Martin Bissett reports on life, business, winners, and losers from England.
By CPA Trendlines
You can divide accounting firms in the U.K. much like you can in the U.S. – into those that act proactively, and those that don’t, Martin Bissett tells CPA Trendlines in a video interview. And that’ll be the difference, he says, between those that survive the pandemic and emerge as market leaders and those that don’t.
CPA Trendlines is providing FREE access to our latest coronavirus crisis updates: Start here for a guide to all our free coverage.
“What accounting firms should be doing is: They should be understanding that their goodwill for years, if not decades, to come is built now,” says Bissett, an expert contributor to CPA Trendlines and the author of a number of manuals and handbooks. “People are going to remember how they acted now in the time of crisis. They should be proactive, number one. Proactive means phone calls, Zoom calls, instigated by the practice, not by the client.”
“But if you can get out of yourself, just be blunt, and make those calls out of genuine concern for your clients,” he says, “then you will find opportunities arise.”
Some firms, like some clients, won’t make it. “So let me be particularly grim in this answer.” he pauses. “I heard today from my client, the accounting firm, they have a client who has committed suicide because of the pressures put on the business because of the lockdown, despite government support. And I don’t know how it gets more serious than that. So will there be casualties in business? There already are.”
“Will there be casualties in the accounting profession?” he continues. “Yeah, I think firms with low cash reserves and firms who are not doing monthly work for their clients but do all the work at year-end. And the year-end is nowhere near where we are now, so it’s very difficult to draw work forward. I think they are at high risk at this moment in time.
“And firms that don’t get off their backsides and go and call their clients,” Bissett says, “I think business owners are going to remember that. Where were you when I needed you? Casualties not necessarily in terms of the firm going into bankruptcy, or anything like that. But casualties in terms of client loss, because the client chooses to go somewhere else for their financial support.”
Out of this crisis, how will the profession have changed? Bissett provides a three-part answer.
First, firms will have “found out that an 8-to-10 hour office day is actually a three-and-a-half-hour working-from-home day.” Adding, secondly, “We’re going to realize that that model for how much work we can undertake is perhaps flawed and can be reviewed.”
Third, live, in-person conferences with exhibitors and keynote addresses will move virtual. And they’ll need new ways to generate leads and awareness.
One final word: “We are learning the clients don’t really give much of a damn about the historical records beyond what the tax liability is, and how the balance sheet looks. And as a result of that, we now see, clearer than ever, where the true value of a trusted advisor is. And if there are firms who come out without changing the message or improving the message, and to be far more proactive, then it was never going to happen for them. Simple as that.”
Simple as that, indeed.
Here’s a lightly edited transcript of the conversation between Rick Telberg and Martin Bissett:
What’s life like in the UK under COVID-19 right now?
It’s quiet. In a good way. So we’re placed into a fairly strong lockdown. We can leave the house for four reasons at this moment in time. And, for children, only really one of those applies. So it’s an interesting time for everybody. But you know the streets, and the shops, and so forth, they are all empty and closed. Just like the Sundays of my youth, basically. This is how it looked every Sunday when I was a kid.
From a commercial perspective, the businesses that are suffering straightaway are the low-margin retail businesses that require footfall, coffee shops, restaurants, bars, and so forth.
But having said that, the counterbalance is that the governments have stepped up and they have introduced a suite of support packages, the like of which we’ve never seen before. We’re not as naive to think that’s free money because that’ll be coming back in taxation in the future… But nevertheless, it’s available now and they’ve moved pretty quickly.
I’m one of the fortunate ones in that my business isn’t hard hit at this time. Ask me again in the next two months, that answer may be different. But right now it’s not too bad. And so we just do our best with our situation. But we have a fair amount of support, oftentimes, at this point. I don’t know how they could have – their critics will always say they’re could have moved faster – but everybody could have moved faster. I’m not sure given the information they had, how they could have moved much faster.
And how are accountancy firms responding?
I’ve been talking to accounting firms that represent maybe 35,000 to 40,000 businesses UK businesses. That sample isn’t representative necessarily. But geographically, it’s very evenly spread. So it representative, that sense. And there’s been four stages.
Interestingly, I’ve noticed other colleagues’ responses, and firms are split into two different camps.
And so how to explain is this: When this all first hit and we got wind of the seriousness of the situation, then, exactly as you would expect to happen, everyone got their own house in order. So all the accounting firms got their own house in order and looked at their staffing situation, looked at their cash flow position and so on, and built their own boat basically, and got that in order. That was kind of that stage one.
Stage two after that was firefighting, really, and calling up clients, clients calling them because they’re panicking, and helping out clients in that situation. And then we split into two camps. So everyone did those two things.
The third stage was the remote working, you know, the acquisition of laptops, and software, you know, Office 365 for a lot of people, to get everyone able to work from home and setting up a regular Zoom calls in the morning to organize a team to keep morale up, and so on. That was stage three, get everybody worked out.
Now, not everyone did that straight away. Some firms were very, very quick to pull their team out of the office and back home. And some were very slow to do it.
So there’s two very distinct camps there. But that was still stage three.
And then stage four is an even greater disparity. And that’s where firms are now proactively, proactively, have organized in a systematic way their client lists, maybe by: Most vulnerable first. Maybe by Grade A client first. But they are literally phoning up and saying, Hey, how you doing? And they’re starting to have the conversations that gurus have been asking them to have for over 30 years, you know:
- How is your cash flow?
- Do you have a budget in place?
- What about personal finances?
- What about management information?
- Do you know how much the business needs to pay you in this moment in time to keep the lights on?
- Do you know what four walls that cost you at home? You know, what are the mortgage?
- What about food, utilities, or transportation?
