A blueprint for the modern accountancy firm

iStock/Thinkstock

At the 2020 Group annual conference last week, US chairman Chris Frederiksen spoke about how to build a modern firm. 

Based on the group's research and Frederiksen's own experience of firms around the world, he came up with five elements common to modern, profitable firms.

"We are now in a paradigm shift, as we have never seen it before," he said, referring to finance technology innovations such as Apple Pay

"Most accountants are following the 'Red Queen' concept and running as fast as you can just to stay where you are at the moment." 

Modern firms specialise

According to Frederiksen, modern, profitable firms typically specialise in a particular industry or product.

In addition, it knows its purpose or 'Why' and doesn't try to be all things to all people. 

"You don't see Starbucks selling Coke," he said, "because that isn't who they are or what they believe in." 

With 90% of what the profession does becoming largely commoditised by technology that lets people to do themselves, firms need to diversify and adapt to survive. 

Once the firm has hammered out its why, what it will focus on and what industry and area it will specialise in, it can then stop taking in "whatever rolls in the door". 

Modern firms are highly focused 

Focus draws on three things, said Frederiksen: passion that you can transfer to your clients; being darn good at what you do; and figuring out a way of working that's very profitable.

There are services firms can focus on to bring in profit. Some that are on the up include: 

  • Virtual FD and CFO (or VFO) services: This will mean you have access to (through a cloud system) an up-to-date set of accounts from which you can produce high quality business advice, as you have the data to hand
  • Business advisory bolt-ons, including strategic planning, KPIs, benchmarking, profit improvement and business coaching: The latter is something that can be done for an hour per week on the phone, and clients "really appreciate" it.

Implement value or fixed pricing. This is so clients only need to make one buying decision a year as one bill rolls in and not one a month, which they are more likely to look at and review. Frederiksen advises telling clients, 'this is the way it's done' and not to accept debtors.

Another area that's rising is that of wealth management, he added. All clients need help and advice with their retirement and succession planning as well as things such as ensuring they have a will written. 

Modern firms are different

Different includes having a unique, client-friendly office environment (his own includes a massive collection of art) and make their experience or client service a personal and positive one. 

Modern firms often present themselves with a differentiating strap-line that focuses its purpose on clients and not the firm itself.

Another thing modern firms do differently, he added, was having publications or something tangible a client can take away with the firm's name on it. Books are a good way of doing this and can be published quite cheaply via Amazon self publishing or by getting a book you can white-label.

Modern firms are good at marketing 

They use a 'pull' not 'push' approach at marketing. Push includes ads, pull includes things like having a "killer" website. 

Elements of this website include ensuring its not another template identical to many others. Having good, regularly updated content including client testimonials, freebies such as downloads and how-to guides, a welcome video and webinars.

Communicate consistently with your clients and prospects with a weekly or fortnightly email. Even if it's not opened, your name was in their minds for that split second.

Modern firms say, 'live first, work second'

This rising ideal from the world of the milennial is one that modern firms have adopted.

There is a challenge in the profession, Frederiksen added, to attract and keep young and motivated talent. There are certain things they want, that allow them to live first and work second - and do so effectively. 

These include giving them the freedom to work flexible hours and from home, to be given cloud-based apps for use on mobile devices, receiving good training regularly on not just accounting areas but management and other skills too, quarterly instead of annual reviews and rewards for performance.

In addition millennials love to be involved in their community and volunteering a charity work would be another draw for them to work at a firm.

Modern firms are cloud based

The message is, if you're not on it, get on it now!

Benefits according to Frederiksen include achieving zero entry, whereby everything is populated including automated bank feeds. 

"Once you start doing it, you will realise how much profit is in it," he added. 

This new paradigm isn't just a flash in the panm, according to Frederiksen. What we are witnessing a "sea change" in the profession. 

Do you consider yourself a modern firm - do you recognsise yourself in any of the above elements?

About Rachael White

Replies

Please login or register to join the discussion.

20th Oct 2014 10:50

Cost

Firms should think about the cost of implementation.

