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Accountants are more adaptable than you think

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29th Nov 2010
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Mark Lee asks how quickly accountants need to adapt to changes in their environment.

There's always someone who will say that accountants need to change and that they need to do so soon. Drawing on recent developments that have affected the profession, there are a number of examples I could point to:

I'm probably one of the UK's most active accountants in social media, but I'm realistic. I don’t advocate that accountants in practice have to do the same – it’s not a crucial new marketing facility and sadly few accountants are gaining much benefit from it.

HMRC's new powers were the subject of much consultation before they were enacted in 2007. But the practical realities are only now becoming apparent.

And although compulsory iXBRL corporate filings become a reality next April, many accountants have yet to plan for the changeover.

In each case various commentators have been urging accountants to change: to avoid missing out; to avoid getting caught out; or to avoid leaving things to the last minute.

This is nothing new. It was just the same before the changeover to Self Assessment in 1997 and the subsequent move to corporate Self Assessment. There are plenty of other such examples too.

I've no doubt that many accountants will negotiate these transitions and wish subsequently they had been better prepared. But such preparation would have distracted them from earning fees and there was no time.
We chose not to make preparation a priority and let it get crowded out by the pressures of day-to-day work. And, I suspect, we prefer to focus on those issues of which we already have experience.

Accountants are trained to look backwards rather than forwards. Could that be why so many of us cope with change as it happens rather than plan and prepare for it in advance?

A popular parable for this is that of a frog in a saucepan of water. If the water is heated slowly the frog doesn't really notice the temperature changing and is eventually boiled alive. (Sorry about the image).

If the frog was dropped into a pan of boiling water, it would immediately leap out and continue living.

Many commentators tell accountants the changes they are facing are equivalent to the gradual warming of the saucepan. These commentators suggest that if the accountants don't recognise what's going on and make big sudden changes then they are doomed. Like the boiling frog.

I disagree. I don't see the need for massive changes. Some accountants who adapt first may gain a competitive advantage over the others, and some who refuse to adapt will eventually run out of clients and work. But it will be a gradual process. None of the catalysts for change demand revolution in the accountants' offices or their marketing efforts.

Some commentators dismiss this attitude as apathy. Accountants refusing to face the future and sticking to the old tried and trusted routes to market and service levels. So what? If accountants are too busy to plan for the future they can defer such activity until they do have time.

Alternatively if accountants are very busy, but struggle to generate the profits they deserve then of course they need to take time out to consider their options. I regularly reference the old adage: "If you carry on doing what you've always done, you'll carry on getting what you've always got."

If you want things to change, you have do things differently. In this context some people find it helpful to engage a business coach or mentor to motivate them to identify and implement appropriate changes in their practice.

I should stress that making time for effective preparation can reduce stress by getting up to speed with new obligations and opportunities before they set in. The alternative forces you to cram the key points and may slow you down from getting truly on top of the issues. In the meantime, how many of us look to blame others for what are our own shortcomings? I admit that's a trap I try very hard to avoid!

Accountants are special. Practitioners will often wait until clients need a new service and will pay for it. Until then the accountant may feel they have no incentive to devote time to learning about a new system, approach or opportunity. In this respect accountants are unlike many other professions. I suspect this passive stance stems from the knowledge accountants have that many of their clients come back year after year. The concept of recurring compliance work (on accounts and tax returns) has no equivalent in the legal world, for example.

Accountants could be more effective, more profitable and more relaxed if they took time to explore new opportunities and get used to new working methods before they were forced to use them.

But unlike almost every other commentator I accept that the majority of accountants will get by to their satisfaction without having to leap out of their saucepans.

Only when a number of clients move to a new accountant will the incumbent consider what they can do to retain the rest of their clients and attract new ones. Will there be enough time? In most cases, I believe the answer is 'yes'.

What do you think?

