Will All Your Stakeholders Be Happy?
Accountant's Minute 169
Would you be happy if your accountancy business was able to achieve the following within the next 2 years?
“Accountancy firms with new income streams, higher average fee per client, complying with many SME expectations and providing varied and interesting work which will assist in team recruitment and retention”.
To achieve this, you’ll need a minimum of a 30/70 split of non-compliance work as compared to compliance work.
Would you be happy with this result?
Where is your accountancy business located on this journey?
Let’s look at the key components:
- New Income Streams: With the ongoing “commoditisation” of income tax returns, accountancy businesses need to develop a range of commercial services to compensate for revenue reduction.
- New sources of income for accountants include: Virtual Chief Financial Officer service – to service a growing “medium” segment of businesses e.g. businesses with turnover $2 million plus.
- Investment Readiness Consulting: To assist SMEs to prepare to be able to take advantage of the legislation which facilitates SME companies being able to raise capital – Early Stage Innovation Company and Crowd Sourced Funding Equity Raising Companies.
The government’s amendment to enable private companies to raise capital, without having to convert to an unlisted public company, was passed by the Senate on 12th September 2018. The new legislation will commence 28 days after the royal assent is given. These changes in the Crowd Sourced Funding Equity Raising Legislation are expected to generate significant interest within the small/medium enterprise market.
Early Stage Innovation Companies and Crowd Sourced Funding Equity Raising Companies will require a range of non-compliance business services:- Market Strategies
- Business Plans
- Budget/Cashflow Forecasts
- Advice on Legal Requirements for Early Stage Innovation Company and Crowd Sourced Funding Status
- Risk Management: To monitor risk awareness in SMEs and implement systems to alert clients to the potential costs, if appropriate strategies are not implemented:
- Personal Property Securities Register awareness for clients who are unaware of the significant financial costs that can occur to a business that has not registered customers or businesses holding assets on their behalf.
- Insurance Policies Reviews – are the sums insured appropriate?
- Risk Strategies Review targeted at an individual client’s requirements, which will vary depending on the type of business operations
- Management Consulting - in-depth analysis of performance:
- Job Costing Systems
- Key Performance Indicators
- Benchmarking
- Business Health Checks
- Cashflow Management - analyse performance and issue prompt advice on emerging problem areas:
- debtors’ days outstanding
- stock turn
- higher levels of investment in work in progress
- gross profit percentage achieved across all of the business’ operational units.
- Higher Average Fee per Client
The Business Fitness “Good, Bad, Ugly Survey” 2017 indicated an average fee per client of $3,575.
The benchmarking.com.au report indicated that, for the “All Firms Average”, the average fee per client was $4,784.
The “All Firms Average” accountancy business income was $1,752,669, thus equating with 366 clients.
A firm, committed to offering a broader range of professional services, should be able to generate 5% of its client base being interested in purchasing additional services. That would generate approximately $30,000 per annum each (business plans, chief financial officer services, advice and assistance relative to preparation to raise capital). This would equate to 18 firms at $30,000 equals $540,000.
A further 5% of clients should be able to produce an extra $10,000 in fees per annum (debtors’ reviews, personal property securities register due diligence reviews, other general work). This would equate to 18 firms at $10,000 equals $180,000.
The projected new fees would be $720,000 which would indicate a new average fee of $6,755; an average fee per client increase of 41%. - SME Expectations
The CCH report on client expectations identified that the top five items on the “SME wish list” were:- management of costs
- management monitoring
- business plans
- assistance in raising capital or loan funds
- expansion advice
The services that we have discussed in this article would enable your accountancy business to be delivering these types of services to your clients.
- Team Members
Young accountants want variety and not to be working on taxation work every day of the year. They want to be doing “real accounting work”, not taxation work all the time.
In the “Accounting Market Pulse Report”, released in June 2018, the authors had identified that a major concern for accountancy businesses was team recruitment and team retention. Accountancy businesses that have committed to offering a broader range of services are expected to be able to improve the prospects of employing outstanding accountants and retaining their services, even when the general business conditions improve and businesses are being proactive in offering attractive salary packages.
ESS BIZTOOLS can supply you with the systems, product packages and mentoring services to assist your accountancy business to be able to deliver a new range of non-compliance services. Why reinvent the wheel – the hard work has been done for you?
You are invited to visit our new website www.essbiztools.com.au where you will be able to view the wide range of products and services that are included in our various packages.
We have a special offer at present... the Silver Package is available for a subscription of $1,493 plus GST. This represents a 25% discount for 12 months 24/7 access per office, irrespective of the number of authors.
The Silver Package also includes 3 x 60-minute mentoring sessions to assist a new member to successfully implement the product packages, including training of team members so that your firm can commence generating income from non-compliance services as soon as possible.
If you have any questions on any aspect of ESS BIZTOOLS’ products or services, please do not hesitate to contact us – or telephone 1800 232 088.
Have a great day!
