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Insolvency practitioner

How do insolvency practitioners engage with accountants?


The 'days of applying copious amounts of alcohol to accountants to get work referrals is over', so how do insolvency practitioners engage with accountants as a client?

18th Nov 2021
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The insolvency world is about to get busy. Statistics from the Insolvency Service show that in September, there have been 1,446 company insolvencies registered, representing a 56% increase compared to the same month the year before.

“We have seen the number of Creditors’ Voluntary Liquidations rise for the third consecutive month, suggesting that despite businesses benefitting from two months of restriction-free trading and the economic boost over the summer, directors are choosing to close their businesses after deeming their financial survival unlikely after 18 months of trying to trade through a pandemic,” said Nicky Fisher, deputy vice president of insolvency and restructuring trade body R3 and partner at Eastbourne and Croydon-based Herron Fisher.

“The dramatic increase in corporate insolvencies illustrates just how crucial the Government’s support has been in keeping businesses afloat and suggests that there may be a rocky road ahead for the business community now it has ended.”

So, it is more important than ever for accountants to engage with an insolvency practitioner or turnaround specialist at the right time. The sooner help is sought, the quicker the business and jobs can be saved.

According to an R3 report, ‘The value of the profession: How insolvency and restructuring supports the UK economy’, pre-pandemic the insolvency industry rescued 297,000 jobs (around 800 jobs per day) and returned £1.82 billion to creditors – the equivalent of £5 million being returned to creditors per day.

As Nick Hood, senior advisor at Opus Business Advisory Group explained, “At Opus our ethos is ‘we're here to help not to judge’. Unfortunately, there are still a lot of cowboys in the industry, which is why it is so important for accountants to be selective of which IP firm they recommend to their clients.

“At Opus we always say, ‘we are only ever going to be as good as our last job’ – and people respect that, and it is how we earn trust. Accountants know we are going to do a good job for their client, and in the process help the accountant keep a client and the fee income flowing from them.”

Whilst the pandemic put an end to face-to-face meetings in the business world, for an industry built on networking, the insolvency sector has had to engage with accountants in a new way.

“We now use a range of tools when engaging with accountants. Obviously, during the pandemic we were unable to meet face-to-face, so the more innovative practices such as ourselves have pivoted to engage with accountants in a more digital way,” continued Hood.

“Our webinars have been highly successful. Recently I was presenting in the webinar to 120 accountants on the new powers that HMRC has under the Finance Act 2020 whereby HMRC can now recover money direct from directors for companies who haven’t paid their tax. For accountants who have clients in this situation, now’s the time to negotiate,” said Hood.

Negotiating with HMRC is a specialised skill in itself, Hood explained, and at Opus they utilise a team of specialist tax negotiators who are masters at this skill.

“It is not uncommon for money previously put aside by a company to pay taxes then needing to be used to keep a business afloat.  Now when the time comes to pay the tax, the money has been spent – not on riotous living of the directors, but solely on trying to keep the business operating, as we have seen many businesses trying to do during the pandemic.” 

It is not uncommon to see directors try to do everything they can to keep a business afloat. As insolvency practitioner at Neville & Co Lisa Thomas explained: “Sometimes the accountant can be one of the last to know that something is wrong. Directors often Google for help, only to realise they need the services of an IP. That’s why it is so important to build a rapport with both accountants and their client to find out what has happened to bring the company to the point of failure.

“Despite this rapport, it is important at the start of any relationship with a director to point out that because an IP’s responsibility is primarily with creditors, the directors themselves will come under investigation to assess whether there has been any wrongdoing.”

With most industries, the pandemic sped up digital transformation. Insolvency firms are at various stages in their digitalisation journeys. At Neville & Co, the practice is almost paperless.

“In many ways, the pandemic has forced us to become digitalised,” said Thomas. “With everything held in a secured cloud environment we no longer need to physically hold the vast amounts of documents which would normally need to be housed as in the past.”

Digital is the way forward for Neville & Co, and in addition to undertaking a full digital engagement campaign of newswires, webinars, and presenting at events both digitally and in-person, Neville & Co has a regular Youtube channel to inform and engage with businesses and their accountants.

As with every industry, corporate entertaining goes quite a way to building relationships – and the insolvency industry is no different. Whilst some insolvency work is done on the ‘golf course’, these are often the result of relationships which have been cultivated over many years.

“In my experience, it’s definitely not all done on the golf course,” said Fisher. “At Herron Fisher a lot of our enquiries or referrals from accountants come in either because we have worked with them in the past, or I have met them through networking at various events including R3 conferences or Chamber of Commerce events.”

As President of the Eastbourne and District Chamber of Commerce, Fisher is a strong believer in the connections which come from being a member of a Chamber. “Not only are you helping local businesses, but as you are likely to live in the same area covered by the Chamber, you are also helping to benefit the local community, often saving many local jobs in the process.”

Moving forward networking in all its forms, whether digital or in-person, is going to see a greater interaction between the worlds of accountancy and insolvency. Whilst in the short-term the days of applying copious amounts of alcohol to accountants to get work referrals may be tempered, as things move to the new ‘norm’ there is likely to be the opportunity for those accountants who still fancy a tipple!

Replies (3)

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By mkowl
19th Nov 2021 10:06

Well I could say about one but don't fancy ending up in a libel court

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19th Nov 2021 10:49

I thought that under Insolvency Act s218(4) the insolvency practitioner *is* there to pass preliminary judgement, and that it was the cowboys who ignored that provision.

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paddle steamer
22nd Nov 2021 14:29

If they want referrals they need to do a professional job.

We have had a number of them acting for tenants where they float around, not committing to what they are doing with the lease of our premises/avoiding contact/not returning calls and generally yanking our chain re access, new tenant viewings, sorting final utilities and clearing etc(they tend to wait until last possible legal point re lease adoption, sell everything saleable and abandon the rest of the contents for us to deal with and offload, usually at considerable cost)

Result is when tenants do need some advice, or we need to consult accountants ourselves re tax, the firms that cannot be ***** communicating are the ones we do not suggest our tenants go and visit or ever consider using ourselves re other (usually tax) work.

If insolvency practitioners wish to improve their reputations they ought to treat commercial property landlords a bit better.

P.S locally property companies talk to one another via our agents, who of course chat with all the other agents, so when liquidators try to be a touch cute word gets around they cannot be trusted-caveat emptor, what goes around comes around.

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