Two top interview tips

Having been asked to contribute some tips to a careers magazine I thought I’d replicate them on this blog too.

I have always remembered the first time that someone I was interviewing asked if they could make notes. Of course my reply was ‘yes’.  Indeed I was impressed that they were evidently prepared, had asked my permission and noted down only key facts. Their notebook also contained prompts for questions they asked of me later in the interview.  This took place 20 years ago. I still remember it because it was the first time. But looking back I don’t recall many other candidates for jobs doing the same thing and when I was in practice I must have interviewed dozens and dozens of people.

So that’s my top tip. Remember that an interview is quite distinct from sitting an exam. I explained this to a young family friend recently before she attended her first ever job interview. I explained that she wasn’t “cheating” if she needed to check her notes before asking a question. I also stressed that it can look very professional to make notes during an interview as long as you don’t lose too much eye contact. So only try to note down key points. You can always supplement the notes later.

Tip number two is something that I would do if I were ever again an interviewee. I would look up the interviewer on the web. I’d check the firm’s website, I’d look them up on Google and on LinkedIn. I’m assuming that you will have already checked out the firm or company online before applying for the job or when the interview is arranged. But these days you can go a step further and look up the interviewer too.

I always try to check people out online before I attend pre-planned meetings. I note down a couple of salient facts and may use these or refer directly to the online profile during the meeting.  This can help you prepare for the meeting as you may find a photo of the person, you’ll remove a little of the uncertainty and you’ll often pick up a couple of things that will help you in building rapport with your interviewer.  But you do have to be careful when you do this. Not everyone I meet is net savvy (and the same will be true of some interviewers). It’s all too easy to freak someone out by revealing how much information you have found out about them online. And that’s something to avoid doing during an interview (and indeed at any time). So be careful!

Do your timesheet procedures reduce new fees?

Over the years I’ve noted that accountants typically devote more time to networking with contacts and strangers (effectively) than they spend helping existing clients.

We’ve all heard the marketing gurus explain that it’s easier to generate additional fees from existing clients than it is to secure new fees from new clients – people with whom we have no prior working relationship. And this makes sense doesn’t it?

All other things being equal, a client who already knows us, likes us and trusts us is more likely to agree to pay for additional services if we take time to find out their needs and problems, than is a stranger.

So why do so many accountants spend so little time ‘networking’ with existing clients? Instead they spend time at marketing meetings and networking with contacts and prospective clients.  Much of this happens outside of the recorded timesheet day of course.

In my experience this happens because of an edict (or simply a perception) that:

• all time spent with client must be recorded on the timesheet; and
• all time charged to clients on timesheets should be recovered.

Quite rightly accountants don’t want to be pressured into billing clients for ‘marketing and networking’ time. Equally the accountant wants to avoid having to justify write-offs or unbillable client time.

Such attitudes are ingrained in the way that many firms of accountants are structured. As a result existing clients feel that no one cares about them, that the clock is always ticking and that they might as well talk to someone else about new issues, problems and challenges.  In effect the accountant misses out on additional fees as he or she misses opportunities to find new ways to help their clients. And the accountant literally wastes time networking with strangers because this is more acceptable within the partnership than spending prospecting time with existing clients (without putting time on the clock).

I suspect this is less of an issue in the case of sole practitioners – unless their timesheet habits have simply been carried over from when they used to work in a larger firm.

Incidentally – when you spend time with clients – it’s best to focus on finding out from them what’s troubling them at the moment rather than trying to sell to them. Find ways in which you could help them and whether they would like that.

What else could you do to reduce the downsides of your timesheet procedures?

The future of compliance services for accountants

Many commentators seem almost contemptuous when talking about accountants who focus on the provision of compliance services.

We’re told that fees are being forced down and that firms that focus only on compliance services face an uncertain future. I’m not sure I agree. If you have an established practice and know your clients well, you are not suddenly going to lose a swathe of clients who all decide to rush off at once.