Creating a remarkable brandDeveloping unique added value services/productsProducing amazing marketing collateral e.g. bespoke websiteAdding unique content (blog posts, Webinars and videos)

Firms that are not able to do this will be stuck with compliance. That seems to be moving to lower cost providers (online and to home workers).

My take is that firms need to get their head around having a full-time team member committed to this.

Bob Harper

The More Network and Crunchers

 

Thanks (1)
avatar
20th Oct 2014 10:46

Great stuff

I was able to attend the conference, and for my money it was one of the best I've been able to attend.

As always, the really great stuff came from learning about what other firms had tried and found out.

Thanks (0)
20th Oct 2014 11:09

.

Load of flannel and buzzword bullshit from the 'visionaries' as usual

We have to "specialise" at the same time a couple of paras later "add services"

Well which is it then? 

We all have to be "different", by all having a different  "strap line" which is an oxymoron and just laughable quite frankly.  Its the sort of thing that poor quality firms have or people with full time development managers with too much time on their hands.  It makes no difference to the customer.  Just dead weight dragging the business down with needless overhead.  

At the core of this there is some truth, things change and people change, and you have to change with it, but that has always been true.  That is no "paradigm shift" (I wonder if the speaker even knows what this means, or just spouts the buzz word?) it is just gradual evolution.

It is only an abrupt change if you have been sitting with your head in the box for the past 20 years or you work with people who have been.

 

This sort if corporate tripe reminds me what I "opted out" of big business 10-15 years ago.

To me the firms that will die are the ones that fall for this tosh as they wont be doing what they should be doing - banging out the tax returns and keeping the clients happy without the overhead of corporate navel gazing. 

 

 

Thanks (5)
20th Oct 2014 11:32

Definition

@YouReallyShouldn't - I think it would be a good idea to define "modern firm".

I take this as having employees as well as being profitable and sustainable.

Home workers do not need to change much if at all. Perhaps just use new technology because their client's want to and carry on form filling.

Bob Harper

The More Network and Crunchers

Thanks (1)
20th Oct 2014 16:10

Way to go ireallyshould...

It speaks volumes that they have to use words like "paradigm shift" rather than "change" to make readers think that there is anything new here in what's splurged.

The only thing that tends to be new are the ears listening, ie the inexperienced newbies who search around for guidance only to be taken in (like previous generations) by hysteria & hype.

It's a bit like religion I suppose, there are probably some sound and valuable bits to it all but it's spoiled by the all the over embellished robes, rituals, symbolism & naff wine.

At least with JW's it only takes 5 seconds to say no thanks & close the door.

Thanks (2)
20th Oct 2014 16:25

Words

@Paul - I think the choice of words are important...for example, when you look into it there is a big difference fixed price and fixed fee. Like there is a big difference between the efficient and effective business models for accountant.

I agree with Ron Baker that the profession is facing radical change, not just change/improvements with Cloud technology.

I personally think we are at a technological tipping point and we are just about to see simple work disappear or move low cost with:

Big corporates such as www.crunch.co.ukHome worker lifestyle accountants

Firms who want to be profitable and sustainable need to start changing the business model sooner rather than later. 

Bob Harper

The More Network and Crunchers

Thanks (0)
20th Oct 2014 16:50

@Bob

Don't wish to be rude but I closed the door, I really have heard the same stuff every 5 years for over 30 years, just with different words, and have a cup of tea that needs my attention.

Thanks (3)
20th Oct 2014 23:51

Hearing it before don't make it wrong
@Paul - hearing it before doesn't make it wrong.

I think the Internet and now Cloud computing are game changers because it allows new and better competition. It also allows home worker accountants to take market share.

This means firms need to raise their game and implement a more structured marketing strategy.

Enjoy your tea...that took 50 plus years to take off and seem pretty normal now.

Bob Harper

The More Network and Crunchers

Thanks (0)
21st Oct 2014 10:05

.

The underlying act of preparing tax returns and advising clients is completely unchanged. If anything its harder now than 10 years ago as the rules are more complex, but our consultant friends who dont appreciate how tax works, don't understand this.  