Mark Lee is chairman of the Tax Advice Network and consultant practice editor for AccountingWEB.co.uk. He writes a regular blog for ambitious professionals:www.BookMarkLee.co.uk/blog

Replies (7)

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Teignmouth
By Paul Scholes
29th Nov 2010 21:40

Sometimes wonder if we are that different to others in business

Hi Mark - really thought provoking so much scratching of chin, nodding & shaking of head.  A few thoughts.

To start at the end so to speak and how some will hang about doing what they have always done until they notice clients leaking away, I think this state of affairs is enabled in our business because of traditional inertia in users (clients) also refusing to jump saucepan till they have no alternative.  From my experience inert accounants tend to attract and keep inert clients and the extra glue of the relationship is inert compliance work.

That's not to say this is wrong, if both sides are happy with the arrangement then who am I to knock it. 

7-8 years ago, in a previous firm, we took over the practice of a retiring (in all respects) accountant, he had 100+ loyal and "good as gold" clients, his fees were not what you'd call market rate but then he did everything himself (even the audits) had a part-time secretary, no IT (I kid you not, he'd only bought his first fax machine 2 years before), worked a strict (to the minute) 9-4 with one hour for lunch, 5 days a week and was taking home £20K pa more than me!  What's ironic was that he had years of work left in him but had got bored and fed up with the treadmill.

Our biggest fear was that in taking over the clients, imposing some modern methods (accounts rounded to £s) and upping the fees by 5% we'd scare them all off but I think we only lost one, the rest were happy to stay inert, go with the flow, wait & see etc etc.

You rightly say we are trained to look backwards.  In the minority of cases (and I'm thinking of a singular minoriity here) they will remain looking backwards because they think the monsters are out to get them but for the majority working in & on the past has been a way of life for centuries and therefore it has tended to attract people who feel more comfortable facing in that direction and so the whole thing has become self-fulfilling. 

But then I think the pace of change in recent years has upset this balance and, as in the ouside world, some will rise to the occasion and realise there's a different way to look at things whilst the others will stay where they are, following along after others have blazed a trail (with many of those getting they feet scorched in the fire outside the saucepan, so to speak)....hare & tortoise like.

As far as reacting to change is concerned, the irony is that many (especially on this site) gripe about the changes imposed on us or our clients by regulation & legislation without realisng that without it they would be out of a job. 

The difficulty some have is recognising the difference between what is imposed, ie with a deadline, (eg audit exemption and IXBRL) and that which comes with the ebb & flow of practice and marketing and so is very much down to personal choice (eg timesheets & social networks).  I failed to do this differentiation when first dumping timesheets, much like the fresh ex-smoker, anyone still smoking was an idiot.  Now I recognise that many smokers will have a happier and even longer life than I will.......in their ignorance (sorry only joking).

I've heard the frog & saucepan parable before but there's a more apt analogy I think that can be used for some change that creeps up on us without warm feet and that's about the mouse in the bathroom who is not overly concerned by the sound of gushing water, ie doesn't realise the plug's in, and the overflow is just about to give up the struggle.

This parable is the one being told to signify our lack of insight and response to global heating.  As far as I can see we're talking more about ostriches, with heads in sand, looking backwards and a tsunami...head for the hills.

 

 

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By cymraeg_draig
29th Nov 2010 23:52

Paul, I dont agree with your "global warming" and "green accounting" stuff - as you know. So I'll stick to my gas guzzling cars. Besides, looking out of the window I reckon a bit of global warming would be a good thing right now:)

However, the rest of what you say makes sense. 

I think in most things we are actually ahead of the game, but, we can never forget our core reason for being here is to assist clients to comply with their duties to file returns etc.  And that is strictly driven by outside influences, namely HMRC requirements.

Where I believe accountants as a breed need to change is in that they need to stop acting like punch bags for HMRC and start to operate a zero tolerance policy, as we do, regarding HMRC. 

