How to Add Value to Compliance

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Compliance work. The bane of Accountants’ lives? Well, not really. It might be, for many Accountants, boring, mind-numbingly tedious and repetitive. But it is good work that has to be done and, let’s face it, it forms the predominance of most Accounting firm’s revenue. Which other industry has up to 90% of its revenue mandated by government authorities? It is a privileged position to be in and accountants need to capitalize on that to find ways to add real value to clients.

CREATING A CLIENT ADVISORY BOARD

At PANALITIX, we have worked with thousands of Accountants and spoken with many of their clients, usually in the forum of a client advisory board (CAB). If you’ve not heard of a CAB, it’s a fascinating process where you invite, say, 15 of your clients along to a two-hour session to give some feedback to the firm. Typically, 10-12 of them will turn up and the beauty of it is the interaction of the clients, who develop ideas as they talk.

One of the key questions we typically ask when running a CAB is ‘on a scale of 1-10, how would you value the services you receive from this Accounting firm?’ The answers often differ wildly. A client who only uses the firm for compliance services will almost always score much lower than a client who uses the firm for other more valuable services (for example, business growth, cash flow and profitability work, wealth management, succession planning etc.) If you’re interested in scores, pure compliance clients tend to score in the 5-6 range whereas clients using more value based services are more often in the 8-9 range.

A challenge for Accountants is often how to lift that score on the value meter. The first thing you need to do is to understand the value in compliance itself. In workshops, we often ask Accountants to reel off just five value points associated with the work that they do. Many have difficulty. If you can’t articulate it to yourself, then what hope has the client got of understanding the great things you do for them?

advisory board
articulate your value better

HOW TO ARTICULATE YOUR VALUE BETTER

The first step in being able to better articulate your value is to change your own mindset. You see, if you are constantly looking for opportunities to help your client, to improve their business or grow their wealth, then you will see how compliance fits into the picture. On the other hand, if you yourself believe that you are little more than a box ticker and that as a result, all of your clients are going to be price sensitive and will not want additional services, the likelihood is that that will be a self-fulfilling prophecy. We have seen it time and time again..

So where is the value in compliance? Here is a list of value points:

  • It keeps the client out of jail
  • It helps the client sleep at night
  • It allows the client to look at trends year on year – is revenue and profit growing,
  • falling, or flat lining?
  • It enables better planning
  • It keeps the client’s bankers happy
  • It enables the client to borrow more money
  • It can be used to secure insurance
  • It can help the client benchmark their performance against others in their industry.

You get the idea, and you can probably come up with more with a quick two-minute brainstorm in your firm. Now, we are not suggesting that you need to rattle off that list to justify your bill whenever you talk with a client, but you should get comfortable with dropping some of the value points into the conversation with the client so that they understand how the mysterious compliance compliance package can help them.

WHY TECHNOLOGY CAN BE A HINDRANCE

Speaking of that package, essentially your end product with much of the work that you do, it is our observation that technology is having a deleterious effect on the way in which Accountants interact with their clients. Would we go back to the old days of handwritten extended trial balances? No, of course not. But we are certain that technology is making Accountants lazy. In the never-ending quest for more and more efficiency, we see Accountants drive down turnaround time (a good thing) but then waste the time saved by simply sending out or emailing the accounts for signing. In fact, in a recent survey that we conducted, completed by 428 business owners, over 50% of respondents told us that that’s the way they receive the year end financial statements and tax returns from their Accountant. If that’s your process, in 90%+ of cases, your client will simply sign where you ask them to and will not even look at anything else. And unless you are having a conversation with the client to explain what you have done, you (and the client) are missing serious opportunities.

technology as hindrance


WHAT A BUSINESS PERFORMANCE REVIEW CAN DO

Let’s not get rid of compliance. Instead, let’s build on it to show our clients that we can do more than they currently know. The first step in that journey is a really simple one. What we suggest you do is prepare and present a three-year Business Performance Review to your clients.

Why three years? We think it’s a long enough timeframe to start to see trends and still be relevant.

So let’s take a look at what a Business Performance Review looks like. Here is an example:

business performance review

Figure 1: Business Performance Review (created by PANALITIX – www.panalitix.com)

You’ll see we tend to keep it simple. We strongly believe that if you blind your client with science by presenting 28 key performance indicators in a variety of colors and chart configurations, you will feel great about it but your client won’t have a clue what you’re talking about. On the other hand, if you have a quality conversation with the client about sales, margins and cash related items (e.g. days in receivable or inventory) that is really all that’s required. Leverage technology to do this efficiently – spend more time face to face with the client and less time

When presenting a Business Performance Review to a client, ask questions and let the client respond. You don’t need to go through it line by line – pick out two or three obvious areas where performance has changed (either positively or negatively.)

In the example above, start by pointing out to the client that two years ago, sales were $2.5M but in the year just finished, they have fallen to $1.9M; ask the client the following simple question which you should carry everywhere you go in your kit bag: “Do you know why that’s happened?”

In the example above, start by pointing out to the client that two years ago, sales were $2.5M but in the year just finished, they have fallen to $1.9M; ask the client the following simple question which you should carry everywhere you go in your kit bag: “Do you know why that’s happened?”

When you ask that question, the client can only answer yes or no. If they say 'yes', ask them to give you some details.

They might say it’s the economy, or the industry is having a tough time, or they lost a major customer – whatever it is, challenge their assumptions (many business owners operate under false assumptions and you can play a very important role by challenging them) and start a conversation.

As an example, if they say it’s the industry, you might respond by saying, “Let me ask you, are there any other businesses you know of in your industry who are doing well that we could learn a thing or two from?”

Remember, all you’re trying to do is have a quality conversation and get the client thinking. You are not trying to sell a thing (at this stage).

If the client responds ‘no’, your response should always be the same: ‘Would it help to find out why?” No (sane) client would respond in the negative to that question. It opens up countless opportunities to create value for the client.







You can get a Business Performance Review of your firm to measure its current productivity level versus its full potential. From this, we can help you build a customized 20-point business performance plan you can implement right away.

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About the Author


Colin Dunn

Director & Co-founder at PANALITIX

Colin is a Chartered Accountant who, having spent almost 10 years with one of the fastest growing and most innovative firms in the UK, has spent the last 19 years working exclusively with the Accounting profession with a focus on helping them implement business advisory services with their clients. He is passionate about helping turn Accounting practices into Accounting businesses and holds a Bachelor of Arts (Hons) and is a qualified ACA. Colin is relentless in the pursuit of improving the performance of every firm he coaches.

Colin is the brains behind ENGAGER (previously the PANALITIX app), TRUST and Proactive Success System, PANALITIX’s three cloud applications for Accountants.

He is also a prodigious author and generator of content, primarily in the form of ‘how to’ material to enable Accountants to respond to client needs with value-based services. He is the author of the bestselling book “Accountants: The Natural Trusted Advisors.”

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