We covered a lot of ground in a recent interview with Panalitix client Michael Burke of Burke Raftery Chartered Accountants. Here are some excerpts.
Michael started in audit with KPMG in Melbourne, Australia though he always planned to go into industry. He spent 10 years with a large US manufacturer, which involved extensive travel and time in their acquisition group. Michael continued to build experience in governance, transactions, and reporting systems when he joined a family business and then private equity group as CFO. Along the way, he completed a post-graduate degree in behavioral science, not a usual approach for an accountant!
Having met his wife back at KPMG, there was talk about starting their own firm and they finally took the plunge (shortly after the Global Financial Crisis!) starting with no clients and no fees.
Tapping into their connections was the first priority, especially through face to face prospecting meetings and asking for referrals. ‘We had to get out and talk to people to get clients, and, in some senses, that never changes’.
Burke Raftery Today
The business is the aggregate of three firms formed through an acquisition and a merger. Located in Gold Coast and Brisbane, there is also a recently-established Philippine presence. ‘Bringing this distributed team together is a major focal point’, says Michael.
Due to Michael’s contact base, there are many clients in the manufacturing, wholesale, professional services, health and construction industries, mostly in the $1m – 50m revenue range. Many are local but a few are situated in South East Asia.
As for their preferred clients, ‘we are less interested in the numbers and more focused on a client’s approach, for example, if they’re driven, ambitious, willing to work hard and disciplined. This is most important… and if you hear ‘but’ more than twice in a meeting, they could be a difficult client!’ Michael explains.
Products / Services
Burke Raftery is a ‘virtual finance department’ for many clients which can include bookkeeping, compliance, budgeting, planning and strategy. There may be participation in quarterly or monthly client (or board) meetings. Michael also leverages his experience, especially to ‘coach’ controllers based in Australia and elsewhere.
Burke Raftery clients are mostly on fixed price arrangements and appreciate the certainty around their annual investment and exactly what is included.
The Value of Experience
Michael acknowledges that his business experience helps him advise clients, especially in areas such as transactions, but much of this can be learned. He suggests that accountants ‘should also leverage their skill in providing structure and accountability since that is what clients generally want’. He adds, ‘Clients often don’t know where to focus and need someone to bounce ideas off, give them the confidence and hold them to account.
Transitioning from Compliance to Advisory
On this critical subject, Michael offers very pointed advice:
- ‘Find people who want to be involved in advisory work then make sure they can dedicate their time to it. It’s not a part-time job and if they also have a role in compliance, they’ll get sucked back in’
- Keep it Simple: Focus on the numbers and add value through budgets, cash flow, monthly reporting and having meetings to ensure they are on track.
- Don’t get too comfortable with the tax work as this is often an obstacle to embracing advisory work
- Use 3rd party tools to create scale, once you’ve understood the fundamentals of your client’s business
- Deliver a couple of things and learn them well
- Recognize that the more strategic the advisory service, the more difficult it is to deliver consistently and effectively
In some cases, clients will confuse an accountant who offers advisory services with a business coach or consultant. ‘But remember that Management Accounting is not offered by coaches and consultants so we have a natural advantage in that department’.
Identifying Advisory Opportunities
An important skill is learning how to identify opportunities in client files, even by people who may not deliver the work. ‘Reviewing financials should be integrated into workflow leading to conversations with partners about opportunities’
Much of advisory work is about helping clients plan and then acting as a sounding board. ‘We can help establish metrics, set targets and ensure they stay on track through systems and process. We can do this in any business area without being an expert in that field’. Always ask, ‘What happened’? and ‘What do we need to change’?
Burke Raftery uses benchmarking tools for an annual fee to identify where clients fall short of their peers. ‘Then we sell clients on how to fix the discrepancies’.
‘Most advisory opportunities are likely to come from existing clients because they already trust you and communication is easier. And these clients are a source of referrals’.
Team alignment in accounting firms is critical and one approach is to tell them what is coming. ‘Simply put, the ATO is taking our job so we need to add more value. We need to ensure our clients are working with the best set of numbers and looking forward’.
Michael continues, ‘Getting partners to agree to invest in a management accountant can be hard. They would probably hire a tax accountant. But the bigger risk is NOT doing anything’.
Michael thinks of accounting teams as ‘separate but blended’, that is, ‘partners are needed for experience and relationship management while young management accountants play a more analytical, sharper role’.
Reducing dependence on a founder is important. ‘At first, it was all about me and my experience. I could do it all on my feet but then we learned to delineate things and structured specific services such as benchmark analysis, cash flow and reporting, which helped us to scale’.
Client Needs in a COVID-19 World
Michael points out that clients need visibility and structure more than ever. ‘Time frames have become shorter as clients think quarter to quarter, not year to year. Some are fighting for survival while others are focused on winning business. Many are overwhelmed so we need to keep them on track’.
On Mergers & Acquisitions
Michael reminds us that successful acquisitions are based on the difference because ‘difference brings leverage, whether in terms of geography, services, client base, etc. They should also result in an improved service offering and client experience.
What are some risks? ‘Cultural difference can create tension, for example where the risk appetites are different. And it can take a long time to integrate businesses where systems are fundamentally different’.
Some Final Thoughts
Michael believes that accounting firms of the future will invest in a dedicated management accountant(s), whether through recruitment or promotion. ‘Have them develop the skills and provide them with tools. Don’t split time with compliance … or risk suffering death by a thousand cuts!’
Our thanks to Michael for spending time with us!