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 Ian Phillips, Partner at Top-40 firm Duncan and Toplis.

About Duncan and Toplis

Positioned at number 35 in last year's Accountancy Age league table of UK accountancy firms Duncan and Toplis has 11 offices throughout the East Midlands and fee income in excess of £15 million. The majority of their clients are family businesses and SMEs, ranging from start-ups to clients with turnover up to £15-20 million. Clients operate across a wide range of industries and trade sectors.

How would you describe the Duncan and Toplis service philosophy?

An important role for us is to 'hand-hold' our clients through the challenges that face them in the current economic climate. I often say that our role is to be finance director to numerous clients, who are in business in the area. Typically our clients have a bookkeeper who prepares a competent set of books, but do not have the resources to employ a full time accountant or finance director. Our practice generally fills that void between the bookkeeper and what is needed from a proper set of management or financial accounts.

How is the credit crunch affecting your clients?

I feel that the term 'credit crunch' is a bit of a misnomer. Locally we have a lot of business geared to agriculture, and that has its own challenges. On the more general issues, we are seeing the banks and the financial institutions being much more cautious and much more reluctant to release funds. They are more demanding of clients and the information that they produce. The banks demand for management information is incessant and keeps us very busy. What exactly they are doing with the information we are not quite sure, but the demand continues unabated.

Is reliable, up-to-date management reporting more important than ever?

With regards to the information that we produce, the pressure is on for accuracy and timeliness. I think that we are very conscious of the need to have accurate, reliable, and timely information that enables outside agencies, our clients, and the proprietors to make sensible decisions. Currently one feature of the credit crunch manifests itself in short-termism. Order books are there, but things are expected in a very short term timescale, and therefore businesses need to react. It is no longer the case that businesses can leave things for 2-3 months and see how they develop. Decisions need to be made reasonably quickly, in a short space of time, and accurate information is vital to help meld those decision making processes.

How are you responding to these market pressures?

The services that we offer are always under pressure in terms of the cost. But clients are becoming more aware of the value that we can add to their functionality and their own accounting expertise. We are analysing the accounts and adding statistical information in order to help business understand better how they operate.

There is a fine balance between the extra cost of this work and the tangible benefit that clients can see, but the hidden benefits can be substantial. This works in two ways. When working with businesses that are struggling, we can identify where cost savings can be made and where business can be realigned. Where businesses are successful, we are looking for trends to drive them further forward and to help them make investment decisions based on sound reliable information.

The compliance part of our work is seen as a necessary evil by a lot of clients. We believe quite strongly that you have got to add more.

How does accounts review technology help you deliver this pro-active approach?

Getting 'under the skin' of the business and being part of the team that is helping the business develop is a key part of our role, and there is a growing demand for that. We are in the position to provide that service having a general understanding of the accounts and the accounting function alongside the practical commercial support that successful entrepreneurs need. We have various tools at our disposal including Validis to assist us in adding value to our clients.

Whilst we do have numerous clients for whom we are doing regular management accounts, some clients only come in once a year. Nonetheless, we are using the techniques that we are deploying in the management accounts area to help us analyse the annual accounts, by using extracts from Validis to identify anomalies and trends, which helps us to create a cost-effective way of delivering an audit. Clients get a good feel for how their business is going. The tools at our disposal can support or challenge those trends to make sure that there is some foundation, and that the business's decision making process is achieving the desired end results.

Is process standardisation an important consideration?

Over the years we have built up substantial expertise on various accounting software packages especially Sage and a lot of our clients are now using that product. Now we are looking to develop further the use of the software using Validis to give us more information, verify the accuracy, and to create reports and information that we can then use to help advise our clients from a point of having knowledge that we can rely on. Within the team that we have here, we have various grades of staff and levels of expertise. It is important within the process itself, that we can be as streamlined as possible with a consistency of approach.

When we deal with things at this level, we have commonality and standardisation, meaning that we are not reinventing the wheel every time we look at a set of books, and we are not going back to a blank sheet of paper. It enables us to deliver a cost effective solution or proposal, knowing that we have confidence in what we have built up and the products that we are using. Repetition of use gives the staff confidence to use those tools and build their methodology. We try and build it up so they can use the same techniques from one client to the next.

Is the speed of accounts production an important consideration?

When we are preparing the management accounts, speed in production is vital. Clients are talking to the banks, and there is an expectation from the banks that we will produce the information in a prompt manner. A lot of the problems that we face when are preparing this are that we do need to investigate variances, why things aren't coming out like we thought they should, inconsistencies against previous month's figures, etc. Tools such as Validis will allow us to streamline this process. It will enable us to identify more quickly the trends, identify any anomalies, identify any particular issues, whilst reducing our time input, thereby producing a more accurate result.

How does Validis help differentiate your services?

We need software to backup the advice and support we give our clients and tools like Validis help us enormously in delivering on timely and accurate basis. We are in a competitive market place but using these tools enables us to be just that little bit different to our competitors and clients appreciate that fact. Businesses talk to each other and it's always nice to get new clients telling us about an existing client being pleased with the support we gave and can they have some!

We feel that we want to have the relationship that enables us to make a positive contribution to their business. Our tag line is 'Shaping Your Tomorrow Today', and that is what we are about.

 

Return to the Validis Insight interviews