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Business advice: why accountants are key

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20th Oct 2011
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Small businesses are missing opportunities to create profitable managerial parnterships with accountants, the Chartered Institute of Management Accountants (CIMA) has revealed. 

Despite many accountants spending large amounts of time offering business advice, the report Finance transformation: a missed opportunity for SMEs? found entrepreneurs are failing to engage accountants outside of their financial remit. 
Compiled from small business and accounting input, the study analysed 7,000 completed surveys and 473 responses from finance personnel working in small businesses. Results show many accountants are highly business orientated. They see their duties as involving the support of operating units and spend much of their time providing business advice. 
However, despite the channging role of accountants, financial functions are undergoing no radical change to accomodate this, either structurally or in allocation of work-time. The majority of finance personnel advised that they are still often located in physically distinct finance departments and traditional activities of preparing management accounting information still dominate, and business partnerships between entrepreneurs and accountants occur very rarely.
Harold Baird, CIMA president, said: “It can be particularly challenging for accountants to realise their potential when working alongside entrepreneurs. But when they work in a partnership based on mutual respect and an understanding that.”
Choosing accountants to help with management decisions can help boost company growth and encourage entrepreneurs to invest, the report found. Small businesses are often focused on driving financial efficiencies rather than improving business process and are cautious to take on additional staff members. Peter Simons, CIMA thought leader on the report, advised in leading organisations the higher performing businesses focused most on non-financial leading indicators. 
"Most small businesses tackle the economic crisis with a short term viewpoint of business as usual - doing tactical things until conditions improve. That’s really difficult. If businesses want to survive and thrive they need to be able to invest at the same time as cutting costs," he said. 
Not using accountants to help improve business management and encourage investments may mean small business are missing opportunities.
Baird advised: "The principals of owner managed businesses don’t always recognise the need for a management accountant’s contribution as a business partner. An accountant might only be employed because it is cheaper and more convenient to have one in-house than to pay fees to an accountant in practice.
"If the accountant’s role is limited to preparing financial accounts and ensuring compliance then it is hard for him/her to realise his/her potential. However, if they can find the capacity to generate insights to help improve performance this can generate demand for them to provide more support of this nature.
"Otherwise, the potential of the business to generate wealth may be limited too. The drivers of cost, risk and value might not be analysed to identify opportunities and manage performance for the long run. False economies will be made.
"This is a shame because the UK economy is looking to SMEs to generate wealth and create jobs, management accountants ought to be more engaged in the management of SMEs."

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By Mike Bassy
21st Oct 2011 12:36

too many Jobsworths

This article suggests that ignorance is preventing the alliance between accountants and small businesses. But often, that isn't the case.

Numerous small businesses would love to have accountants on board .... if only so many weren't pure Jobsworths.

All business owners welcome good, solid, dependable advice on financial planning, making money work harder, and using business finance efficiently.  However, accountants with these qualities are like hen's teeth. You simply can't find them.

Instead, too many accountants are bean counters, with a narrow,  fixed view of their role and an unshakeable, genetic tendency to say: "No". Ask them to innovate and you'll hear a sharp intake of breath, followed quickly by a pained expression and the words: " I'm not so sure about that." .

They're a drag on business, an expensive burden made necessary by overly complicated tax legislation. Few contribute anything to the company other than tax compliance. 

Of course there are always exceptions - and the good ones do very well indeed. But for every one good accountant, there are at least nine others who seem content to remain mere drudges. They feel much, much happier following rules and saying why things can't be done rather than finding a way to achieve business aims. 

You only have to read Any Answers to see this trend. Have a look at the vast number of accoutants who go out of their way to prove a suggestion illegal under HMRC rules compared to those who try to suggest ways where initiatives could work.  It's a 20:1 ratio at the very least. Accountants love to find negatives rather than positives. Who needs this attitude in business ?   

So rather than castigating businesses for missing a worthwhile strategic alliance, perhaps accountants should ask themselves why it isn't happening more often ?  The answer is that accountants need to change their culture. Or is that more than their job's worth ?            

 

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By Carlhotson
21st Oct 2011 15:33

Business advice: why accountants are key

Spot on Mike,

As an FCA who has spent most of my post qualifying career outside practice, both in industry, higher education and running my own businesses, I have been banging on about the lack of involvement of accountancy practices in giving business (as opposed to just tax and historical accounting) advice to their business clients. (In fact I started an M Phil to research this but didn't complete it because I set up my own business!).

I now offer a service to Accountancy practices to enable them to widen their offer to SMEs in the areas of strategic and business planning and management information and accounts, but I must say there is a significant level of resistance to this concept, based on either "we can do it ourselves" (despite the fact that in many cases the partners have never worked in industry) or "we're busy enough with our mainstream service!".

I think they're missing a trick, and letting their clients down at the same time.

Carl Hotson

www.planforsuccess.co.uk

 

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By consultfdi
24th Oct 2011 18:47

Pro-active Accountants

Agree with the above comments entirely but I suggest that it has much to do with the business perception of the self titled 'Accountant' - try qualified business development consultant or business and financial development consultant.

I have spent much of my post qualified working life developing a complimentary skill set but I still find that I am generally engaged for number crunching assignments which might then lead to consultancy work and rarely the other way round/purely on a consultancy basis. 

Perhaps it is my approach to marketing these skills although I do believe that promoting oneself as an Accountant will automatically pigeon hole your perceived skills to many perspective clients.

I also believe that professionals from smaller practices are better placed to offer general added value services to SME's given the rounded exposure received for many different businesses.

The relevant institutes could of course do a lot more to help members promote these 'other' services.

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