Short-term and populist policy-making is failing those that drive the UK economy, argues Vipul Sheth.

So, another Autumn Statement is announced, and chancellor Hunt has attempted to partly row back on the huge tax take caused by fiscal drag through reductions in National Insurance.

As an ‘entrepreneur’, I found the announcements underwhelming. Capital allowances expensing at 100% in the first year was welcome, but there wasn’t much beyond what was an extension of existing tax rules.

Broadly speaking, and without getting into tax minutiae, I feel that the way entrepreneurs and business owners are taxed is usually driven by political, and therefore short-term, thinking.

We’ve seen in recent years how Entrepreneur’s Relief (now known as Business Asset Disposal Relief) was slashed (by our now-prime minister Rishi Sunak during the 2020 Budget). And the way inward investment, and investors, are treated is inconsistent and not hugely competitive.

There has also been discussion about changing Business Property Relief (which is relief against IHT when passing a businesses’ assets onto a beneficiary). There are numerous successful, family-owned, businesses that would more than likely end up in the clutches of private equity if this relief was reduced.

In an economic slump, we won’t improve it by letting entrepreneurs either leave the country, or by disincentivising their efforts.

As someone who grew up in Coventry and saw the importance of manufacturing to the local ecosystem during the 70s and 80s, I do wonder who will create the businesses to support the myriad of new-build housing developments popping up along out-of-town A-roads around the UK.

Let’s be a nation that encourages investment, entrepreneurialism, and drives the economy forward. Not one that is short-termist, and where politicians prey on envy to misdirect the public.

Vipul Sheth is founder and MD of AdvanceTrack Outsourcing.

You will have seen, no doubt, that a ‘beefing up’ of corporate governance in the UK is being pared down.

The accountancy, reporting and governance watchdog, the Financial Reporting Council (FRC), said plans to add ‘comply or explain’ on the effectiveness of corporates’ internal controls would be dropped. 

But this current stalling is impacting not only big business, but even accounting practices – ones well below the Big Four. Crucially, missing from the King’s Speech was legislative reform of the watchdog itself: The FRC’s transformation into the Audit, Reporting and Governance Authority (ARGA) was again notable for its absence from the legislative timetable.

ARGA’s creation is seen as crucial in driving competition among the larger audits, alongside increasing quality of the work itself. You will also be aware of the myriad audit cases that the biggest firms have faced in recent years, and have led to the desire for change, so there’s no point in listing them.

Audit: moving on

So, what has changed? Well, quite a lot actually. Firstly, the biggest audit firms have dramatically eased back the number of audits they’re working on (though worth noting they still dominate the FTSE 250 audits).

The impact of them shedding hundreds of audits has been to shower them onto the next tier of firms, and so on. Most small and medium-sized firms offering audit have seen a lot of work come their way.

However, being able to serve this evolved market is becoming very problematic. Namely, several tiers of firms are struggling to manage their audit capacity as work comes to them. We are aware of these firms becoming more selective themselves about the audits they take on – as we’ve already seen from the Big Four – and turning work away.

Resourcing options

The bigger firms have run their own shared service centres for many years. This has not been an economical option for smaller practices. However, select aspects of audit can be outsourced and offshored – it’s an area that more and more of our practice partners are working with us on.

So, while the government and its agencies continue to prevaricate over audit reform, the market is making its own moves.

Vipul Sheth is founder and MD of AdvanceTrack Outsourcing

If you’d like to talk to us about our audit offering, then please contact us by clicking here

 

Our latest FAQ looks at the typical qualities and attitudes that pervade the firms we typically work with at AdvanceTrack.

Technology and culture

We see that firms are proficient with technology. More importantly, there is usually a culture that is open to change – to adopt new processes and workflow – and by definition, this means the embedding of new technology. When a practice begins working with us then there are inevitably some changes in how the work is undertaken and tracked – but the vast majority of practices are open and proactive and looking to make the venture succeed.

Investment

Making any change, particularly in an accounting firm, is viewed as a risk: ‘We could perhaps be more efficient and improve profits and service, but why ruffle feathers when we do OK?’ But there are firms that do try different things, and crucially, understand that these won’t always work. These firms will try something and, if it fails, then they learn to fail ‘quickly’. 

