The Future of Accounting: Will it Still Exist in 2040? [Part 2]
Which Accountancy Firms Will Survive?
In the first part of this article we looked at why I believe there is still a role for accountants and accountancy firms in the future. In this part – I’m offering a prediction for which firms will thrive and which ones will likely struggle to survive the inevitable changes in accounting.
So, while the ‘role’ of accountancy is alive and well, I’m predicting it’s going to get much harder for established firms to win and keep business.
The Rise of the New Accountancy Practices
One of the predicted impacts of the ‘Open Banking’ legislation currently being rolled out in the UK, is that it will be easier than ever to switch bank accounts. In the same way, using cloud accounting will make it easier to allow data to be shared with other parties or accountants. This makes it easier than ever before for people to switch accountancy firms. Cloud accounting is now table stakes: it’s essential if you want to pick up new businesses that demand the transparency and all the other advantages that come with it.
I’ve yet to hear of a new startup business that isn’t using one of the main cloud accounting packages. But just being comfortable with a platform like QuickBooks Online or Xero really isn’t enough. Ambitious businesses are looking for the best tools available to them. They want their advisors to know more than them about the financial technology they should be using. They want to work with experts, not laggards.
We recently decided to move from an accounting firm we’d been with for over five years to a new one, if only to see if there was a tangible difference in the service we would receive.
Switching is now so easy that you really can’t rely on friction and loyalty to retain your clients. Yes, there is a relational aspect and a loyalty that is built up, but at the end of the day, the business must do what is best for the business as a whole.
You Have to Add More Value Than Your Competitors!
I was discussing this with Kirsty Mackenzie, the owner and founder of iMultiply, a fast growing business that recently switched to a new accountancy firm. She said:
“What persuaded us to switch was the breadth of their service offerings which has now become very relevant as we look to scale. However that alone wasn’t the clear differentiator. [The firm] had been great at proactively keeping in contact with us over the years and before becoming our accountants managed to add value in other ways, like inviting us to events and introducing us to relevant contacts. This proactivity and eagerness to learn about our aspirations brought confidence that they could add value beyond just signing off our financials from a historical perspective.
What I’m really looking for is assistance on how best to use our resources to grow and ensure our processes and controls are robust enough to deal with further change.”
Their new firm have a partner who is tasked with building relationships and that’s what they did. This individual is not an accountant and won’t be doing the financial work, but he’ll continue to build the relationship and be the main point of contact.
What I’m really looking for is assistance on how best to use our resources to grow and ensure our processes and controls are robust enough to deal with further change.
How to Be a ‘Value Add’ Accountancy Practice?
Stand Out From the Crowd.
In his book, Purple Cow, Seth Godin writes about how only remarkable and unique businesses will stand out in the clutter. Fortunately, in accounting, this isn’t actually that difficult, as most firms from the outside still look very similar. Firms like the Wow Company stand out – just by their very name – but dig a little deeper and they also focus on things that businesses care about. They focus on being the best with a particular type of business (agencies) and then use their marketing to show their knowledge and experience to target this sector. Using their brand, video, and social media, they make sure that they stand out.
Talk to Your Customers.
I’m gobsmacked that accountants aren’t knocking on our door more often and asking the question, “What do you want that you’re not getting from your current firm?”
It’s that simple.
As a software company we try to talk to our customers on a daily basis, and not just in a reactive way. We survey people who aren’t customers, buy them coffee, and even pay people for their time when talking to customers who have left us. This takes time, but it’s SO valuable. What we learn increases our understanding and helps us get better.
Word of Mouth is Everything – How Likely are Your Customers to Refer You?
One way to figure out how well you’re doing is to run an NPS (Net Promoter Score) survey. This would tell you how likely your current customers are to recommend you from on a scale of 1-10.
NPS only counts scores of 9 or 10 as “promoters”, and 1-6 as “detractors”. If you’re getting 7’s and 8’s that’s considered fairly neutral, and clients probably aren’t going to be raving about you to their friends.
The goal is to get to a 9 or 10, but the beauty is that it’s the beginning of a conversation.
Speaking as a client, we want to help you succeed. You just have to ask!
The Number One Reason Businesses Will Leave You.
This is the crux of what I really wanted to say in this post. The number one reason I hear from businesses that have switched firms is that they were looking for more interest and engagement from their accountancy firm.
Business owners are not accountants. We don’t know what we don’t know and we need you to come to us with suggestions, help and advice on areas we can improve.
We recently started working with a part-time FD (an ex-accountant!). I was blown away by his ability to make relevant suggestions for where we could engage with our accountants. From software selection to tax advice, to fixed asset depreciation! We were able to identify different people in the firm we should speak to, and then we actually started to get useful, timely advice about how to improve and make our business more efficient.
Without these connections being made, I could have easily seen us leaving this firm and trying another. As the accountant, it’s your job to find out what the client needs on a regular basis and support them, or they will eventually move to someone who can do this.
Hire for the Role of Customer Success – Be Proactive Rather than Reactive.
It shouldn’t be up to the client to come to their accountant with questions all the time. Customer success is a growing role in many software companies, and it’s all about proactively working with customers to make sure they get what they need.
What’s more, the person who makes the connection between you and your clients doesn’t need to be an accountant. In fact, it’s probably better that they are not! Agencies refer to this role as an “account manager”. Their role is to check in and make sure the clients are happy, find out what is going on for them, and what help they need.
Imagine the impact that this role could have on your clients! Imagine the time that it could save you, not having to be the first person to respond to every email! Having a connector in the business to communicate monthly with your most valuable clients could be a significant value-added service. Not only will it help surface issues, but it stops any potential resentment building up for a piece of work that hasn’t been fully resolved, or a query that may have dropped to the bottom of the pile.
It Will Cost Too Much
I can hear the protestations already, “it would cost too much!”, “we already do this”, yada yada…
- Think about the lifetime value of your customers.
- Think about the marketing cost of reaching customers, only to have them leave after a few years rather than staying for 10.
- Think about the extra business that might be generated because you’ll know more about your customers.
- Think about the time you can save at the year-end by helping them have great technology solutions in place.
- Think about the time that is wasted by a partner answering irrelevant questions.
- Think about the business you will win when you’re referred because you have brilliant service.
Ultimately the benefits are greater than the cost, and the risk of doing nothing is potentially fatal. I predict that customer success will become an essential factor in securing the future of accountancy firms.
The landscape is changing. It’s time to change with it.
Further reading: The Future of Accounting: Will it Still Exist in 2040? [Part 1]