The most dramatic change I would say occurred about 20-30 years ago when we went from handwritten or typed returns to doing them "on the computer". And that is still only the admin side, not the advice side.  The key issue at this point was that for a generation accountants "didnt do letters", armies of secretaries did those. When I started work 20 years ago that was nearly dead in the water, and everyone below partner level typed their own letters. This was quite a new concept then, now it is normal. 

The tools for the job are changing slightly bit by bit, year on year but its not really that dramatic.  Actual time and cost savings are not that great, they are pretty marginal.  

Eg post vs PDF there really is very little in it both create their own problems whilst our consultant friends will tell us if we are still sending tax returns out on the post we are dead in the water dinosaurs. It just ain't so. 

 

 

 

 

Thanks (0)
21st Oct 2014 10:26

Accounts

@YouReallyShouldn't - my focus (and I think the above post) is businesses and accounts based compliance.

56% of businesses in the UK are not VAT registered and do not employ anyone. They can now complete their own tax using cash accounting. In my opinion, cash accounting for these clients should NOT be optional.

Bob Harper

The More Network and Crunchers

 

Thanks (0)
21st Oct 2014 12:18

.

 

 

 

 

And your point about cash accounting is what?  Displaying yet again that you don't understand anything about accounting and why "cash for all" would be a disaster for many micro businesses and lead to increased compliance costs?

Sound to me like someone has a small limited company well under the economic barrier and is not making enough cash to pay for his accountant to produce the figures. After all in your mind compliance work is so easy it should all be free.

Thanks (0)
avatar
By qad999
18th Dec 2014 00:04

but no-one is asking you for your opinion

Bob Harper wrote:

@YouReallyShouldn't - my focus (and I think the above post) is businesses and accounts based compliance.

56% of businesses in the UK are not VAT registered and do not employ anyone. They can now complete their own tax using cash accounting. In my opinion, cash accounting for these clients should NOT be optional.

Bob Harper

The More Network and Crunchers

 

 

.. and there will be many irate small businessmen  that would be after your blood if it did happen

PS - how do you think lenders would view cash accounts for  all?   they certainly do not give you  a fair view of profits earned

so probably more compliance costs to meet  lending criteria,  and that's not even considering  the potential tax disadvantages

 

 

Thanks (0)
avatar
21st Oct 2014 11:56

cautiously yes

Sending Tax Returns electronically is OK if they are encripted - far too many accountants just send them by e-mail which is illegal. As is sending accounts!

Beware!

 

Thanks (0)
21st Oct 2014 12:27

Cash Accounting

@YouReallyShouldn't - my point is that if cash accounting was mandatory it would reduce/eliminate the need for accountants to be involved in micro businesses reporting to HMRC.

I fail to see what cash accounting would be a disaster or how it would increase compliance costs. Money In less Money out with a few simple adjustments is all that is required.

Bob Harper

The More Network and Crunchers

Thanks (0)
avatar
By qad999
17th Dec 2014 23:47

not that simple

Bob Harper wrote:

@YouReallyShouldn't - my point is that if cash accounting was mandatory it would reduce/eliminate the need for accountants to be involved in micro businesses reporting to HMRC.

I fail to see what cash accounting would be a disaster or how it would increase compliance costs. Money In less Money out with a few simple adjustments is all that is required.

Bob Harper

The More Network and Crunchers

 

read the legislation  before you open mouth, ...you show your ignorance Bob

 

loads of disadvantages that could end up with a  businessman paying more tax , ......

 

so where's your value added ?.. do you advise all of your small businesses to go for this ?,( eg  what about those with large borrowings )

 

because  if so... some will invariably pay more tax as a result

 

they should'nt allow salesmen to post on an accountants forum .. its dangerous.. someone might actually  believe what they say is true, and suffer  as a result

 

I'm fed up of trying to educate you Bob...

Thanks (0)
avatar
21st Oct 2014 13:01

isn't that what rental income

is yet 000's seek an accountant to deal with their affairs.  I suspect most households own a bucket and sponge....how many though decide to use a car wash....

Thanks (0)
21st Oct 2014 13:10

Rental

@YouReallyShouldn't - I am sure there will always be compliance work...just less and it will probably go to homeworkers and low cost online providers.

