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Don’t let HMRC run your practice strategy

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It’s important that practice owners set their own strategy rather than let it be dictated by HMRC and regulatory change, argues GoProposal by Sage vice president James Ashford.

4th Jan 2022
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“MTD is part of something bigger - you want to build a digitised firm, not just a digital one,” said the GoProposal co-founder at AccountingWEB Live Expo last month during a tech talk devoted to the future of accounting.

The difference between the two approaches was equivalent to a “heads-up display in a modern car that transforms the driving experience, giving speed, safety alerts, and directions versus a simple digitised version of a traditional speedometer”, Ashford explained. 

Together with Sage director for accounting and bookkeeping, Chris Downing, and Jordan Smith ACCA, client and practice developer at AG Smith & Co, Ashford explored the challenges accountants and bookkeepers faced when trying to retain control over their practice strategy. 

The panel also discussed how to stay profitable across all areas of practice and what accountants were doing to ensure their clients are ready for the transition to MTD ITSA in April 2024.

Set your practice strategy

Bearing in mind the need to determine their own strategy rather than being dictated by external forces, the panel advised practitioners to take a step back and really make a strategic decision about what their firm should offer to clients, and what tech and process would deliver that service efficiently and profitably to the right clients. 

However, they cautioned that software was not a magic wand. “You can have all the software, but still find you’re having to work too hard to be successful unless your strategy and processes are right,” said Ashford.

Once you’ve set your practice strategy, the next step is to get all your team on board to implement it. Ashford cautioned: “Everyone in the business needs to make sure their mindset is aligned to the business strategy.” Managers needed to “watch out for the ‘Yes, but…’ responses that were really really ‘No’ in disguise”, he added.

Compliance is not dead

The speakers were clear that in spite of the constant buzz around the need to offer advisory services, compliance as an offering was far from dead. Downing insisted: “The future of accountancy is not JUST advisory. It’s also delivering compliance efficiently, profitably and in a timely manner.”

Jordan Smith agreed: “For all our clients it starts with compliance. Then it’s about identifying services that will help your clients develop their business. This helps them feel that you value their custom and are not just taking their money. Getting this mindset into all your existing clients will help your practice grow.”

Ashford said that MTD and the move to quarterly reporting would prompt a move away from annual fees. “You need to move to monthly billing as you are doing regular work that you need to charge for. You’ll need to have the right systems, processes and mindset in place to manage the transition for all your clients.”

Smith agreed, adding that practices could provide quarterly management accounts at the same time as quarterly updates: “This could be very useful for businesses, as well as a new revenue stream for the practice”.

Smith explained how his firm had been using the new Sage For Accountants platform that was making it easier to see and segment all the firm’s clients. “As well as enabling services such as bookkeeping and compliance, it gives us a database of our clients and lets us capture what tech they use, and how much they want to self-serve,” he said.

Build a great customer experience

Downing said MTD was likely to mean that “every client will need to be service reviewed, repriced and re-engaged”. 

Ashford traced the roots of the GoProposal business back to MAP, the accounting practice where he’s a director alongside founder Paul Barnes. When they were looking at how to grow the practice they realised they needed to create the best possible client experience - not just compared to other accounting firms, but compared to the best businesses out there.  

“Most accountants over-service and under-charge their clients,” Ashford said. “This creates a lose-lose situation, where clients don’t value what you do, and you don’t charge enough to be able to provide the level of service they actually want to pay for.”

A simple spreadsheet of MAP’s prices and services eventually grew into the GoProposal software solution, which created the foundation for a new sales culture that maximised the value the firm offered to clients.

AG Smith & Co also uses a GoProposal pricing and engagement strategy with all new clients and plans to roll it out to existing clients too. Smith explained: “It’s important to price things sensibly and profitably. If you were previously doing payroll as a loss leader for clients, then the pandemic meant you were doing a lot of extra work for free. Beware of pricing in annual bundles. Make sure each service is priced properly and is valued and needed by your clients,” he said.

Future-proofing your firm 

Looking ahead, Ashford side-stepped the term future-proofing. “The main thing is to be adaptable - no one can predict the future. Certainly almost no-one predicted the turmoil of the last few years. But one thing is certain, that you’ll need to adapt to changes and challenges that come your way, whether that’s staffing, competitors, technology or even a global pandemic. You need to make sure your practice is in the strongest position you can be.”

Drawing together the different ideas, Chris Downing summarised: “As well as setting your practice strategy, the challenge will be to change the mindset of your clients. We believe that around 20-30% additional effort might be needed for MTD compliance. Recent Sage research shows that of all those who help support vital small businesses, accountants have been named the number one go-to service. With 9/10 small business owners rating accountants as an important part of their businesses’ operations.  So, practices should feel confident in their offering and need to reinforce the value that you bring to your clients.”

Find out more about Sage For Accountants and see how it provides a unified view of your clients, giving you access to data whenever you need it, as well as delivering bookkeeping payroll and compliance free of charge. 

Replies (6)

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By Hugo Fair
04th Jan 2022 15:33

"Smith agreed, adding that practices could provide quarterly management accounts at the same time as quarterly updates."

This would of course be delivered within the £6 cost promoted by HMRC?
And would be despite the quarterly updates containing little of relevance to management accounts?

Thanks (8)
Replying to Hugo Fair:
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By Paul Crowley
05th Jan 2022 01:31

I just love being told what my clients need.
Every landlord is just begging for quarterly reports saying that the tenant paid, because they are too stupid to read bank statements.

Thanks (10)
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By GHarr497688
04th Jan 2022 18:34

HMRC has still not taken up my offer to show them the negative affects of MTD on the smallest self-employed. I had no idea that a window cleaner earning £13,000 a year would benefit from quarterly management accounts. HMRC are failing repeatedly to listen or act on what is being said by the Accountants.

Thanks (11)
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By Paul Crowley
05th Jan 2022 01:35

"Don’t let HMRC run your practice strategy"

I just so agree with this
But no choice, got to submit any old rubbish to avoid the £200 per quarter per type of income per spouse brand new penalty provisions

Thanks (6)
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By johnjenkins
05th Jan 2022 09:38

Where are you Bob? This sort of spiel is right up your street.

Thanks (1)
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By JacquiMBurns
05th Jan 2022 18:45

Unfortunately, Sage, who I have been happy to use & recommend since Version 1 (when the program was on those square disks that those of a similar age might remember) is actually becoming part of the problem with only remembering sign in details for VAT MTD of an agency rather than individually for each client. So each quarter I have to waste time & enter each clients own gateway user id & password which are already stored on Sage because otherwise Sage, in its wisdom will use the same details for all my clients.
Also, for some unknown reason, they have decided to show the latest open VAT period on top of an earlier one when surely commonsense tells you that people are more likely to be submitting the earliest one first.
Added to this is the fact that they also limit the number of open VAT returns even if other, earlier ones, are still open at HMRC meaning you cannot file the earliest ones. Yes, we do have some clients who have let over a year go since they submitted their last return & then come to us to bring it up to date only Sage says nope! This means we can't file the earlier ones at all as HMRC won't accept them any other way.
Wake up Sage you are supposed to be working for your clients not HMRC. Remember who pays for your product!
And stop keep telling me there is a later version to upgrade to. My clients have not upgraded yet & if I do, they wont be able to restore the data on their systems & NO, they do not want to go on the cloud, thanks.

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