Making Tax Digital will be one of the biggest opportunities the UK profession has ever seen.
In New Zealand, the profession has had its version of MTD since 1986 when GST (VAT equivalent) and bi-monthly reporting was introduced. In Australia GST and quarterly reporting was introduced in 2000. For 31 and 17 years respectively the ANZ accountants have ‘known the numbers’ of their clients every 2 or 3 months – not just once per year.
Once both countries got the hang of the reporting requirements and the workload involved there was a BOOM in business advisory services. And of course, a boom in gross revenue.
The reason there was a dramatic increase in business advisory services was because the accountant knew the trading numbers or the client every 2 or 3 months. They could offer numbers based advisory services with more accurate data in front of them.
This the real opportunity is not to do more compliance work but to add value to the numbers on those 2 or 3 screens on your desk. If the numbers are up to date and more accurate the accountant can add a tremendous amount of value.
Where is the value in annual historical accounts preparation? It is very hard to add value to data that is 3 – 18 months old. It is old, dead, redundant data. Annual compliance based reporting (which represents 87% of the globes accounting revenue) offers very little value to the client.
Because of more accurate data that you’ll have access to every 3 months, MTD enables you to move into a range of new ‘numbers based’ services.
You see, because of MTD, your clients will be forced into more accurate book keeping and better systems. As a side note, now is the time to insist your clients get onto a cloud accounting platform – or their fees will sky rocket. Only 7% of the UK small business market is on one. In Australia, its 30% and New Zealand has 50% of all small business clients on a cloud accounting platform. Your market is about 3–4 years behind us. When your client is on cloud accounting, it’ll be easier for them to do the record keeping and easier & faster for you to process the data.
If they don’t switch over to a cloud platform then the workload on you will be immense. You’ll need to hire many more people to do the volumes of new work – not a good profit strategy.
With all this new data at your fingertips, what are you going to do with it? I think you have a duty of care and deep obligation to advise the clients how to improve their numbers. If you are living by the mantra to ‘provide every service to every client that helps them achieve their goals,’ then it’s not selling new services—it’s servicing your clients properly.
Here is a list of 14 services that you could offer.
- Cash flow forecasting and analysis
- Profit improvement program
- Monitoring and accountability program
- Debt restructuring
- Capital raising
- Interest reduction service
- Waste audit
- Revenue improvement strategies
- Creditor analysis and negotiation
- Product profitability analysis
- Receivable management service
- Tax planning and tax minimisation
- Business planning
- Inventory management system
All are valuable services that will make a significant impact to your client’s financial future. All these services are very valuable to your client and they should be priced based on value based fees – not time based billing.
By ‘staying close to the numbers’ you have a better chance of the client buying the service. You’re known for your numbers, your clients expect you to be good with the numbers and you know how to positively alter the numbers. Also, with good systemization of the services, you can have accountants of all levels deliver the service—not just the partners. That’s the ultimate leverage.
An accountant has an enviable stature in the community of being ‘The Trusted Advisor’. My definition of an accountant being the trusted advisor is that all clients are buying every service they need that helps them achieve their goals. Are you actually going to be the trusted advisor or are you just going to do what the government mandates you must do – the bare necessities of compliance reporting?
Your opportunity with MTD is to not help your clients write up more history. Your opportunity with MTD is to help your clients make history!