Firms of accountants will struggle to make the margins unless they add value.

Bob Harper

The More Network and Crunchers

Thanks (0)
avatar
By Old Greying Accountant
21st Oct 2014 13:22

Just when you thought ...

... it was safe ...

Thanks (1)
avatar
By 68fw
21st Oct 2014 15:08

and so it was...

Remember a dear client of many years standing who has since sadly passed on, remarking that I was of course a 'boutique accountant' At the time I smiled his comment off... but over the years have come to reflect and agree with his assessment.

We all have a niche; from my own small one man band semi-retired practice to the mighty (and oft sued?) PwC. Strangely in the small provincial business park where my office is located, there are three to four other firms of accountants - yet their clients don't come knocking on my door and fortunately... I don't appear to have lost to many clients to them! Simply put at this level we all attract/repel a certain client profile, ymmv,

Thanks (0)
21st Oct 2014 15:11

the modern accountancy firm

Changing technology is an ongoing factor, nothing new in itself. Accountants prosper according to how they lay their stall. It all depends on what type of client they aim for. Working solo from home is not bad earnings and it is their choice to operate that way. However, operating a bee-hive firm profitably requires a particular strategy. Corporate clients know independents are better priced and provide personal attention but they will still go to firms in international groups; it is instinctive. Ironically, stand-alone accountants find it difficult to pay subscription for membership of an international alliance although they preach Ad Nauseam to their clients that it is about the margin and not the static cost. It is the attitude in the end that counts, pardon the pun! Jaffer Manek, Affilica International   

Thanks (1)
21st Oct 2014 22:18

@peterlashmar

Whilst I don't do it, this is the first I've heard that sending unencrypted tax returns & accounts to clients is illegal, can you point us at the law please?

Thanks (0)
avatar
By qad999
17th Dec 2014 23:55

clients need protecting

Paul Scholes wrote:

Whilst I don't do it, this is the first I've heard that sending unencrypted tax returns & accounts to clients is illegal, can you point us at the law please?

 

as is your practice  .. I always encrypt .. but I don't see unencrypted email as being any different from posting via royal mail , .....which can just as easily be intercepted

 

I just encrypt as a belt and braces (and knowing the clients can often get themselves in a pickle sometimes, so it is really to protect them from themselves)

Thanks (0)
avatar
24th Oct 2014 09:54

Its all been documented before.

Modern firms specialise

'According to Frederiksen, modern, profitable firms typically specialise in a particular industry or product.

In addition, it knows its purpose or 'Why' and doesn't try to be all things to all people.' 

 

When I was studying I read In Search of Excellence they called it 'Stick to the Knitting'. 

Thanks (0)
avatar
By Old Greying Accountant
24th Oct 2014 10:18

The thing is ...

... we don't all want to be super efficient, super rich and super successful - we want to be happy.

Not all doctors are specialist consultants, we need a mixed bag of specialists, and of general practitioners.

It gets rather tedious constantly being told what you should be doing.

I suggest certain people should go on ITV player and watch last nights "Tonight" program

https://www.itv.com/itvplayer/tonight/series-16/episode-32-is-britain-happy-tonight

In particular as the worlds happiest man states at 22:35

"The key to happiness is altrism and compassion, benevolence - there is no such thing as a successful selfish happiness. Me me me all day long makes you feel miserable, it makes everyone miserable around you , it is a lose lose situation."

 

Thanks (0)
avatar
24th Oct 2014 12:27

Old Greying Accountant

Old Greying Accountant wrote:

... we don't all want to be super efficient, super rich and super successful - we want to be happy.

........

"The key to happiness is altrism and compassion, benevolence - there is no such thing as a successful selfish happiness. Me me me all day long makes you feel miserable, it makes everyone miserable around you , it is a lose lose situation."

 

You are absolutely right, no argument from here.  But one of the refreshing things about the 2020 conference (as opposed to others I've been to) is that it did touch on these areas.

Paul Dunn did an excellent presentation on getting involved in the B1G1 Business for Good scheme, which makes altruism a built-in part of your business life.  The section on getting and retaining good staff highlighted the need to consider what's important to them - the only way you get and keep good staff is by having happy staff.