About the only thing that could cause a speedy dissipation of your client base would be widespread publicity of your incompetence or negligence. Any other changes to your client base will be sufficiently gradual for you to take steps to stem the flow as and when it becomes necessary to do so.

Of course the better prepared and ready you are for such changes, the faster you will be able to adapt and evolve. I do think it will be evolution rather than revolution in this regard.

What will change first and fastest in my view is your ability to win and retain new clients if you and they are focused on compliance services. That means tax returns, bookkeeping and accounts preparation.

The issue will be the alternative ways in which these needs can be satisfied and the time and cost considerations of each option. Are you even aware of the alternatives to a traditional accountant? Again, many accountancy strategists have been predicting this development for years.

I do understand those views and I respect most of the commentators who encourage accountants to plan for the future. Indeed, I agree that’s a wise move, especially for larger firms where there is an inbuilt resistance to dramatic change. However, for most firms of accountants there needs to be something equivalent to a burning platform before there will be a consensus for fundamental changes. At the moment, few partners accept and believe that forthcoming developments will have such a big impact.

What do you think? Please add your comments to this blog post.

Networking strategies for accountants

Many accountants attend numerous formal networking events on a regular basis.  This can be very time consuming and it will be a waste of time if you set out with the intention of winning new clients and securing new leads from every event that you attend.

Effective networking involves developing profitable relationships and that takes time.

Do you have a networking strategy?

One approach is to find ways that can help speed up the process whereby new acquaintances move up the tree from simply knowing you, to liking you and trusting you.

And one way to do this is to focus on securing just a small piece of one-off work whereby you can prove yourself before seeking to establish a longer term relationship built around recurring compliance work.

What’s your networking strategy?

The future of auditing and assurance services

At a recent ICAEW conference on the future of auditing I realised how what was once a traditional service provided by most accountants, is almost extinct. It won’t die out completely but it’s certainly becoming more specialised as the number of companies requiring audits has fallen dramatically in recent years. And that trend is set to continue.

Not only is the audit landscape shrinking but the principles are changing. I won’t pretend to fully understand the new “Clarity ISAs” (International Standards on Auditing) but I understand that the UK will be an early adopter within the next two years. Audit firms will need to invest in new training and systems to comply – but there won’t be any additional fees so this is simply an additional cost to be covered.

I’d also mention that earlier this year the Treasury Select committee asked the FRC to review the level of non-audit work that auditors should be permitted to undertake for audit clients.

And the outlook on the financial reporting side is also changing. A recent EU proposal would exempt micro-companies from the financial reporting obligations in the 4^th and 7^th directives. The current UK Government sees this as deregulatory; Just think about the implications for your practice if smaller companies were no longer required to produce formal annual accounts other than for the taxman.

How will these developments impact your firm? Have you yet undertaken any form of strategic review, perhaps comparing your current structure with that which you will need in 2 or 3 years time? And how will you evolve over that period? Will your firm be one of those that offers alternative assurance products – such as The Assurance Report? Will you be competing with other firms that do offer this service? Whilst you may think you know what your current clients want in this regard, what about prospective clients?

Please share your views and comments below.

Engagement letters for accountants

It’s almost a year since the professional bodies published their updated guidance on engagement letters for tax work. This was the culmination of a thorough review by a working party that I was proud to chair on behalf of the contributing bodies: ICAEW, ICAS, ACCA, CIOT, ATT, IIT, CIMA.

I wrote a number of articles on the subject for the professional press and online forums. eg: AccountingWeb and Tax Adviser. I also explained our approach in a posting on the TaxBuzz blog.

And most of the bodies published the updated guidance on their websites for members. More recently this has been updated to reflect one last schedule that we added for those who want to advise on tax credits. (Incidentally I’ve explained elsewhere on this blog why I think it’s important to at least cover the basics on the subject of tax credits).