This requires an investment of time and money. But, with a risk-based approach, driving change can bring about huge benefits – certainly in a climate where many practices have an opportunity to improve. Which leads to…

ROI

Practices that can deliver change, make improvements, are usually good at project management. And a key aspect of the out-turn of a project is using metrics that allow you to track the impact of the changes made. For firms that work with us, they will eventually look at the impact on their bottom line. But, beforehand, we see them use client service measures, including job turnaround. And, if we can help client work be undertaken quicker and more efficiently, then cashflow and lock-up improves. Firms that work with us certainly measure – and see – improvement in the revenue per head.

Ambition

Finally, the firms we work with usually have leaders with a clear ambition – and these revolve around practical targets such as gross margins. But that is normally tied into running the firm better, offering clients more, upskilling team members – which all creates a more saleable asset. They see that improving the firm’s value is the ultimate goal.

FAQs for you

We’ve produced a number of FAQs – and here they are. Just click on them to view:

If you’d like to speak to us about how we could help your practice, please get in touch by clicking here.

I’ve run AdvanceTrack for almost 20 years, and this is the most exciting (and busy) time we’ve experienced.

But such a path was rarely smooth. In fact there have been instances, as many business owners will have experienced, where things were so tough that we had to run on an incredibly tight budget at home.

Questions about the business’s long-term future were also on my mind (and sometimes part of our family conversations) during those times.

And another budget has been a big part of everyone’s discussions in the last few days – the ‘mini’ Budget with ‘big’ implications and ramifications.

I am not a politician, nor am I an economist – but a chartered accountant and business owner.

I’ve built a great business employing hundreds of staff and am experienced enough to understand the fundamentals that have helped me succeed: a stable and ambitious family; good business advice; and learnings through my accounting experience. Equally importantly, a stable and ‘fair’ economic/fiscal environment.

The current policies and decisions led by chancellor Kwasi Kwarteng – and the impact of those decisions, therefore, leave me frustrated and concerned.

Tax and levy cuts for those who are well-off (including me) just don’t make sense. I imagine that very little of those extra thousands will find their way quickly, or at all, into the pockets of the hard-working – and that includes small or local businesses.

And those businesses are dealing with rampant inflation, a devalued sterling (making imports more expensive) and a customer base with rapidly shrinking disposable income.

As we saw through the Covid pandemic, some of this burden will fall upon the accountancy profession to help manage cashflows, funding and forecasting. I know that accountants are increasingly like my family’s accountant – an indispensable business adviser.

AdvanceTrack’s reason-for-being is to help accountants provide a better service, and to more clients. And, with your drive and ambition we are supporting more of you, more than ever.

Unfortunately, I fear that the blunt and political policymaking of recent days will leave us all offering remedial advice, rather than growth.

Written by Vipul Sheth

In the first of a series of articles, we look at why it is important to understand what the client wants. Only when we do that, can we truly help clients fulfil their personal and business ambitions.

What the Client wants

Our profession has been going through change, but never more so than the last decade. It’s fair to say that the Pandemic has probably accelerated that change, with the move to the cloud being made even more relevant.

The story that underlies everything we do is that “Accountants Change Lives, but not by producing a set of accounts”.

As the son of entrepreneurs who benefited from an accountant who understood this over 40 years ago, I know that he made a difference to my future. Having worked on markets when I was 7/8 years old to help my parents, I went on to University and qualified as a Chartered Accountant and Chartered Tax Adviser, going on to work for 2 of the largest accountancy firms on the planet.

Why do I talk about this?

My parents’ ambitions were not necessarily for themselves, but the futures they could afford their children. I talk about this because we need to understand what is important to the client.

Below is the result of some research which shows that client meetings and strategic implementation and advisory is more valued than the compliance, yet professional firms spend a disproportionate amount of time delivering compliance.

what does client want

Credit: Aaron Dunn

The key therefore is to reduce the cost of the compliance element, whilst allowing the accountant/bookkeeper to focus on the client relationship. We’ll talk more in the next feature about how you do this.

