What’s keeping public practitioners awake at night around the world? Surprisingly, exactly the same things! So how do CPAs tackle these business challenges to come out on top and let their practices soar?
By Zilla Efrat
Attracting new clients is the number one challenge facing small and medium-sized accounting practices (SMPs) around the world. Indeed, 47 per cent of the 6725 SMPs polled from 169 countries in the International Federation of Accountants’ 2015 IFAC Global SMP Survey rated it as a high or very high challenge.
But that’s not the only big issue facing accountants. Keeping up with new standards and regulations (44 per cent), standing out from competitors (43 per cent) and being pressured to reduce their fees (41 per cent) are also keeping accountants awake at night, right around the world.
View from Hong Kong
Practitioners in our own region, however, have a slightly different perspective. SMPs in Australasia and Oceania list keeping up with new standards and regulations, keeping up with new technology, succession planning and enabling employee work-life balance as their biggest challenges. And SMPs in Asia rate serving clients operating internationally (52 per cent) as their top challenge.
That is certainly true for Thomas Wong FCPA, one of three founding partners of CWCC, a professional advisory firm with offices in Hong Kong and several cities in mainland China. His client list includes multinationals with operations in the US, Latin America and various other countries.
Wong works across borders, dealing with different nationalities and cultures. His trick to bridging different cultures is to “always respect others” he says. “If they want to have a four-hour lunch, you have to respect that,” he adds.
What makes his practice successful, he says, is showing care and concern for clients. That’s why he’s up late at night answering their emails, and why he has staff on hand in various countries.
Like his international counterparts, Wong says a big challenge is attracting new clients. He does this via publicity in magazines, holding seminars and through social media such as Facebook.
"Always try to learn which five countries are your biggest trading partners, and develop business relationships with these countries." Thomas Wong FCPA, Hong Kong
He confesses the biggest lesson he’s learnt in running his practice is to avoid complacency; that’s why he had to go international.
He also believes in following the money. “Always try to learn which five countries are your biggest trading partners, and develop business relationships with these countries. As accountants now, we have to keep abreast with what’s happening around the world and we have to stay mentally and physically fit.”
View from Singapore and Malaysia
Mental and physical fitness is certainly required in Singapore, where SMPs face unique challenges. Lisa Liew FCPA, managing partner of public accounting firm Philip Liew & Co, says the biggest challenges for SMPs in Singapore are attracting and retaining talented staff, while also dealing with competition and eroding margins.
When it comes to talent, she says: “This is a perennial problem in the accountancy sector in Singapore, which inevitably affects SMPs. One of the causes is that, due to their size, the smaller accounting firms lack the branding and relative attraction of their much larger counterparts in the industry.
“For the same reasons, retaining staff becomes a challenge. SMPs have traditionally had a higher reliance on foreign sources of talent for their staff requirements. But in recent years, government policies to tighten the entry of foreign labour into Singapore have aggravated the situation. The confluence of these factors has made hiring and retaining good staff more difficult.”
She adds: “The accounting sector in Singapore is made up of the international accounting firms, mid-tier accounting firms and SMPs. Smaller firms make up more than 90 per cent of the total number of accounting entities.
“SMPs have traditionally relied on compliance work as their main source of income. But their revenue from this work has been declining as regulators introduced audit exemption, which excuses some companies from mandatory statutory audits.
"SMPS have traditionally relied on compliance work as their main source of income, but their revenue from this work has been declining." Lisa Liew FCPA, Singapore
“The subsequent relaxation of the audit threshold also shrinks the pool of companies subjected to audit and, hence, demand for SMPs’ services. In addition, a high-volume/low-fee model is common for compliance engagements. These services are increasingly commoditised, putting greater pressure on SMPs’ margins.”
But being small has its advantages. Liew says that as well as simplifying the firm’s structure, being small means Philip Liew & Co has more autonomy to create initiatives that position it as a model employer. That, in part, helps with its efforts to attract and retain good staff.
“To appeal to staff with young families, our firm adopted flexible work arrangements some years back. For example, we made special arrangements to accommodate a grandmother who needed to work half-day weeks to help care for her young grandchildren. She liked this flexibility so much that she decided to stay with our firm until her retirement at 67 years of age.
Audit Fast Classes
“Work-life balance is another important aspect that we try to accommodate. We have observed that this concept appeals to our staff from the Millennial generation. So we constantly look at ways to incorporate this balance within the constraints of work requirements.”