The reason for this post now is that for whatever reason I have started to receive more requests for links to the online guidance. And some people are asking for guidance as regards non tax related issues too.

Rather than keep cutting and pasting content I though it would help to put all of the links in one place.

• ICAEW – Tax Faculty – TaxGuide 02/09 - Engagement letters for tax practitioners (This contains the latest guidance as issued by my working party in August 2008 as updated in March 2009)
• ICAEW – Library - Engagement letters – sources and samples

I have also included  a link here back to a recent piece I wrote about disengagement letters as this may also prove useful.

Why aren’t more accountants talking about LLPs with clients?

The facility to operate as an LLP became a reality in the UK on 6 April 2003. That’s more than 6 years ago. Whilst an increasing number of professional service firms are migrating to an LLP structure the concept it still relatively unknown to most clients.

Why is that?

Given how many presentations that I and others have given at seminars and training sessions for accountants I am sure that most of them understand the key issues, differences and benefits of LLPs.  When I lectured on this subject from around 2001-2007 I used a matrix to highlight the key distinctions as between the 4 principal alternative business structures in the UK:

• a sole trader;
• a conventional partnership (where the individual works with one or more partners in the business);
• a limited liability partnership – LLP – (this provides the individual and their partners with the protection of limited liability, just as with a company); or
• a limited company.
There is also a fifth option – the Limited Partnership (as distinct from LLP) – but this is rarely an attractive or feasible choice for smaller businesses. These old style Limited Partnerships were very restrictive, required at least one partner to have unlimited liability and precluded the limited partners from being involved with the management of the business. The LLP is a very different animal.

So why the apparent reluctance to discuss LLPs with clients?

I think it has much to do with something I never had cause to fully understand or to speak about. But it is a critical issue for accountants in practice. And until and unless they are clear on this issue I entirely understand why they don’t advocate LLP structures as an option when talking with their clients.

Quite simply it’s How do you prepare LLP accounts? Do the accounts prep software packages include an LLP option? Does the accountant fully understand the issues so as to be able to anticipate the accounting issues that are especially relevant? And so on.

In this connection I was inspired to write this piece after noting a CPD seminar “LLP Accounts Preparation” being promoted by Tolley in a flyer that arrived this morning. Sadly the event took place on 11 May and 1 June so it’s too late for now. If the content matches the title then this seminar could be very useful and deserves to be well attended if it is rerun.

If you’re already an advocate of LLPs, are aware of other sources of information on this subject or of accounts prep software that facilitates the preparation of LLP accounts, please add your comments below.

(If you want more on this subject I wrote an outline piece on another blog here: Limited Liability Partnerships (LLPs) – a better business structure than a limited company?)

Calling sole practitioners who want free PR

Sole practitioners have a unique opportunity to secure unprecedented publicity and kudos this year. If you’re keen to grow your practice you won’t want to miss out, especially as it need not cost you very much if you do everything yourself.

I’m referring to the prospect of being crowned sole practitioner of the year at this year’s AccountancyAge awards. This will be the first time that such an award has been presented.

For a number of years I was on the judging panel for what are now the Taxation annual awards.  When they first started the relative number of entries was quite low. Of course this did not detract from the profile and benefits that flowed from being a winner.

Years later I’m sure that the number of entries for each award has increased such that it is quite an achievement to even be short listed as the ‘Best tax whatever’.

The implication, whether you win or are shortlisted is  that you have beaten all other such tax people/teams around the UK. In practice, with notable exceptions, you simply have to beat those who have entered the awards.

The same is true of most of the Accountancy Age awards. Indeed it’s true of almost any such awards which depend upon a judging panel to decide winners (rather than votes from the public for instance).

The key lesson I learned is that it’s easier to win in the first year when the relative number of entries will be lower than it will be in the future. So I would encourage you to check out the entry criteria for this award and give it a go this year. The deadline for entries isn’t until July so you have a few weeks to put your entry together.