In this issue, let’s focus on the client needs. In order to serve the client, they need to deliver value and then demonstrate this.

Let’s discuss this a little further.

what the customer wants

© AdvanceTrack Outsourcing

The most important part of the equation is to identify the client agenda. Understand what the client’s aims are. For some, that may be material things, such as a large house, car, boat etc. The reality for most business owners is something more emotional than the material things.

Financial independence may be just one goal for the business owner. For my parents, it was ensuring that the children got into higher education.

This was their agenda for the accountant to help guide them through. If we take the past 18 months, some of your clients just wanted to get through and retain their staff, home, business etc.

It’s therefore important that the firm identifies the client agenda, jointly with the client and then agree their role in helping the business owner deliver that. The accountant won’t stand behind the counter of the store or weld the metal in the workshop. Their role helps the business grow, prosper and deliver the goals necessary for the business owner to fulfil their goals.

The accountant needs to measure what that looks like. More importantly, has the accountant and their team shown they understand the business? The most valuable lesson any accountant learns is asking the business owner to show them around their business. It is usually their biggest passion (other than family).
If the accountant doesn’t know what drives the entrepreneur, they can’t help the entrepreneur. At some point, the relationship could break down if it is not nurtured.

what the customer wants

© AdvanceTrack Outsourcing

So you’ve helped the entrepreneur share their goals.

How are you going to help them?

Have you identified the issues that will hinder their success. What impact will it have on the resources required of the entrepreneur and/or your firm? Every firm may think they can do the job, but at some point, the entrepreneur may outgrow the firm. That doesn’t always mean that you can’t serve them.
Sometimes it is about collaborating with others to help the client, for example, the world over, there are incentives to invest in Research and Development. The firm may not be able to do that, but there are specialists who work in this area. The firm retains the primary relationship and has presented a solution that serves the client and shown that you can help them deliver value by keeping their costs down or bring cash into the business.

I’ve seen in my own training days, a very successful entrepreneur floated their business on the stock market. The firm lost the audit to one of the large international firms then. The firm acted to support the entrepreneur and their family to manage the wealth they built up over the 30 or more years since, serving him throughout his business career. They maintained the trust and respect and just understood that the business was best served by a larger firm for part of their requirements. Retaining the trust of a prominent entrepreneur helped the firm to continue to demonstrate its value to the family and the wider business community.

We’ve included ethical values. This is important in considering whether you should retain the client. When faced with such dilemmas, the firm always needs to consider whether they want to retain the client or not. If the firm or its principals are not comfortable with what a client is asking them to do, what is the appropriate action for them to take?

When I used to run a small practice, I’ve been faced with situations where clients I considered to be friends asked me to do something I just felt uncomfortable with, or they acted against my values. At that point, you go back to the values you live and breathe as they’re instilled in you as you grow up. I think of the way I dealt with bullies in the playground or the workplace. Do you do the “Hard Right” or the “Easy Wrong”? I’ve always done the Hard Right and it’s what allows me to sleep at night.

If enough firms and principals rewarded partners for doing this, rather than penalising them because they “lost” fees, our profession would be stronger for it.

Can we execute the work?

How many times have you been on the wrong end of poor service? It’s often because the provider has decided that you’ll be their test customer/client. You’re paying for them to learn the service, which they’ll then be able to charge other clients for in the future. I’m pleased to see I’ve always been in firms that either had the expertise or stepped away from delivering it themselves.

Today, our industry is incredibly collaborative. Think of the WhatsApp or other groups you’re a part of. One message and you’ll find someone who can help your client. It doesn’t have to be you. You can manage it. Just make sure it’s right for the client.

If you know what your client’s goals are, you should be able to measure the success of the project. This is incredibly important in showing the value that your firm delivers in yours and your client’s journey. Without this, you’re not helping to keep the client or the firm focused on results.

It’s then time to re-evaluate what goals are important and the cycle goes through the same process again. I know I set both personal and business goals annually. It’s important that as an adviser you understand what your client’s goals are and if they’ve changed in any way. It will help you focus on making those happen. Remember, you’re trusted with their innermost fears and ambitions. Guard them safely and bring your team on that journey, so they understand what they do is so much more than reporting history.
We help firms deliver their goals. We’d love to talk to you about yours.