She continues: “For our clients, we constantly look for ways to delight them by providing a service level beyond their expectations. Most of our clients are small and medium-sized enterprises which are cost conscious. Providing value is another way to differentiate ourselves.
"Clients that come to us expect us to 'know everything' and hence we need to be a Jack of all trades." Theresa Ngu FCPA, Malaysia
“This model has helped us retain happy clients who, in turn, are pleased to recommend us to their contacts and professional networks. Such word-of-mouth referral has worked very well for us. We get many referrals by existing happy clients.”
Under an initiative that was spearheaded by CPA Australia’s Singapore Division, Philip Liew & Co became one of eight founding member firms of the Singapore Accountancy Alliance (SAA) in mid 2013.
“These like-minded SMPs came together to pool our resources to achieve several common objectives: growth, scale up capabilities, common branding, succession planning and staff development.
“The thinking is that, as small firms, we can achieve much more by working together as a loose association of business advisers,” Liew adds. “As an alliance, we have realised many benefits through group projects and in the areas of joint training and practice management. We have also built up visibility as a group by jointly participating in activities that give back to society.”
Theresa Ngu FCPA, an accountant in Malaysia, says she often stays awake asking herself how she can improve her business model to add value to clients and keep staff engaged and happy.
Like Liew, one of the biggest challenges in her practice is attracting talent. “Bigger firms have the advantage of brand names and an attractive pay package,” she says.
“Being a small outfit, we are also expected to be knowledgeable in all aspects of the services we provide, as opposed to bigger firms where they have ‘divisions’ that specialise in specific areas. Hence, we need to keep up-to-date with changes in all fields all the time. Clients that come to us expect us to ‘know everything’ and hence we need to be a jack of all trades.”
View from New Zealand
Bridgette Pretty CPA, a director of Pretty Accounting in Nelson, New Zealand, says she’s kept up at night worrying that she doesn’t know everything.
“As a New Zealand regional public practice, it is very hard to specialise in any one particular accounting area given the smaller population,” she says. “For that reason, I deal with a wide variety of accounting areas in any one day. I rely heavily on my New Zealand CPA colleagues for support and advice when I come across scenarios that I don’t feel confident with.”
Her advice to accountants in Australia encountering similar challenges is to not be afraid to ask for help.
“I have found most people are happy to share their own stories and knowledge. Building up a support network among my fellow CPA members over the years has been an invaluable resource.”
She believes the secret to attracting new clients is quite simple – “personality”.
“When I attended the CPA Public Practice guideline talks, it was discussed that 60 per cent of the reason clients choose a new accountant is that they find affinity with the accountant’s personality. I have found this very true in regional New Zealand where the majority of my clients are from referrals.
“I find the people that existing clients have referred have similar values and ethics as they do, therefore a referral adds substance to our working relationship both ways. It’s always nice to get referrals as you know you are doing something right.”
To differentiate her practice, Pretty says she keeps accounting real and uses down-to-earth plain English. “I treat my clients how I like to be treated, with respect and with an aim to minimise surprises (although the odd good surprise doesn’t do anyone any harm). This hands-on, personal approach seems to be a point of difference compared to competitors. Did I just give my secrets away?”
Pretty adds that the key to attracting and retaining new staff is being flexible. “When I first set up my practice, I took the time to set up on a cloud-based practice management system (CCH iFirm) and using Microsoft Office resources. This allows my great staff to have the flexibility they need around families and to work from anywhere.”
"As a New Zealand regional public practice, it is very hard to specialise in any one particular accounting area given the smaller population." Bridgette Pretty CPA, New Zealand
Technology advancements, such as remote access to systems and being able to share data easily these days with email and Skype, has also made it easier for Pretty to deal with offshore clients.
“I don’t really notice any obstacles any more when working with clients, as technology has made our working relationships seamless,” she says.
On the biggest lessons she’s learnt in running a practice, she says: “There is so much great training material available online and in book shops which can support my business, but at the end of the day I have learnt to listen to and trust my instincts.
“I regularly lecture my clients on the great importance of having a life-work balance. I try to do this myself by booking regular exercise into Outlook (I am very good at doing what Outlook tells me to do). Life is short; finding a balance to extend that life in the healthiest way is vital.”
Does it all sound too familiar? When it comes to challenges, it appears there’s more that unites SMPs around the world than divides them.
These are the issues keeping accountants up at night