTab
23rd Aug 2017 12:29

FirstTab wrote:

He fell for advisory services talk that KPMG offered. They made a mess of bookkeeping, what would they base their advice on?

One of my biggest bugbears with the accountancy profession at the moment. So much talk from marketeers et al that accountants need to be so much more than just bean counters. You get very average people promising the earth with business advice and expert tax reduction...but they can't get a set of accounts to balance and don't understand what VAT is.

Doing the basics well is critical. It's assumed by clients, but sadly the reality seems a bit different.

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to Maslins
23rd Aug 2017 13:05

The main reason I hear for people wishing to leave their existing accoutant and move to me is, "we signed up to him as he was going to be pro active, and do this and that be an virtual FD etc". But ended providing a basic compliance service at a price way more than the business could justify. Once signed up they got very little contact etc.

This is what happens when services are "sold" beyond what those delivering the service can deliver.

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to Glennzy
23rd Aug 2017 13:12

Ahh yes, "proactive", or its much earlier incarnation "dynamic".

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By Tornado
to Glennzy
23rd Aug 2017 13:14

A flashy website and aggressive marketing may quickly attract people, but in the end those people will move away when they find they do not get what they expect.

My website is basic to show people we exist, but 99% of all clients we have ever had have come from recommendation and those clients are retained almost indefinitely as they receive the service and care they require.

A bit old fashioned I know, but I do not waste time trying to get new clients when all I need to do is spend that time looking after those that I have already.

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23rd Aug 2017 09:06

So local accountants for local businesses appears to remain the norm. Thanks for all you replies.

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