In the next instalment, we’ll continue the story of how to improve the customer experience.

Kinder Pocock

Q: How have things been for your practice?

A: It’s been tough going. We’ve done so much for clients and lost a lot of chargeable time – but some are grumpy because we’re either looking to charge for support or they think we’ve not been in contact enough. We’ve done good things but it’s been forgotten by some. We have all clients on a monthly package and we did a lot of work for them to get through this year. We then charged for furloughing in July and perhaps we should have communicated the value in that service better. Some team members have found it easy working from home and others haven’t. And while we trust our people we’ve improved monitoring of workflow, using Karbon, to be better organised.

Q: How do you see the next few months, particularly lockdown/SA filing season and more government initiatives?

A: We’ve had everyone coming in for Monday planning meetings – these go on for a long time because of dealing with all the issues and the week ahead. Afternoons have been more for training sessions – this has involved grading clients and allocating them to our two new senior team members. Obviously, with new lockdowns and tiers it’s been difficult to get to know them and integrate as quickly as we would have liked.

Q: Longer term, how easy is it for you to plan? Where do you see the firm in the planning cycle, both long term and next 12 months? What is in your thoughts?

A: We have new offices, new people and new processes. I know what the team structure will look like and what our ideal client will look like – and it will involve us providing much more advisory; certainly with two seniors we can build deeper relationships.

On the tech front, it’s making sure you get the best out of it. We’ve been using Xavier every day; there’s competition for who has the highest Xavier score and then we build that into our analytics – but there’s so much more we can do. Take VAT returns; we can now do a pre-VAT check that picks up that clients’ bookkeeping is up to date – either they can sort it or we can do it for them with a charge.

Karbon’s my favourite thing. It sends out notifications, automates tasks and is helping with workflow for enquiries as well – we can even send a potential client a task list of what they need to do and have before they sign up. Practice Ignition sorts out the proposal and Karbon sends it.

Get in touch with AdvanceTrack here

Building a new normal way

We last spoke to Bruce in August 2020.

Q: How have things been since we last caught up?

A: We’ve had someone leave our firm, and I’ve reorganised the work around our existing team – that was a tough decision but it has worked well. It’s an upshot of the circumstances of recent months where I realised we needed to make changes. We’re now at two offices, Surbiton and Cheam (we had Kingston), having at one point been at four during the initial lockdown. The Cheam office is new, larger and gives us room to grow.

Q: How do you see the next few months, particularly lockdown/SA filing season and more government initiatives?

A: With fewer local offices it’s important that we up our online presence, so that’s a task to be dealt with quickly. There’s been much furloughing and insolvencies are increasing, so I think it’s going to be a tough winter. For my own practice, I’m trying to get a better handle on how we work and the metrics that flow from our operations.

As a management accountant in a growing business I’m always looking to improve the how to tweak and change things based on reliable information – but I am also a business owner and that can make it difficult to see the wood for the trees I recognise our monthly numbers, and the work people are doing, but from a system/process point of view we need better connection.

I’m managing cash and revenue separately. It’s against my rules of being a management accountant – instead I’m being an entrepreneur… I have a CIMA colleague coming into the firm to help connect the two.

Q: Longer term, how easy is it for you to plan? Where do you see the firm in the planning cycle, both long term and next 12 months? What is in your thoughts?

A: Fine-tuning the organisation is a big priority because it will help redefine the work people are doing and then manage from there. It will help me understand what work is going to be undertaken day-to-day and by whom. I’ve applied for a government grant to help me on that journey.

For the client, we’re looking to outline the path that a client will take and document it. From there it will mean that whoever is working with that client will know what they require in their lifecycle.

Get in touch with AdvanceTrack here

Wood & Disney

We last spoke to Brendon in August 2020.

Q: How have things been since we last caught up?

A: It’s been pretty much ‘business as usual’ the last few months – we’ve been fully open without any furloughing of our staff. Trading has been good, clawing back some of the fees that dropped off in April and May. Some project work has been coming in, and this has come from us being proactive with our client base. Lots of ‘looking after’ has led to advisory work. For example, some restructuring of property portfolios for tax planning purposes. Bringing clients’ bookkeeping up to date brings about other opportunities.

