The Connected Practice – tips on shifting to business advisory services
As the traditional role of accountants evolves, one expert warns they need to be more proactive when it comes to business advisory services.
In 2016, we introduced the concept of the Connected Practice to show how transaction processing, compliance and business advisory are transforming the way accountants and bookkeepers work.
Thanks to automation and other digital innovations, time spent on once labour-intensive tasks has reduced. Like reconciling financial records using bank feeds. This enables accountants to spend more time being specialist business consultants.
READ: The Connected Practice
It’s a good time to jump onboard
Rob Nixon, Founder of Panalitix, author and consultant to the global profession, told The Pulse that the traditional accounting tasks are the bulk of what accountants do.
“According to IBISWorld figures from 2015, 87 percent of the world’s accounting revenue is tax preparation, compliance and auditing. All reactive services, they write up history,” Nixon said.
Business advisory services have been around for 30 years, Nixon said. It’s getting more important for accountants to offer them.
“Business advisory – value-added consulting – whatever you call these services, the general concept first gained popularity in the 1990s. When GST was introduced in 2000, a lot of the dialogue fell by the by.”
“As the digitisation of compliance services has occurred, discussion around business advisory services and how to provide them has ramped up. Now, more than ever, the role accountants play has changed to the point that they must get involved in business advisory work.”
And the range of services can be broad. Nixon flagged management accounting, cash flow forecasting and succession planning as just some of the ways accountants can generate sustainable revenue streams.
Pivoting towards business advisory services
Most accounting firms have all the tools to offer business advisory that connects with their other services. But Nixon sees that too many firms are reactive.
“To stay ahead of the curve, accountants should be proactive about meeting and understanding their clients better,” he said.
Then firms can see opportunities to advise and prepare their clients for future events that may not occur for some time. But this high-level thinking that deepens client relationships can limit how firms work.
“The real challenge lies in selling a project that, due to the high level of experience required, only partners can be seen to deliver. There is limited leverage in that.” Nixon said. “But the work is out there. If the firms stay close to the numbers, then they can sell on the project and still have a junior team member deliver it.”
Rob Nixon’s 3 business advisory tips for accountants
- Meet with every client – establish their goals, identify their potentially biggest threats and opportunities, then tailor a solution that meets those needs.
- Don’t ‘hire in’ business advisory expertise – unless there’s a clear, ongoing need. The work should flow from the partners and centre on the numbers, even if junior team members complete the work.
- Create an alliance or partnership – if the project requires occasional expertise, then specialist lawyers, bankers or finance expert partnership may be in order, but this depends on the situation.