Why Isn’t My Accountant More Proactive?

“My accountant isn’t proactive enough.”

It’s one of the most common complaints we hear from prospective clients who are thinking about changing accountants.

They’ll tell us their accountant prepares the accounts, submits the tax returns and deals with Companies House – but that’s about it.

Nobody contacts them during the year.

Nobody talks to them about tax planning.

Nobody discusses how the business is performing.

Nobody suggests what they could be doing differently.

Then we provide a quote for our services and occasionally get a surprise response:

“That’s twice what I’m paying my current accountant.”

And therein lies the problem.

Very often, they’re paying their existing accountant for a compliance-only service but expecting an advisory service as well.

Those are two very different things.

What Is an Accounting Compliance Service?

Compliance is the work that has to be done.

Depending on the business, that might include:

• Preparing annual accounts

• Preparing and submitting Corporation Tax returns

• Preparing Self Assessment tax returns

• Filing information with Companies House

• Preparing VAT returns

• Running payroll

• Dealing with routine statutory requirements

These services are important. Your accounts and tax returns need to be accurate and submitted on time.

But ultimately, compliance is predominantly about reporting what’s already happened.

Your financial year has finished. Your accountant prepares the accounts.

Your tax year has finished. Your accountant prepares the tax return.

There’s nothing inherently wrong with a compliance-only service.

For some businesses, it’s exactly what they need.

The problem arises when a client is paying for compliance but expecting something considerably more.

What Does a More Proactive Accountant Actually Do?

If you want your accountant to be more proactive, you’re normally asking for some form of advisory service.

That might include:

• Regular meetings during the year

• Tax planning before the year end

• Reviewing management accounts

• Cash-flow forecasting

• Profit and margin analysis

• Business planning

• Advice on remuneration and profit extraction

• Reviewing the structure of the business

• Discussing investment and funding

• Helping management understand its KPIs

• Being available to discuss commercial decisions

That requires considerably more time and involvement than preparing a set of accounts once a year.

And inevitably, that has a cost.

What Does “Proactive” Actually Mean?

This is something I’d encourage business owners to think about.

It’s easy to say:

“I want a proactive accountant.”

But what do you actually want them to do?

Do you want quarterly meetings?

Do you want someone monitoring your management accounts?

Do you want tax-planning meetings before your year end?

Do you want someone you can telephone whenever you’re considering a significant business decision?

Do you want your accountant to challenge your numbers and ask difficult questions?

Those are all reasonable things to want from an accountant.

But they need to be part of the service you’re buying.

You Need to Compare Like With Like

Accountancy fees can vary enormously.

One firm might quote £1,500 while another quotes £3,000 for what initially appears to be the same client.

That doesn’t necessarily mean the second accountant is expensive.

And it doesn’t necessarily mean the first accountant is cheap.

You need to understand what’s included.

One quote might simply cover the annual statutory accounts and tax returns.

The other might include regular contact, tax planning, meetings and ongoing advice.

They’re not the same service.

Comparing the headline fee without comparing the scope of work can therefore be misleading.

Different Businesses Need Different Levels of Support

Not every business needs an advisory accountant.

A small, straightforward company where the owner understands the numbers and only wants someone to deal with the statutory requirements may be perfectly happy with a compliance-only package.

Why pay for something you don’t need?

As a business becomes larger or more complicated, however, the value of good financial information and regular advice can increase considerably.

You may start needing help with questions such as:

• Can we afford to recruit?

• Why has our gross margin fallen?

• How much cash will we need in six months?

• Should we buy or lease this equipment?

• How should we fund expansion?

• Are we extracting profits tax efficiently?

• Which parts of the business are actually making money?

At that point, you probably need something beyond an annual compliance service.

Ask What You’re Actually Paying For

This is why I’d encourage business owners to have a clear conversation with their accountant.

Don’t simply ask:

“How much are your fees?”

Ask:

“What exactly do I get for those fees?”

And if you want more support, ask what additional services are available and what they cost.

At Paul Marks & Co, for example, we offer different levels of service. Some clients want predominantly compliance. Others want additional advice and support throughout the year.

Neither is right or wrong.

It depends on what the client wants and is prepared to pay for.

The Rolls-Royce and Mini Cooper Problem

I sometimes describe it this way.

Don’t expect a Rolls-Royce service when you’re paying for a Mini Cooper service.

And there’s nothing wrong with a Mini Cooper!

If that’s all you need, there’s little point paying for a Rolls-Royce.

But if you want regular advice, tax planning, management information and someone actively involved in the financial side of your business, you need to make sure that’s actually included in the service you’ve bought.

The Bottom Line

If you feel your accountant isn’t proactive enough, they may genuinely not be providing the service you need.

But before changing accountants, ask yourself another question:

Am I actually paying them to provide the level of support I’m expecting?

Compliance and advisory services are different.

A good accountant should make it clear what is included in their fees, and a good client-accountant relationship starts with both sides understanding what is expected.

So when comparing accountancy fees, don’t simply compare the number at the bottom of the quote.

Compare what you’re actually getting for your money.

Because when it comes to accountancy fees, the cheapest and most expensive quotes may not be offering the same thing at all.