Q: How do you see the next few months, particularly lockdown/SA filing season and more government initiatives?

A: With the experience of what happened earlier in the year, we took the initiative of talking to our clients as regularly as possible. Key will be maintaining that communication – it has involved an awful lot of work but has stood us in good stead. There’s still uncertainty ahead for many sectors so we’ll still be deciphering what comes out of the government. We’ve got systems in place, including our outsourcing with AdvanceTrack, and so we know at a base level work is being done.

Sitting above that we use Senta’s tasks and deadlines capability to monitor the work. Part of what we capture in our customer relationship management (CRM) system is to check against what clients’ goals are – we can drill down into the information to check whether clients are on target. For example, letting them know that margins have decreased.

Q: Longer term, how easy is it for you to plan? Where do you see the firm in the planning cycle, both long term and next 12 months? What is in your thoughts?

A: I think that online will be more professional, perhaps using microphones and lighting. There is also phasing a return to the office – we all work across clients so communication is key. Longer term, we will keep an office.

Accountex Summit UK 2020

The recent online Accountex UK Summit saw AdvanceTrack MD Vipul Sheth lead a 45-minute session giving a really concise and useful roundup of what goes on in the outsourcing industry, and how firms can make outsourcing work for them.

In ‘The good, bad and ugly of offshoring and outsourcing’, Vipul started with ‘the ugly’. There are lots of horror stories told by accountants who have had bad experiences with outsourcing.

“One of the things we often hear is: it doesn’t work. In many cases that can be true,” said Sheth. “One reason is a lack of tech. A lot of people in the industry don’t have the tech to manage outsourcing effectively – whether that’s the firm, or sometimes the outsourcer or offshorer. Without tech it can’t be managed successfully, or at scale.”

The ‘real horror’ is the lack of security protocols in place. “We do hear of outsourcers with little regard to these,” he added. When it comes to ‘the bad’, poor communication between the outsourcer and accountant is at the fore. “We’ve improved over the years,” said Sheth.

Secondly, outsourcing can be seen as a short-term solution to a workflow ‘problem’. “However, this means it’s not usually managed and put together effectively. Outsourcing is not a magic wand to ‘wave’; there needs to be thought.”

For ‘the good’, Sheth said that “we want accountants to go and help their clients more”. “What can you use your extra time created by outsourcing to do? Clients really want your help – and if you can demonstrate value then they will rarely question their fee.

The firms we serve have increased revenues through the pandemic. “They have capacity to drive growth, and offer new services. We’re seeing them offer bookkeeping in the cloud; lots of virtual FD/FC services – getting under the bonnet of client data and feeding back analysis to clients. It gives them a place in clients’ ‘boardroom’,” he concluded.

• Visit https://summit-uk.accountex.co.uk to access this archived recording, along with all the other sessions

AdvanceTrack is proud of its latest ISO certification for business continuity – but what does it all really mean and why is it so important for clients?

Kevin Reed steps into the shoes of existing and potential clients to ask Vipul Sheth, MD, to explain why they should be comforted by this ‘badge of business resilience’

What is the ISO and this particular ‘standard’?

It’s an international measurement tool of competence and excellence in a particular area to demonstrate the use of best practice across a range of areas…we also have ISO 27001:2013 Information Security Management, ISO 9001:2015 Quality Management and British Standard BS10012 Personal Information Management System. It’s great to have an external body review what you as a business are doing in a particular area.

This one is about business continuity and the ability of our business, with very clear direction, to continue to manage the business where events occur that are out of the normal day-to-day business. You just have to take the pandemic as an obvious example – six months ago, we would have thought something like that wouldn’t affect us but now we’re all more cautious about who we do business with and how. We want to give customers the confidence that we are a resilient business.

 

Why do you think it is important to AdvanceTrack and why now?

