Death of the practice accountant?

Enterprise_Warrior

burg said:

Our contractors fees start at £720 if they do their own data entry on Xero. This leaves us with £588 to provide support and the year end accounts and tax work.

So you pay out £11 a month per client to use Xero? Isn't that just bookkeeping software though? You still have to file accounts with another piece of software at an additional cost.

burg

Enterprise_Warrior said:

burg said:

Our contractors fees start at £720 if they do their own data entry on Xero. This leaves us with £588 to provide support and the year end accounts and tax work.

So you pay out £11 a month per client to use Xero? Isn't that just bookkeeping software though? You still have to file accounts with another piece of software at an additional cost.

Yes I use Capium which costs about £1200 for the year so about £4 per client so it doesn't add a huge amount.

Enterprise_Warrior

Unfortunately my practice isn't that big to warrant the software. Built my own software in Excel and file using the HMRC website.

burg

Enterprise_Warrior said:

Unfortunately my practice isn't that big to warrant the software. Built my own software in Excel and file using the HMRC website.

Might be worth looking at. Up to 100 clients for Accounts production, corp tax and SA100, SA800 and SA900 is £540 + VAT. The time savings of using software are huge.

AP - it enables you to download a TB from your bookkeeping software and import (no re-entry needed just mapping to nominals). You can then export directly to tax software to no re-entry required.

Corp Tax - Most corp tax is pre-populated from the accounts. You need to enter b/fwd losses if there are any and enter capital allowances info but standard dissallowed expenses are already pre-done. Most CT cases take me 10 - 15 mins.

Tax - Great advantage is you don't have to use HMRC's system. A while since I used HMRC's offering but it was the case that you need to go through pretty much every page checking boxes even if they don't apply. Not with tax software. You just fill in the bits that matter for that client. No dividends then just ignore that part as it is pre-selected as not applicable.

Does not have to just be Capium. Although pricing is per module (see here - https://www.capium.com/pricing/) Tax filer do very good and cheap tax software (from 120 + VAT). Their accounts offering isn't great though.

Bertie

It's similar to the move from paper ledgers to software, if you'd decided not to make the transition you'd be toast now.

Most OMB owners have no interest in accounts and tax returns, they just want the bottom lines.

Yes they could complete their own accounts and tax returns but it would take them many more times longer to finalise. It's similar to DIY, you can do it yourself but it would take much longer than it would a professional.

Taking the above, if your time is worth £50, but a tradesman will charge you £35 it's surely a no-brainer, you'd call a pro.

It's difficult to try to change your mindset if you're certain it will all be negative.

Clients get a sense of reassurance when instructing a professional - yes in the eyes of HMRC they have ultimate responsibility, but get it wrong and they'll try to sue the shirt off your back.

It is all about embracing change, don't fight it - take advantage of it.

Enterprise_Warrior

I only have 15 clients myself as I am p/t, working full time in industry. The cost is prohibitive unless I can gain something like one new client per week and I find this difficult to do, or find products that charge per client.

I charge clients between £720 and £1,200 a year and probably spend about 5 hours on each client a year, which includes bookkeeping, RTI, accounts and tax returns. They generally don't have many queries and when they do, they are easily resolvable.

The Excel model I built does the bookkeeping and accounts preparation. I just take the figures and put them through HMRC's website, which does not take long. I give my clients (who are not that tech savvy) an Excel spreadsheet with built in macros and all they do is fill out boxes to give me the data which plugs into my model really easy.

If I was looking to attract tech savvy clients as new business, then I would certainly look at cloud software but not sure how easy it is to market yourself in this marketplace?

It's a shame really as my commercial / financial / operational consulting skills are excellent but the types of client I am attracting are not in need of that service.

Bertie

I'd say we are on the cusp of change in regards to how we interact with tech.

Without making a mass generalisation, take the youth of today, what they can do with a computer is nothing short of amazing.

When I was 14/15 you had to have an interest in IT to be able to get the most from a computer - it seems to be as easy as speaking English today.

I'd say those folk, with those skills, are just starting to enter the business world.

You've got to judge the future by what the kids are doing today - children seem to lead change.

(I'm not saying adults have no clue with tech, but on a like for like basis the difference is massive)

Jawz

Totally agree with @Burg... One must embrace the cloud, to stay relevant in the next 5-10 years.
Of course, some business owners will give it go and try doing the MTD thing themselves but they will soon realise that Accounting is not what they do and will come running back to their Accountants.