EVERY error made by HMRC that we have to correct is invoiced and HMRC are not allowed to get away without paying. The slightest cause for complaint results in a formal complaint being filed. Where the complaint is srious we copy in the Chairmans office and we make sure its pursued strictly withing their timescales.  If we have cause to resort to court, then no matter whether the issue is large or small, we comence proceedings. HMRC know that if we threaten to take it to court - we will. 

Accountants need to stand up to HMRC and refuse to accept the current levels of incompetence, because only then will something be done about it.  

Similarly accountants need to stop "sitting on the fence" and realise that it is the client who pays them, not the tax office, and that their duty of care lies with the client. Too often I've seen accountants take the easy route, and end up costing their clients additional tax. To me there is something dishonest, and almost corrupt, about that.

We need to forget what the tax office will accept without question, and claim every single penny we can legally claim. Loopholes in legislation are, in my view, there to be used, and morality has nothing to do with it.  It's not our place to impose our morals upon our clients. If HMRC dont like a loophole being used, then it's up to them to close it, and if they dont either through incompetence or idleness, then we should continue to use it.

I dont think whether a practice is forward thinking can be judged by whether it uses a computer or an old typewriter to produce accounts. It's not a matter of equipment, a state of mind.

 

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By spurs1952
30th Nov 2010 13:50

Paul

 Well said.  Hear hear and keep up your good work.

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By Bob Harper
30th Nov 2010 17:13

Can they be bothered

@Mark - most accountants are not gaining from Social Media because they have nothing interesting to say. Nothing wrong with Social Media unless your clients/prospects are not online.

I think it is accepted that compliance work is reducing because of better technology and more sophisticated clients. Work is also being outsourced and there is new competition from bookkeepers and technology companies like crunch.co.uk. If accountants do not change their business model there will just be fewer accountants.

Clients need/want new services like financial planning and business consulting and accountants have the opportunity now to move into this space. Some are doing it but most are not. It is not too late but firms should know that the change takes time. Perhaps 3-5 years because it’s about building knowledge and changing a mindset.

What is a shame is that loads of clients are getting business advice which would be better coming from accountants. But, only if the accountants can be bother to develop themselves.

Bob Harper

Portfolio Marketing
 

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By cymraeg_draig
30th Nov 2010 23:46

If you think most accountants are simpletons Bob - I wonder why

Amazing - every time you post Bob you end up insulting the majority of accountants and predicting their imminent extinction.

The problem is you're talking total B/S. Most accountants have been doing far more that simple compliance work for years - in our case 40 years.

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Teignmouth
By Paul Scholes
01st Dec 2010 08:04

Enough already!

CD How about paying Mark (and readers) some respect there is no need for that sort of response. 

I don't agree with your views but to tell you for the 20th time I think you're talking rubbish is boring and does nobody any good.

I've found the best way to ignore you is to go back and read the question and see if there's anything else I can contribute, give it a try.

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By cymraeg_draig
01st Dec 2010 12:35

@ Paul Scholes - with apologies to others but some things cannot

CD How about paying Mark (and readers) some respect there is no need for that sort of response. 

I don't agree with your views but to tell you for the 20th time I think you're talking rubbish is boring and does nobody any good.

I've found the best way to ignore you is to go back and read the question and see if there's anything else I can contribute, give it a try.

 

Posted by Paul Scholes on Wed, 01/12/2010 - 08:04

 

 

If you are happy to see an entire profession insulted by being told it has " nothing interesting to say" (which in your case may well be true), I am not.  In virtually every post Bob makes insulting and frankly offensive statements about professionals and speaks as though only his selling tactics can save our businesses.  Frankly according to Bob we should all be bankrupt with the exception of the few firms who sign up to his schemes.

My point - if you care to read it - instead of merely seeing the part it suits you to see - is that accountants, like every profession, have adapted and evolved certainly for the last 40 years, and we have done it without self appointed guru's telling us how to do it.

Incidently, if you think I'm talking rubbish please feel free to say so, and I will happily show you why I'm not.

I don't recall making any posts which insult you - perhaps you will now have the courtesy not to insult me.

 

 

 

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