It’s important to us as a business because it hit home to our full team that they have a clearer direction of what to do, should certain scenarios present themselves. One of the scenarios we thought about was me dying. I hope to be around a long time, but something like that could be detrimental to the business. If I’m not here, someone has to have my thoughts on how things then move forward. What’s important is that the business continues to operate without me.

The pandemic, rather than applying for the standard, had got us thinking in more depth about what sort of things might happen and to be better prepared to deal with them.

With the pandemic we had a good bunch of people in our team who managed our migration to working from home successfully. If that is to happen again, it’s now enshrined with our formal disaster recovery and business planning processes.

The last few months showed us it is even more important that we demonstrate our ability to cope in incredibly challenging circumstances.

 

Why is it something that should be of interest to AdvanceTrack’s existing and former clients?

Our existing customers will know about this direction of travel. After our first client comms around the pandemic, one of them said: “We knew you’d have it under control.”

Existing clients see what we do every day, but for someone that doesn’t know us, gaining this certification gives them additional comfort. In very trying circumstances you will know that we have a robust business process to continue to be supported, and that it’s not something being made up as we go along. Gaining the standard means we faced a rigorous stress-testing of processes – of how we operate now and what we might face in the future.

 

What has been the process of audit and achieving the standard?

It followed the way most of these standards work. There is initially an overview and analysis taken by the standard’s auditors that you have the basis for commencing the certification process. That’s effectively ‘day one’ – auditors come in and look at documentation to support attaining the standard.

Then you also have to have an internal audit process, where you look to identify improvements to address before the ‘actual’ audit. However,
we also used an external body to undertake the internal audit – we didn’t want that stage too ‘friendly’… we went for rigour.

Then in the external process they’re seeking evidence that what we say we can do is actually something that is beyond the documentation. Such as demonstrating how we’d handle our servers going down for example, or one of our buildings suddenly didn’t exist – however unlikely these scenarios may be. It’s then a case of showing how long we could operate without impacting service.

 

How does it align or complement with other standards you’ve achieved?

We’ve always tried to demonstrate excellence – which is why we already have core standards. Allied to that it’s about showing consistency of delivery – that we’re ‘continuous’. What this has been about has been exactly that, even in trying circumstances.

Before we decided to go with this standard my phone ‘crashed’ and the backup didn’t work. I lost a lot of contact numbers. I told our CTO that this stressed me, and made me think about the business. As a result we ramped up the availability and resilience of our servers, shortly after this event, so we would lose very little data even if there was a huge problem.

 

How does the standard set you apart from competitors?

There’s a reason why accounting practices work with us and stay for the long term. It’s our consistent approach and high standards from a delivery point of view but also security and infrastructure. Ultimately, I sincerely believe in the abilities of AdvanceTrack’s senior management – that they’re better than our competitors.

 

What’s the future for AdvanceTrack in context of other certifications and standards? What are your next improvements?

We’re not ruling out other certifications – but these current ones are absolutely at the I’m sure as we evolve then other certifications will become important to us. It’s important to note that we don’t ‘chase’ certifications to puff up what we do. We strive for the best, as I’ve already outlined, in terms of service, security and resilience – these certifications are the upshot of what we do and try to achieve on a daily basis.

 

What ISO 22301 means for business continuity.

The ISO, in its own words, is an “independent, non-governmental international organisation with a membership of 165 national standards bodies. It uses this vast network to build international standards that are ‘consensus-based’ and
‘market-relevant’.”

ISO 22301:2019, of which AdvanceTrack has completed certification, focuses on security and resilience. Namely, requirements for robust business continuity management systems.

The certification requires rigour in a number of key areas:

  • Organisational context – an understanding of how the organisation works, for whom, and what that means for the scope of its business continuity requirements
  • Leadership – How the business continuity policy has been formed, and its communication  to interested parties; alongside set roles and responsibilities
  • Planning – The determination of risks and opportunities, alongside addressing them; and establishing and determining business continuity objectives
  • Support – Documentation and resources relating to the plan
  • Operations – Impact analysis; continuity strategies and solutions; implementation of solutions; recovery plans
  • Performance evaluation – Monitoring and assessment by internal audit and management of performance against business continuity metrics
  • Improvement – Corrective actions and continual improvement

Source: ISO (iso.org)