Of course, not everything in the conference was relevant to everyone, and it wasn't all of equal value.  And it wasn't all new and never-been-seen-before stuff either, but with so much time spent hunched over a desk it was good to take a couple of days out and look at the bigger picture for a change.  And I love hotel breakfasts.

WS.

 

Thanks (0)
25th Oct 2014 10:34

Correct

@Wilcoskip - good for you.

The problem is that 99% of accountants haven't joined the dots because they are looking in the wrong direction. They are focussed on time and jobs rather than value and people.

@OldGey - the truth is that accountants can be happy providing an average service, and many do...does that make it right? 

If you have a health issue that impacted your life would you want average health care? A GP or a specialist?

Accountants are in a position and have the potential to improve their client's lives by using their knowledge. Not to save a few quid of tax but by helping them create a better business. And, by doing this they helps themselves and the local, national and global community.

It's a lot to ask of accountants but who else is going to take the lead? 

Bob Harper

 

Thanks (0)
avatar
By Old Greying Accountant
26th Oct 2014 00:07

@ Harper

I find your comment grossly insulting and displaying crass levels of ignorance.

To continue the analogy, there are many accountants whoe provide a very good service to their clients, in terms of service levels, results and timeliness information (many of these consider what you call "added value" to be what they are paid for anyway) and deal at an above average level when dealing with the coughs and colds of the business world. They also, like competent GP's, although not necessarily having the skills to deal with "a health issue that impacted their client's life" they are more than able to spot the symptoms and refer the client to an appropriate specialist.

There are also a majority of clients for contributors to this forum who have no value to add above what can be obtained from a simple first aid kit. Thre is a big place for that in the market.

I don't disagree that there are many clients who could have value added by the right accountant, I just wonder why you don't accept there are many that can't.

So Harper, keep harping, because the more you do the more stupid you make yourself look.

 

Thanks (2)
26th Oct 2014 09:08

@Grey

You choose to be offended, if you want.

I am sure there are many accountants who provide a "very good service" and it would be interesting to define what that means.

For the record, I think that means things like:

Accounts completed in 45 days after the year endEmail the same dayPhone calls within four hoursQuarterly tax forecastingMonthly seminars on key business topicsIntroducing the latest technology to clients

Our experience is that this is just not happening. And, the research by other companies supports this. For example, Xero reports that 50%+ of businesses still use a spreadhseet to do their bookkeeping!

No excuse for not having added value...client's deserve better.

Harper

More and Crunchers

Thanks (0)
avatar
By qad999
17th Dec 2014 23:30

Xero is Zero

Bob Harper wrote:

You choose to be offended, if you want.

I am sure there are many accountants who provide a "very good service" and it would be interesting to define what that means.

For the record, I think that means things like:

Accounts completed in 45 days after the year endEmail the same dayPhone calls within four hoursQuarterly tax forecastingMonthly seminars on key business topicsIntroducing the latest technology to clients

Our experience is that this is just not happening. And, the research by other companies supports this. For example, Xero reports that 50%+ of businesses still use a spreadhseet to do their bookkeeping!

No excuse for not having added value...client's deserve better.

Harper

More and Crunchers

 

Bob .. its a rudimentary book-keeping system that has many flaws ( I could right a bible) and looks as if it was written by a  14 year old who had heard about book-keeping somewhere, but hadn't really done any

 

actually spread-sheets are fine for a lot of small businesses , easy to manipulate , no monthly fee and no third party controlling your data and software, so no chance of rogue employees of cloud sellers messing you up or losing data if you dont pay

 

and Bob.. apart  from the point 5. (sales gimmick monthly seminars) , most practitioners do the rest and a lot more (like advice on trading disclosures , which are law, punishable by fines .. and which you continue to ignore on your www)

 

 

Thanks (0)
26th Oct 2014 19:03

Bob, that list is hillarious, and demonstrates yet again you don't have a clue about what is happening in small accounting practices in the UK.  What happens in the strange world in your head does not reflect the reality.

Nor do you have a clue about what the clients want, or what they will pay for, or why they will come back.

