Australia Archives - AdvanceTrack Outsourcing

As private equity helps practices ‘bulk up’, what should smaller practices do that want to control their own destiny?

The accounting news is regularly filled with information about exciting practice mergers and acquisitions. These deals are now much more likely to be backed by external financing – typically in the form of private equity.

This second wave of consolidation in the market is a staggering 20 years on from the first wave; the early noughties saw a number of major players form but collapse under the weight of growing too quickly, often paying too much, and struggling to create a governance and ownership model that allowed the firm to develop.

But times have moved on, and a lot of water has gone under the bridge. In a world where more clients require more support, and real-time bookkeeping and tax filing is on the horizon, where do smaller practices fit?

The new-wave consolidators will argue that they are creating mass to enable them to offer lots of specialist services, backed by back-office automation and efficiency to help maintain (or improve) their margins. However, this will inevitably lead to smaller clients being priced out of these firms’ offerings – surplus to requirements.

Bigger practices also have more flexibility, more options, around their resourcing strategy – they can outsource and offshore tasks but still retain a workforce that they can train and develop. Smaller practices are at the sharp end as far as recruitment is concerned.

Australia’s accounting development

AdvanceTrack’s development in Australia has allowed me to understand the structure of their accountancy market. It certainly has fewer generalist practices than the UK. In particular there are lots of small firms offering high-volume processing or niche, focused firms.

It’s increasingly likely that this will develop into a self-service model, where clients’ accounting and tax information is retrieved automatically and then checked, validated, by an accounting professional.

But we also see in the UK that many smaller firms have specialist, niche knowledge in particular sectors – whether, for example, it’s academies, farming or dentistry. Others focus on technical specialisms such as VAT or R&D.

Decision time

Firms need to make big decisions around their direction of travel, and how they’re going to deliver that offering. Skillsets, technology, operational structure and governance should all form part of that discussion.

The quicker you move the quicker you will be able to differentiate from the competition.

Vipul Sheth is founder and MD of AdvanceTrack Outsourcing

We are working with practices who are automating and outsourcing tasks to free up their people’s time to better support clients. We’d love to speak to you about supporting your practice’s development – you can contact us by clicking here.

In September, we were at Xerocon Brisbane. Whilst we were there, we had the opportunity to catch up with our Australian clients, see some new faces and get the latest updates in tech.

The biggest move we noticed in Australia is the increasing move into SMSF and bookkeeping for clients by accounting firms. Clients want a holistic service from their trusted friend – their accountant!

Often the two go hand in hand and firms are increasingly asking us to manage the SMSF record keeping for the individual fund, but more importantly, the business owner wants the accountant to look after the business’ financial records. This trend, which started a while back is turning into a flood, with businesses recognising that their energies are best spent in driving their business forward.

Their accountant is now better able to help clients with Cashflow management using tools like Float, Fluidly, Fathom and Futrli for example. They can do this, because they are responsible for the regular production of management accountants, all enabled through technology. This was a very important growth area.

In 2018 we wrote about the top three issues facing Australian firms.

Talking with professionals this year in Brisbane we found that outsourcing is becoming more of an accepted way to deliver work. Some firms also wanted to hear about our dedicated offshore resource.

But most successful firms among them have truly embraced the fact that their role has changed.

They’re outsourcing as default, from compliance through to reporting, so that they can have a consistently proactive rather than reactive relationship with their clients.

What moved them to make this decision?

1. They realised they’re not in the business of accounting

What?

A confusing statement for an audience of accountants.

Our friends at GoProposal wrote a really great blog titled ‘You’re no longer in the Accounting business’.

It’s just as true in Australia as it is in the UK, perhaps even more so.

When we meet accountants we often find ourselves asking them – what is it that your clients want? Yes, they want to save tax. Yes, they want to know that their affairs are sorted. But what do they really want? What are their goals for the growth of their business, for their family, for their future.

The successful firms are now in the bigger-picture business. They’re having conversations with their clients about the things that really matter.

There’s a growing demand for wealth management advice

One of those bigger picture conversations that’s in demand more and more in Australia is wealth management. There’s an increasing need for advice in personal and business wealth strategy, pensions and retirement, and many accountancy firms are filling the gap by moving into wealth advisory services.

As more individuals manage their own pensions with a self-managed superannuation fund (SMSF), the work involved is also rapidly growing for those accountants who have moved into the wealth space. This means two things:

The firm will be pushed to deliver more compliance work
The firm owner needs to free up more time firm-wide to have bigger conversations with clients and offer more value

As these two things happen in tandem, it means more training, stronger systems and consistent processes. This is where the need for outsourcing has become more than just offloading compliance work. At AdvanceTrack, our goal is to help you create the business structure to have the very best conversations with your clients.

2. They understood they need to create the right environment for today’s staff

We partner with firms in the UK and AUS/NZ and we’re seeing that the same issues arise when it comes to staff retention. Once qualified, if not pushed to their potential, staff are leaving smaller practices for the big accountancy firms or migrating to tech companies.

Australia is further along than the UK in digital development, and the tech space is an attractive option for graduates who are now learning to add value at an earlier stage in their career.

At the same time, we’re seeing desktop software being discontinued. BGL, Australia’s leading SMSF admin software, has retired its desktop product in December.

It’s adapt or be overtaken when it comes to transitioning to new technologies and giving clients real-time information. Business owners can access their finances at the click of a button now, meaning that roles have changed whether we like it or not. Cloud integration specialist, Chief Data Officer, Virtual FD – These are the next generation of job titles.

Your staff already don’t want to be stuck delivering low-level work now, and they won’t want to be stuck delivering low-level work in the future. And remember, it’s not why you became an accountant either!

The firms who are seeing real growth realised early on that their people are working at the wrong level, and they’re outsourcing their core services to make room for more skilled, challenged and satisfied staff.

Ask yourself these two questions

If you’re stuck in a compliance cycle right now, and you can’t see a way out of the hamster wheel, first ask yourself:

What do my clients really want?
What do my staff really want?

Then take a look at how you can go about joining the global community of firms on this outsourcing journey, and realise your new potential as an evolved accountant.