I posted this question within the thread "coping with nightmare clients in the recession and it was suggested I repost under a new title - so here it is:
An insolvency practitioner I know estimates that 80% of SME insolvencies are caused by poor financial management and in most cases this is caused by a skills gap in the finance function. This is arguably born out by a survey that was mentioned in Accounting web https://www.accountingweb.co.uk/cgi-bin/item.cgi?id=193332&d=1025&h=1022&f=1026&dateformat=%25o%20%25B%20%25Y
Often the engagement letter will be restricted to year end accounts and taxation. However some accountants market themselves as "business advisors" and many SME owners rightly or wrongly see their accountants as the fountain of all financial knowledge. There may be no legal responsibility, but is there a moral responsibility to guide the client in the right direction? Alternatively you may even feel that there is a risk of being construed as a shadow director - so want to stick strictly to the terms of the engagement. Commercially, giving the client a steer in the right direction may be seen by some clients as proactive and lead to recommendations, whilst others may see it as interference.
Many practices' core business centres round year end accounts and tax services and some day to day financial management skills (eg: cash management, forecasting, business planning) may be outside the comfort zone of some practitioners. Also the charge outs rates in some firms may preclude cost effective provision of FD services.(i recently heard of one firm charging its partners at £1,700/day for FD services).
Taking the above into account how far do practitioners go in helping their clients with financial management?