General Business Advice

JodieR

This isn't a question aimed specifically at any one client, I'm just wondering to what extent other MIPs give their clients general business advice, especially in the current economic climate.

Most times when I sit down with a client to go through their accounts or even VAT return info they start complaining about how hard it is to find work, how advertising no longer works, how expensive fuel is etc etc. I'm sure I'm not the only one, but in situations like these I really don't know what to say for the best. I can really only tell them what has happened in their business and (if appropriate) I can offer to do some projections/budgets/forecasts for the months/year ahead depending on different factors, but beyond that I have no real experience of providing advice on running a successful business. I do sometimes suggest that they contact businesslink, but I'm not sure this is always the right answer.

So, what do the rest of you do?

*Know the answers to all their questions and have them going away with fresh ideas on turning it around?
*Refer them to a contact of yours who can give them specialist advice?
*Tell them that really no-one knows their business as well as they do and they just have to find their own way to success.
*Tell them that everyone is struggling - there's actually not much they could do to better their situation.
*Explain that you're an accountant, not a business advisor/mystic meg so you can't answer/comment on their questions.


Looking forward to some insightful answers!

Jodie

clegganator

Don't think it's all that insightful!

We try to encourage people to persevere whenever possible. Everyone is struggling but so long as they're breaking even overall or making a very small one off loss, it's going to be a nightmare to give it up. Sometimes there are really hopeless businesses, in particular there was one where all he did was refurbish alloy wheels. He spent about £15k on equipment and a van and I advised him to branch out into detailing, fabrics etc but wouldn't have it. Funny enough he packed it in after a year! Also, we refer them to some local networking type groups but not everyone is keen on it.

jamesm96

I'm of the AVN view that accountants shouldn't just be telling clients about what happened last year; we should also think about what could have been done better, and how to do so in the future. (I don't mean this to sound patronising at all, by the way!)

A great way I find is just doing some basic ratio analysis like debtor days or gross margin or average spend per customer or creditor days or stock turnover... there's a whole host of ratios that might be relevant depending on the client. And then you can make some recommendations around those ratios. For example on debtor days you can see what their debtor days are and if they're more than 30 days then make some suggestions for improving cash collection, such as offering early payment discounts (n.b. there's a better way of doing this than just doing a basic discount I'll elaborate if you're interested), or having customers sign Direct Debit agreements so that you control the payment date... etc.

It's all pretty common sense stuff to those of us who have a financial background but generally it's brand-new to the clients and they absolutely love it.

TreadStone

There is no magic wand.

I honestly think it's down to the attitude and character of the client. There's a great quote by AAT columnist Dawn Clarkson in the latest AAT magazine -

"When the wind of change blows, some build walls, others build windmills".

Very, very true in my opinion. I also go along with her sentiments that there is more to Accountancy than just the numbers.

Pete12

During a conversation with a friend, yesterday, who has a limited company and engages an AAT & ATT MiP to prepare the F/Ss, CT return and Co House filing - he commented that he paid 1600 p.a. for the MiP to essentially "just file the returns". He expressed disappointment that he had never been offered what he would consider to be strategic advice - other than when the MiP had been prompted by a question from himself. I suspect it is the "other stuff" that goes beyond what clients perceive to be "just accountancy" - things they cannot or never thought of doing for themselves - that they actually value and may be the ultimate differentiator when a client decides to stay or go.

Mike, I would be interested if you would elaborate on your "better way...of doing a a basic discount" as I realise I have a lot to learn!

Pete12

Monsoon

£1600 for just the compliance might be in the right ballpark. It certainly doesn't sound excessive for a Ltd Co, depending on the scope.

It sounds to me though as if the accountant hasn't made the client understand what they are paying them for, what savings they've made, or talking them through the figures. That should be as standard, even if it's just a compliance service.

I haven't really offered business advice in the past as I haven't felt qualified to do so. Now, I've had enough experience in business that I do feel able to offer this and it's something I plan to expand on over time.

*Know the answers to all their questions and have them going away with fresh ideas on turning it around? Not all the questions but I answer what I can
*Refer them to a contact of yours who can give them specialist advice? Where I have one, yes
*Tell them that really no-one knows their business as well as they do and they just have to find their own way to success. Definitely not!
*Tell them that everyone is struggling - there's actually not much they could do to better their situation. Definitely not!
*Explain that you're an accountant, not a business advisor/mystic meg so you can't answer/comment on their questions. Definitely not!

jamesm96

Pete12 wrote: »

I would be interested if you would elaborate on your "better way...of doing a a basic discount" as I realise I have a lot to learn!

Pete12

Pete! I think I'm going to send you an award... you're the first person who hasn't assumed my name is James!

As for payment discounts, what can happen if you just put '5% discount for payment within 15 days' is people take the 5% but then still don't pay within 15 days. Not everyone does this but it's a risk and, at best, it means you pay £50 on every £1,000 just to get the cash in earlier.

A better way of doing it is to (politely and carefully) explain to the client / customer that your prices will be rising by 5% but that if they settle invoices within 15 days then this will be waived. That way if clients / customers do take the 'discount', you've not lost anything and, hopefully, you've got your cash within two weeks. If they don't then, as long as they do actually pay, you've got a 5% increase on your sales price.

Pete12

Monsoon,

I can't disagree with your points, it is more that the conversation left me with the impression the client wasn't so much disappointed with what the MiP did, but what he appeared to want to do; that - apparently small difference - could have made the difference between being perceived as a "valuable resource" rather than a "necessary evil".

Mike,

Got it - thanks!

With regard to the award - cash please...and if I don't receive it within 14 days - I shall expect an additonal 5%!

Pete12

My name is not misleading....it isn't "12".