Compliance | AdvanceTrack Outsourcing

Posted on 24th August 202129th July 2022 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.

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.

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.

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.

Posted on 16th March 201820th February 2018 by Vipul Sheth

Referring clients to other service providers is a path well-trodden by advisers, but it is often handled by practices in an opportunistic, ad-hoc, and ‘arms-length’ manner. But thinking about a strategy where clients receive high-level business advice from their accountant fits with ‘holding their hand’ for other types of business support they require – even if outside the practice’s comfort zone. However, ‘outsourcing’ front-end services to other professionals requires processes and strategy, much like outsourcing compliance services or back-office functions.

“Clients value having a business partner on their journey; one who can assist them in negotiating the twists and turns of their business life as they strive to achieve their goals and who can empathise with them,” says Wood & Disney’s Brendon Howlett. “While we can outsource a substantial amount of the ‘doing’, we can’t outsource this relationship building and we wouldn’t want to. After all, people do business with people.”

One practitioner told us that their approach was to act as a “go-between” for clients and the third-party service provider – an arrangement that suits all involved. Working with third parties requires research: find out about them from other practices they’ve worked with; learn if your goals and culture is aligned with theirs; and discuss how the relationship will work with them. Finally, start working with them in a strategic way that truly tests the service before rolling it out.

Posted on 8th March 201820th February 2018 by Vipul Sheth

With such complexities that come with running an accountancy practice, the option is always there to outsource some elements. But as Kevin Reed finds, what works for one practitioner might not for another.

The running of an accountancy practice, like any type of business, can be frustrating. Trying to offer your core, valuable, services to a client at an optimal level feels impossible as administration, production work and of course red tape, bog you down.

Having all that ‘just dealt with’, leaving practice owners to get on with the job, is the ideal scenario for many. What, then, can be outsourced… handed to someone else to deal with? Are there any limits? If so, how are they defined?

What can be outsourced – and how – requires practitioners to step back and think about the way their business operates.

For instance, there are administrative responsibilities for a practice to consider. These can include HR, health & safety, technology – and their own Companies House filing requirements. As with any deep back-office responsibilities, they will not bring fee income into the practice. Practitioners would be strongly advised to use outside help on these matters.

Making the right choice, or choices, as to who helps you manage the back office is important, but doesn’t need a grand strategy. Other outsourcing decisions, however, require practitioners to really think deeply about how their practice makes money, and how it wants to achieve that in the longer term.

There are two other key areas in which outsourcing can be leveraged. The first is in the production and management of compliance and accounting information on behalf of their clients. This could include calculating and filing of tax returns, formulating annual accounts, or other types of reporting.

Second, there is an option to outsource front-line services and management to other providers (see blue box). For example, this could include wealth management services or complex tax advice such as R&D claims.

For Della Hudson, a business consultant who recently sold her eight-staff accounting firm, her efforts at outsourcing met with mixed results. She envisaged a practice, aimed at corporate services, where customer service would be retained in-house, while everything else was outsourced.

“The idea was around having a one-man band, but with hundreds of clients,” says Hudson.

In reality, she was already down the track with her practice, but that didn’t mean maintaining the status quo. First, Hudson tried out a virtual PA, but found the role was too complex for it to be managed out-of-house. “That process gave me a good understanding of what could, and couldn’t, be outsourced,” says Hudson. “Standard, repetitive things can, but anything that requires deeper thinking cannot.”

She then outsourced some accounting work to another practice. It “wasn’t a money-saving exercise” in itself, but enabled her and her staff to concentrate on higher-value advisory work for clients.

Going deeper

Other practices have moved much more deeply into the outsourcing of compliance work. And as previously stated, such a move requires careful thinking.

For Brendon Howlett, operations director at practice Wood & Disney, the last 18 months have seen outsourcing become key to its business – while also witnessing it impacting other practices, “and we see that trend continuing”.

From a strategic point of view, the practice is aligning towards high-value advisory services. The outsourcing of compliance work has enabled team members to take a more consultative approach with clients.

“As well as an improvement in our own numbers, outsourcing has had a positive impact in freeing up capacity in the team, allowing them to provide advice and assistance our clients really value,” says Howlett.

Outsourcing doesn’t abdicate a practitioners’ responsibility for the work undertaken, or how it is managed. Another practitioner we spoke to said that it is vital that your own processes and approach to work is systemised. “This gives you a platform to work with an outsourcing provider – but at this point it’s crucial that a good workflow will be set up between the two parties, or any value from the project will be eroded,” says the practitioner.