However, I also agree with the notion that, old ways of doings will soon not be good enough any longer. e.g Excel only Accountants will have to try and adapt to embrace the cloud otherwise, they can forget it! The cloud is here to stay and we must embrace and make the best use of it.

That said, the cloud alone can't workout your prepayments, accruals, depreciation, etc etc, these adjustments will always require the human element and by that I mean Accountants not Business owners. I think most business owners would rather focus on what they do best, i.e running their business!

Regards,

Jawz

AAT_Team

You may find this article interesting guys, it's a piece our PR team worked on publishing in Malaysia: How technology is changing the face of accounting.

Enterprise_Warrior

Just had an email from a client today who has said that he is leaving to go to an accountant who is closer to him. To be fair, that is true as the new accountant is 10 miles away from him and I am about 200 miles away but he stated that he needs that face to face contact with his accountant to reassure his financial worries, which is not true as he has a very simple business (a contractor) and always makes profit.

After stalking looking into the new accountant, they appear to be offering a far cheaper service and have their own cloud accounting software, so I suspect that the client has left for a cheaper fee. I should have known something was up though as last month, he submitted an expense for subscription to the cloud version of Sage, which was strange as I do all his bookkeeping for him.

Again, this is an example of accountants lowering their fees to attract new clients and then offering cloud software for the client to do their own bookkeeping which allows the accountant to spend less time on the job. There is the argument that accountants should not be lowering their fees as they need to recover the cost of the software but by having more clients, you spread the cost of that software which reduces the £ / per client.

I fear this will eventually be a race to the bottom for accountants. I was hoping to expand my practice this year but I don't think it is going to be worth it and should focus on completing my CIMA qualification and becoming an FD of an SME. The pay will be better and wouldn't have to worry about clients leaving unless I charge minimum wage for my work.

Bmer82

Ironically from my reading of sage software it is one of those where it is a fixed price per client therefore impossible to spread over a larger number of clients like capium for example. I am in the opposite situation from you @Enterprise_Warrior I am a fellow of CIMA and am seriously considering becoming an MIP. As an FC for a high profile SME in my area this is because of a severe lack of opportunity to progress to the next level as an employed FCMA in the south west. my view being that whilst set up etc will be challenging I will ultimately have more control over my future and families security.

Enterprise_Warrior

Hi @Bmer82

I am very similar to you in that I am also an FC for a high profile SME in my area and there is definitely scope for me to move into the FD role in the next few years.

I set up my practice a few years ago on the side, as I was finding the employment market difficult and wanted a Plan B if industry didn't work out, but I am finding that I am leaning the other way to you as I am only in my early 30s and still have a lot of opportunity in industry ahead of me.

Bmer82

dont get me wrong the whole thing is still quite daunting am in my mid 30's with 3.5 kids (the 0.5 being the wife lol) think the main issue in my area is the renumeration level is quite low and jobs are few and far between have no doubt eventually I could get where I want in industry there is no identifiable route at present and with stagnent wages and rising bills the opportunity to sell my "free" hours is very tempting and with the market being very practice based it seems a niche could be filled with my skill set.

Enterprise_Warrior

Wages in the Humber region are also very low which was my main reason for wanting to get out of Industry as top wages seem to be reserved for ACAs with first time passes, a 1st from a top university and several years commitment to a top 10 firm looking for their first move.

Unfortunately though it seems that small businesses that seek practice accountants want bargain basement fees but are happy to pay a mechanic £80 per hour to keep their vehicles on the road. I suspect the fact that MOTs have to be done by a garage and can't be done by an individual, has something to do with it.

Bmer82

have you thought of offering virtual CFO / FD services there seems to be a groundswell in that direction with a number of "agent" type firms looking for candidates to market to firms

Enterprise_Warrior

I did look into this but they want people who hold chartered qualifications. Something to look at once I finish CIMA.

Bmer82

how far through CIMA are you? I qualified last year directly to fellow after taking a 10 year break and did management and strategic levels in 13 months self study whilst working full time and with a sub 2 year old. the new exam technique makes it relatively easy to power through if you get the content

Enterprise_Warrior

Just got the Strats to do. Haven't done any exams since 2014.

Bmer82

found F3 the hardest of the strat papers as swaps and hedging is quite tricky if you have never had any exposure to them