Accounting firms build reputations on the strength of their financial advice. They counsel clients on improving profitability and efficiency, but how many actually follow their own rules?
Most accounting firms offer far more than just accounting and tax advice to their clients. Enjoying a unique relationship, their insights into the inner workings of a business mean they can often see clearly how certain changes could deliver big benefits.
In this role of both bookkeeper and business advisor, firms recommend everything from workflow changes to embracing new technologies. Yet they are often much slower when it comes to adopting similar approaches themselves.
Adopting the best structure
Many accounting firms are called upon by their clients to provide advice on structural and legal matters. This could include topics such as the most tax-effective way to organise a company or how to ensure partners and owners are fully protected.
Edwin Ross, principal of UK-based Ross Legal, says many firms do not have sufficient documentation in place covering the relationship between co-owners. This can cause significant problems if disputes arise or if one owner wants to sell their share of the firm.
Ross says having proper agreements in place means such situations can be resolved without having to resort to expensive and time-consuming legal action. Just as the firm would advise its clients, so it should ensure it has taken similar steps itself.
Industry commentators have highlighted a similar situation in Australia, where a significant number of accounting firms don’t consider their legal situation until things go wrong. It might be a case of two partners who have worked together for years deciding that the time has come to dissolve the practice. Only then do they realise the legal challenges such a change can bring.
Just as with any business, an accounting firm needs to make sure it has its legal structures and agreements in place upfront.
Improving internal workflows
Accounting firms are also regularly asked to cast a knowledgeable eye over the day-to-day functions of a client’s business to help identify where improvements can be made. They put everything from supply chains and manufacturing strategies to promotional and sales campaigns under the microscope, in a search for ways to streamline and improve operations.
Yet some firms may not be paying the same forensic attention to their own operations. Rather than looking for ways to achieve more efficient workflows, they persist with traditional methods.
Interestingly, accounting firms can have a lot in common when it comes to the way they operate. For this reason, it’s often possible (and advantageous) for them to adopt a best-practice approach to internal workflows and activities.
This trend is something that has changed over the past few years. Traditionally, each firm has tended to take its own approach, but this no longer needs to be the case. Firms don’t have to constantly reinvent the wheel when it comes to work practices. Rather, a firm can adopt industry-proven best-practice approaches that allow standard tasks to be streamlined, reducing the time required to complete them and improving the profitability of the firm.
Adopting new technologies
Accounting firms are also increasingly being asked to provide advice on the adoption of new technologies by their clients. Popular current topics include security, mobile devices and productivity software.
Topping the conversation list at many firms is cloud computing. Evolving in a variety of forms, cloud-based software and services can be used to change the way many businesses approach IT.
Cloud services can improve the returns achieved by business on their IT investment, however it’s important to realise there is no single approach that will guarantee success. What works for one firm may not work for another.
Accounting firms should carefully assess their clients’ individual needs before recommending any particular cloud services. They should also check their own internal requirements before doing the same thing.
The unique position held by accounting firms in their clients’ businesses means they are called upon to provide advice on a diverse range of topics. Ensuring that advice is also followed internally is important for the firm’s ongoing efficiency and profitability, and their ability to offer exceptional service to their clients.