@OGA, only reason I post to ensure Bob is exposed for what he is. 

Thanks (1)
27th Oct 2014 08:33

Reality

@YouReallyShouldn't - reality is what you make it.

We start calling business owners next week so I'll be able to report back what they say about accountants.

I'll keep everyone posted but my guess is that most (80% or more) will say:

They don't really hear from their accountant until it's time to do accountsThey do not get tax forecastsThey have not been offered the latest technologyThey do no get invited to free eventsThey are not offered advice on personal or business money management

Bob Harper

The More Network and Crunchers

 

Thanks (0)
avatar
By qad999
17th Dec 2014 23:20

Bob is condescending and defamatory

Bob Harper wrote:

@YouReallyShouldn't - reality is what you make it.

We start calling business owners next week so I'll be able to report back what they say about accountants.

I'll keep everyone posted but my guess is that most (80% or more) will say:

They don't really hear from their accountant until it's time to do accountsThey do not get tax forecastsThey have not been offered the latest technologyThey do no get invited to free eventsThey are not offered advice on personal or business money management

Bob Harper

The More Network and Crunchers

 

 

Go away Bob , we always offer this to clients .... and no one believes you

(and of course when you ring people up they will tell you any old crap just to get rid of you,..... I certainly would  )

Ps -  get your trading disclosures right on our website before someone shops you

now that's value added

Thanks (0)
27th Oct 2014 10:57

.

Sounds pretty desperate if you are cold calling with a 'survey' with a predetermined outcome to promote your franchise. 

If you ask most people if they would like a newer car, a bigger house, better health, less time at work,  higher wages, less tax to pay, more holidays of course they will say "yes".

Doesn't mean a thing.

I hope you are doing this yourself so I can have an image of your being told where to go every 30 seconds this week.

I like to put cold callers on hold myself to waste their time. 

 

 

 

 

 

 

Thanks (0)
27th Oct 2014 12:07

TPS

@YouReallyShouldn't - just register for TPS...the telemarketers will thank you for it....it will save some of their time and energy http://www.tpsonline.org.uk/tps/index.html

Bob Harper

More and Crunchers

Thanks (0)
27th Oct 2014 22:02

.

Yes Bob, as ever well ahead of you. Been there, done that. 

Do just assume everyone else knows nothing when you post? It might explain a lot. 

Thanks (0)
31st Oct 2014 16:36

Assume nothing

@YouReallyShouldn't - I don't assume anything.

Bob Harper

More and Crunchers

 

Thanks (0)
avatar
01st Nov 2014 11:17

Same experience as I really shouldn't
And an awful lot of them still want them tax returns "banged out ".But ( we are still finding) by a suitably qualified local Accountant who they can come in and visit as email mostly confuses things and there are still quite a lot of things that are best resolved by meeting up and thrashing out. And that includes the generation that grew up with computers. They still don't really want to do anything to do with tax themselves. And many of them have not got the time to do much on Accounts. But by ly the law of averages some of 2020 predictions may come right in the next 10 years. After all as has rightly been said here they were saying l this 20 plus years ago. I know I sat in that class.

Thanks (0)
avatar
01st Nov 2014 11:16

and that is before we start on the new HMRC penalty regime
Which i think is a game changer that will frighten a lot of self employed off doing tax well beyond all of our planning horizons ! 30 per cent penalty for getting the Work in progress adjustment slightly skweiff for example. It's a bit of a fright out there in self employed land of you don't know for certain you areddoing it 100 percent right..

Thanks (0)
avatar
By qad999
17th Dec 2014 23:14

frederiksen is dumb

 " you do'nt see starbucks selling coke"  ?

of course not

it's not because   "it's not who they are or who they believe in"

 

its because its a coffee shop trying  to make a profit and they cant compete with coca cola

 

more sales tripe

Thanks (0)
avatar
By Old Greying Accountant
19th Dec 2014 13:33

Bob Harper is to accountancy ...

... as Bob Downe is to music, but not as funny :o)

https://www.youtube.com/watch?v=rl2og4Er9Nw 

 

Thanks (1)