With a challenging trading climate, you can't afford to waste time or money on the wrong financial advice.Does your accountant assist you in the area of financial management; improving the bottom line of your business and achieving business objectives?If your answer is no, then you are not alone.There has been a growth in recent years of business coaches and/or consultants (usually non-accountants), to assist businesses and organisations improve their performance and profitability, achieve their goals and objectives and manage various projects.Public accountants have focused their attention for too long on tax and compliance matters for their clients to the detriment of assisting/advising clients in these financial management areas.In other words the focus has not been on assisting clients improve the bottom line and the management of resources to achieve it (strategic planning, budgeting, pricing, costing, working capital management, people management, etc) but rather what to do with the bottom line once it has been achieved (tax, audit, annual accounts etc).The rise of consulting and business coaching partly testifies to this neglect. This neglect has been patchy and some accountants have always provided their clients with excellent financial management as well as compliance advice. But not all.The following questions can be used to assess how well your accountant is doing in this area.
- Does my accountant do more than just handle the ‘red tape’ (tax, annual accounts, superannuation, audit) of business for me? Do I hesitate to ask for their assistance in financial management areas because of the cost involved?
- Does my accountant come to me with proactive advice or suggestions during the year? Has my accountant for example suggested to me to consider any of the government business grants and packages available (such as Enterprise Connect Reviews & Grants, or New Market Expansion Grants) in the last five years? Do I think they are so busy that they do not have time to really focus on my business or situation?
- Is our contact usually on my initiative? Does my accountant only contact me to ‘chase up’ compliance matters? If the main contact with your accountant is in the final month of the financial year or following you up after the year-end to do your accounts, then I would suggest he/she is not really providing you with value to improve your profitability and wealth. Most business owners will know if their accountant is really interested in their affairs or if it’s just a case of doing what needs to be done.
- Do they outsource any of my work overseas? If so, have they discussed this with me and/or reduced my fees accordingly? Accountants also have their own business to run, so they endeavour to operate as efficiently and productively as possible. The normative way they do this (beyond just increasing their prices) is to lower their staff costs which they are increasingly doing by utilizing computer systems to do a lot of the work (standardised reports and analysis work), to have unqualified (but supervised hopefully) staff do more chargeable work, and/or to outsource the work overseas to places such as India and Fiji (where the staff costs are considerably lower). This is all well and good so long as the standard of the work does not suffer, and that you are comfortable with this. Ask the question at least.
- Do I regard them as an invaluable asset or an expensive necessity? Do I really see value in what they offer or is it just one of those costs begrudgingly paid each year? Do they provide me with value for money? Have I complained to them in the last three years about the amount being paid for their services? Was I satisfied with the explanation and/or the standard of the work done?
- Do they hold on to their staff? Continual changing of staff overseeing your work can be costly (especially in time spent ‘educating’ new staff on your business) and can lead to poorer service. We are all human, and mistakes occur in any work however it can also be an indicator of a couple of weaknesses in modern accounting firms. These being (a) the high workload pressure on accounting staff to maintain high productivity rates (i.e. charge out a high percentage of their work), and (b) the greater utilisation of unqualified staff. Where these weaknesses become evident is in the high turnover of staff, and more mistakes being made.