It’s now easier than ever to swap banks or mobile providers, and for all the benefits cloud accounting brings, the reality is, it is now easy for your clients to switch firms too! We’re also seeing a growing trend of clients working with multiple firms at once.
The firms that thrive will be the ones who build strong and proactive relationships with their clients.
I see a new kind of firm emerging. One that starts with the client workflow and puts itself at the heart of the client's relationship with money, not just end of year tax. To get to this point, there are two prerequisites: Becoming super efficient with compliance accounting and prioritising advisory. Efficient compliance means that accounting data is much more real-time. This forms the basis of a more proactive and constructive advisory relationship. From operational cash flow forecasting to outsourced credit control or business planning, there is so much to offer that businesses need help with!
Streamlining of compliance accounting
Compliance accounting is becoming increasingly automated and outsourced. Open Banking provides live bank feeds, and we know Xero is working on automatic bank reconciliation aiming to capture 90% of all transactions.
Through our work at Float, we see a new generation of business leaders who grew up with digital tools expecting to be able to handle the majority compliance themselves. As such, it makes sense to start building out an advisory offering now while at the same time streamlining the efficiency of the compliance work and helping clients run a tight ship when it comes to their bookkeeping.
The streamlining of compliance accounting doesn't mean the end of accounting, just as the rise of Google and Wikipedia didn't make schoolteachers redundant. Clients need more than facts, more than search results. They still look for the empathy, context, understanding, advice and breadth of experience that external advisors (accountants) can bring them.
I'm certainly not saying that businesses will all start doing all their accounting on their own. They will continue to need tax advice and help to understand all the things they don't know that they don't know. For example, I know how to wire a plug, but I certainly wouldn't try to rewire my whole home!
One of the biggest opportunities in advisory will be helping businesses choose the right technology resources available to them. App advisory is now becoming a business in its own right, and setting up and maintaining a functional tech stack isn't something many businesses want to get heavily involved in. So either working closely with an app advisor or bringing this skill in house, could be a wise move.
Introducing two-way feedback
The number one reason we hear as to why businesses switch accounting firms is that they did't hear from them enough, or they didn't think their accountant really cared that much. If you forget to check in with existing clients on a regular basis, they will leave. The firms that are still around in ten years from now will be those that have a regular touchpoint with their clients. Like successful brands do now, they will actively work to understand what their customers want, and what they honestly think of their services.
I know that interviewing customers is time-consuming and often painful, but it't just good business.
Start by simply building a list of assumptions you hold, then interview 20-30 of your best clients to get a qualitative sense of whether they are accurate.
Intersecting with the client workflow
As well as establishing these feedback loops, you could set up an annual review, and start to look at client pain points, which could look something like:
- Their bookkeeping process
- When they do their bank rec
- Employee expense reporting
- Are they with the best bank?
- Systems integration. What could be better? Eg. e-commerce reporting, or SaaS based revenue recognition
- Financial reporting for management teams
- Budgeting and forecasting
- Board reporting
- KPI measurements
Longer term business planning (one pager)
Maybe you have staff that will understand where clients are having challenges in some of these specific areas. Your annual or quarterly meetings with clients could be a great platform to offer proactive advice before critical moments, and will soon make these interactions indispensable for your clients.
The best firms we've seen ask themselves if clients are inspired to run a better business as a consequence of their financial advice. Adopting this mindset not only helps grow new business and reduce client churn, but also boosts employee satisfaction, retention and recruitment.
These may be bold claims, but I’ve seen how this approach resonates with businesses in the real world. Indeed, the client workflow is where a lot of the most progressive accounting firms are focused. If competitors implemented this kind of business model successfully, what impact would that have? Suddenly it doesn't feel so unrealistic, does it?