Again, how the re-engineered processes will work is crucial. For Wood & Disney, the practice is exploring outsourcing more tax compliance work in light of the extra strain it will face with Making Tax Digital’s (MTD) requirements for more client information. But a lack of clarity in MTD’s workings means Howlett is circumspect: “Until the government provides more clarity about the mechanics of MTD, where the devil will inevitably be in the detail, we remain unsure of exactly how any outsourcing will work.” A key concern voiced about the direction of the accounting profession is that automation and artificial intelligence will render accountants useless.

This doesn’t mean the end of the accounting practice. It actually aligns with shifting process-oriented tasks away from the key advisers, and enabling them to provide the more valuable service.

The problem comes when the makeup of these ‘key advisers’ is considered. Do they need to have the technical accounting and finance skills to back up their communication and analysis abilities? And if so, how will they attain them if the work is dealt with by outsourcers?

This is a concern for Della Hudson. In her former practice she considered the impact of outsourcing all the ‘straightforward’ accounts work, keeping more problematic client returns in-house. This model would have made it difficult for apprentices to see a cross-section of work, she feels. “I hadn’t got my head around that,” Hudson admits.

Wood & Disney’s Howlett says: “Technical skills will still be relevant, and you will need to be good with the numbers as we will be acting as a conduit for the financial information.” The next generation of accountants will need to develop that broad skillset from the get-go, he believes.

“In the past it may have been enough for an accountant to be a technical guru but AI has this side of things sewn up. Accountants will need to be much more ‘agile’ in terms of business advice and focused on people.”

Posted on 4th April 201720th November 2023 by Vipul Sheth

We asked this two office partnership for some feedback on their reasons to outsource and why they selected AdvanceTrack^®.

1. Why did you decide to outsource?

The decision to outsource was made primarily as a result of a lot of maternity leave hitting us at the same time, together with our historic curiosity surrounding outsourcing as a potential option for our practice that had never been acted upon.

The time seemed right therefore to give it a go. The advancement in scanning technology was also instrumental in making the decision as this was no longer the administrative burden that it was previously.

2. Reasons why you hadn’t tried it before.

We had heard some good stories but also many bad experiences from other companies who had used outsourcing.

3. The reservations you had before trying it

The quality of the work which would be returned, the administration burden of scanning documents, the unknown, we are accountants and we don’t deal with change very well

4. What made you overcome those reservations and why AdvanceTrack^®?

Having known Vipul for a few years made the decision to outsource a little easier. AdvanceTrack^® using the same accounting packages that we used also helped make the decision easier as we would not have to load the returned data onto our system ourselves.

The trial jobs went very well and the quality of the work exceeded our initial expectations.

5. How have the staff taken to outsourcing and where next in the development of outsourcing with your practice?

Initially there was a mixed reception amongst our staff as some obviously feared for their own job security, however once it was explained the reason why this decision was taken and the change in their roles to one of more value added work rather than pure compliance their opinions quickly changed.

Our next steps are therefore to utilise our own staff more efficiently on client work and look to outsource the pure compliance function wherever possible allowing us to become a more profitable firm.

6. What’s the greatest benefit you have got from using AdvanceTrack^®?

The obvious answer would be the cost benefit which is of significant importance, however by outsourcing the compliance function, it is now allowing us the opportunity to give our existing staff more exciting work on clients allowing them to personally develop and maximise our return on our existing client base.

Posted on 4th March 201717th January 2018 by Vipul Sheth

A Major International Group chose AdvanceTrack to help them through the iXBRL maze.

Rather than just tagging a set of accounts prepared in Word, this UK group (part of an international global building products group) wanted to deliver a long term solution to iXBRL compliance. Having adopted an accounting software product, this group considered whether to prepare accounts and iXBRL files in-house, decided to outsource the first year file preparation to AdvanceTrack^®.

Having completed their due diligence, AdvanceTrack^® were selected. It was agreed that the accounts and iXBRL files would be completed for a small number of subsidiaries. Once these were complete, the remaining 60 companies in the group were completed on time and on-budget. This is what the client had to say:

“Thank you for your help and your team’s hard work in assisting us meeting our deadlines. It has been greatly appreciated” .

AdvanceTrack^® can deliver services on the main accountancy software packages including Caseware, CCH, Digita, Onesource, IRIS and Sage.

We also tag accounts prepared in Word and Excel.