Those conversations have been held proactively. But the sad news, and I hope this changes, is that the proactive group, as you might imagine, are very small comparative to the reactive group who have remained in the firefighting camp and are just putting the shutters up, as we call it over here.
“Putting the shutters up.” Yeah, I guess you addressed it when you talked about the proactive group. But let me ask the question anyway. What should accounting firms be doing right now?
Well, I think one of the things that has been really revealing at this time is how many accounting firms – their partners and owners – have been treating their firms as ATMs. At many firms, you know, there aren’t a lot of reserves in the firm. We’ve seen quite a bit of that. So now, they’re panicking.
What accounting firms should be doing is: They should be understanding that their goodwill for years, if not decades, to come is built now. People are going to remember how they acted now in the time of crisis.
They should be proactive, number one. Proactive means phone calls, Zoom calls instigated by the practice, not by the client. If we haven’t heard from the client, don’t assume that the client is okay. The client may have been paralyzed by panic.
And then going to them with that:
- A, How are you doing?
- B, What do you need right now?
- C, Let’s get something in place for you.
And the general rule of thumb, you know, is one that it is not socially appropriate at this moment in time to sell, or to market things to be bought. Nevertheless, accounting firms are not nonprofits. As far as I’m aware, they are for-profit organizations. And therefore, if you’re doing the work, if the client has instructed you to do the work, you should be getting paid.
What I’m seeing, and this is perhaps the most important answer I can give you to the question is: When accounting firms, especially partners, take that step of saying, We’re going to see if you’re okay, proactive… then the conversations from clients are ranging from: I need help, through to, We’re okay, but while you’re here, you know…
And I have spoken to two accounting firms today and they were reporting today that, in one case, four figures, and the other case, five figures, of new work as a result of just calling the clients to see how they’re doing. Nothing more complex, nothing more scientific, than that.
For the introverted, that’s quite tough to do. You know, if you’re not naturally outgoing, if you’re not naturally empathetic, that’s difficult. But if you can get out of yourself, just be blunt, and make those calls out of genuine concern for your clients, you will find opportunities arise. And I’ve seen it twice today.
Will there be casualties? Will there be firms that don’t get it? And don’t come out at the other end?
So let me be particularly grim in this answer. I heard today from my client, an accounting firm, they have a client who has committed suicide because of the pressures put on the business because of the lockdown, despite government support. And I don’t know how it gets more serious than that.
So will there be casualties in business? There already are. Will there be casualties in the accounting profession? Yeah.
I think firms with low cash reserves and firms who are not doing monthly work for their clients, but do all the work at year-end. And the year-end is nowhere near where we are now. So it’s very difficult to draw work forward. I think they are high-risk at this moment in time.
Firms that don’t get off their backsides and go and call their clients: I think business owners are going to remember that. “Where-were-you-when-I-needed-you? You know, that type of stuff. And I think, not necessarily casualties in terms of the firm going into bankruptcy or anything like that – but casualties in terms of client loss, because the client chooses to go somewhere else for their financial support.
When this is all over, how will the profession look different?
There’s a number of things. I’ll pick three things here, if I may.
The first, I think, is that firm owners, whether they are principals or whether they are in a multi-partner firm, are realizing exactly how much productivity is lost through travel, and commuting. And that when you had to remote-work, you found out that an 8 to 10 hour office day is actually a three and a half hour working-from-home day.
The second thing that does, of course, is: That makes a mockery of traditional capacity calculations.
Firms say, We just don’t have the capacity to do the work? Yeah, not so much.
You know, 22 years I’ve been working in accounting serving the accounting profession, Rick, and I’ve yet to see an accounting firm in a hurry when I walked in the doors. You know you’re in a hurry? Go to a sales environment and see people panicking to beat deadlines. But, over the course of a year, do you see employees – I can’t imagine it – rushing from place to place to get things done? No, you don’t, you don’t see that generally.
So I think traditional capacity calculations are the second thing that is going to change. We’re going to realize that the model for how much work we can undertake is perhaps flawed and can be reviewed.
So remote working is number one, far more remote-work and far less commuting.
At number two, I think the capacity calculations are gonna change.
And number three, I think from a continuing education point of view, I think the necessity for so many conference organizers to put their conferences on virtually is going to be on the increase as well. And while that’s not a new concept – you know, we have virtual conferences already – I think we’ll see larger-scale attempts at: Can we deliver a conference virtually? Does the attendee get the same value out of it? What does that mean for vendors who sponsor the conference and exhibits at the conference? And I see that ecosystem changing quite a bit as well. I think vendors who served the accounting profession, who no longer have those conferences, have a stand at, or to have a keynote at, are going to be using digital communications a lot more to get that lead gen.
Very good point. Thank you. Is there anything I haven’t asked that I should?
There’s only one thing that comes to mind. Okay? Again, I’ve been working with accountants for 22 years, that’s over 1,800 firms at one level or another in that time. But, over and over again, I’ve heard: We just don’t have time. We’re maxed out. We couldn’t possibly move beyond compliance.
In this period, if there are firms who emerge with the same messaging of what they do, or maintain the no-messaging of what they do, when this is all over, then it was never, ever about time. And it was always about hunger and discipline. And how focused you were on helping the clients. Or how focused you were taking money for recording historical performance.
We are learning the clients don’t really give much of a damn about the historical records beyond what the tax liability is and how the balance sheet looks.
And as a result of that, we now see, clearer than ever, where the true value of a trusted advisor is. And if there are firms who come out without changing the message or improving the message, and to be far more proactive, then it was never gonna happen for them. Simple as that.
Martin Bissett, thank you very much.
Thank you very much, indeed.