Beyond compliance-only services: how forward-thinking practitioners are responding to the challenges of the recession

The Validis Insight Interviews explore the challenges and opportunities that accountants face, how forward-thinking practices are responding and how accounts review technology supports their goals.

Interview with Peter Guinn, Partner at Alliotts, a top-100 UK practice.

About Alliotts

Alliotts is a multi-disciplinary accountancy and business advisory practice operating from three offices in the South East: London, Guildford and Harrow. Their professional team, incorporating 80 staff and 13 partners, offers a comprehensive range of specialist services to clients operating across a broad variety of business sectors. Their active participation in a worldwide grouped network Alliott Group extends their coverage worldwide to approximately 100 countries supporting their growth and expansion.

What is the main challenge that your clients face currently?

My clients today face many challenges. The key one is cash flow. Their customers are paying them later than they used to. Late customer payment in the UK has always been a problem, but now it's getting worse. Perfectly good companies are now having cash flow problems when they really shouldn't have. It's largely because historically the flow has been financed by the supply chain and that supply chain is now drying up in terms of cash.

How significant an impact is the lack of credit insurance on your clients' cash flow?

Credit insurance is playing quite a big role. A lot of our clients will use credit insurance for their customers and will do invoice discounting. They are now finding the credit insurance companies are down-rating their customers so the discounters are down-rating their facilities. Another problem is that when they are in a supply chain their customers are down-rating them as a supplier, causing them problems.

Aside from reducing credit lines, what actions are lenders taking to manage their exposures?

There is a requirement for more timely information and more detailed management reporting information. In the past where quarterly accounts would have sufficed, now its monthly accounts. Previously one or two pages of a P&L and balance sheet would have done, now it's cash flow projections. The biggest thing we're finding is that cash flow is more important to the bank than the P&L is.

Are you experiencing greater fee pressure as a result of the recession?

The challenge for professionals has always been 'staying relevant'. Clients have always changed over the years in terms of what the client wants from us. It's moved from routine compliance, to now detailed management reporting and information packs. At the same time there's always pressure on fees. The first thing the accountant says to their client is "cut your costs" and we are now one of those costs. It's very important that we do offer a value added service where they get real value for money in relation to what they pay for us. Over time, I think in real terms accountants fees have come down in terms of cost and gone up in terms of value. In the past management accounting packs would have been quite small, now they are quite large with the fees the same or even lower.

How important has technology been in helping you to maintain profit margins?

IT has paid a huge part in our practice in the last few years. It has kept our costs down in terms of producing management reporting packs and enough information, and that means that our prices haven't gone up as they might have otherwise done, so the client sees more value. They get better information quicker and for the same price or less.

What part does accounts review technology have to play?

In the current climate it's more important than ever that we keep out costs down and our value up and we need to change the way we do things to make us more efficient. A product like Validis is very useful to us because it will speed up our accounts preparation process and we can use it as a tool to find little errors faster in the information we are looking at. The slowest part of doing the accounts is correcting errors. It's not producing or pushing the button to produce the report, it's getting the report ready in the first place and Validis will really help us with that.

Is process standardisation an important consideration?

A product like Validis will give us a systematic approach to doing this. At present all our staff have their own way of doing things. Most clients get a tailored spreadsheet pack especially for them, not one that we can use immediately on another client. Using Validis standardises the process. With standardisation you always get efficiency. The biggest time consuming area within any management reporting is getting the data right in the first place. At any clients site there is always a few mis-postings which we have to find first before we even get the accounts out. With downwards pressure on fees we have to be very fast in getting the accounts out. A product like Validis will find the errors for us quicker so that we can produce the management accounts in a shorter time. This allows more time to be spent focusing on the direction of the company providing the information they need rather than preparing the information in the first place.

Finally, how would you describe Alliotts' competitive advantage?

A number of our new clients came from smaller practices that do compliance work only, and provide a bill once a year to the client for a service they don't really value. The service that we aim to provide is more a tailored consultancy service where the compliance is part of that rather than the other way around. We provide them with the information they need at a price that is right. They value us more and therefore we retain them as client.

 

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