If you do decide to enter, the biggest tip I can offer is to focus on the stated judging criteria and make sure that your entry does 3 things:

1. Addresses all key points
2. Makes it easy for the judges to see that you have addressed all key points
3. Includes current testimonials from client to back up your assertions.

Let me know how you get on or if you’d like some help.

Managing client expectations re tax avoidance

One thing that most accountants have to face is a desire on the part of their clients to pay less tax. In this context it can be helpful to ensure that clients appreciate what is and what is NOT possible/achievable.

For example is it legal to legitimately minimise your tax liabilities. This includes:
•    Claiming all available allowances and reliefs
•    Claiming tax relief for expenditure incurred “wholly and exclusively” for business purposes
•    Planning your affairs to keep your tax liabilities as low as possible within the law

On the other hand it is ILLEGAL to deliberately/dishonestly evade tax. This includes:
•    Claiming tax relief for non-business expenses;
•    Failing to include all taxable income in accounts/tax returns

The consequences of illegal activity include: Revenue investigations, back taxes, interest on late paid tax and penalties (up to 100% of tax), time, hassle, professional fees, and if you’re very unlucky, ill-advised or stupid – prosecution and prison.

Clients also need to understand that if they get involved in structured tax avoidance schemes they are also highly likely to suffer a tax investigation – even though the scheme may be legal and fully disclosed.

I almost admire one promoter who told me his approach. Apparently he explains that clients who would be worried sick by the inevitable Revenue enquiry, the letters, the demands, the time it takes to resolve and the inconvenience should NOT get involved in his schemes – even though he claims they are legal, have full Counsel’s opinion and are fully disclosed to HMRC.

He manages clients’ expectations and makes clear that the enquiries often last 3 – 7 years; and even though he claims they are usually resolved in favour of the taxpayer, he admits there are no guarantees.

I always mention this issue in my talks on ‘How to avoid professional negligence claims and worse‘. If clients have been forwarned as to what you can and can’t do there is less chance of them subsequently complaining.  In this context though I would refer you to an earlier post on this blog. (I told him. Once. 12 months ago. How dare he forget). It contains a salutary warning.

What do you do to manage your clients’ expectations? Please add your comments to this blog post.

7 ways to ensure your pitch is not a waste of time

Chatting with the managing partner of a top 30 firm recently I was impressed to learn about one of the processes he insists on in his office.  It concerns formal pitches that follow on from the submission of written tender documents. The teams involved in such pitches are required to rehearse in front of the managing partner.  The objective is to ensure that the teams are adequately prepared before they face the prospective client. This is a CRUCIAL stage in any pitch process.

It seems that I last addressed this point in a blog post over two years ago: Preparing tenders when pitching for work. Although I have also written over 40 subsequent posts containing advice on the pitching process.

Anyway, here is an update on my 7 tips:

1 – Remember that the written tender is like a CV. Its job is to get you to the next stage. Too long or detailed and it won’t be read.

2 – Try to ascertain with whom you are competing. Even if you don’t know for certain, you can guess – local competitors, bigger firms, smaller firms, a niche practice, a more general practice. Identify your relative strengths and be ready to refute any perceived weaknesses – from the prospective client’s perspective;

3 – Be consistent when you attend the formal pitch. If what you say you will do is different to what you promised in the written tender you will lose credibility;

4 – If you claim to be a team, be a team. If you’re not already a team admit it. Otherwise when it becomes apparent (and it will) you will lose credibility;

5 – Do not assume that everyone on the selection panel has read your written proposal – some of them may have just scanned it; Some may have been drafted in to add weight to the panel at the last minute. Even if you ask have they all had a chance to read it, be aware that few people will want to publicly admit that they haven’t given it the attention you think it deserved.

6 – Beware that at least one person will challenge something in the written proposal – be prepared;

7 – Plan for the face to face meeting. Anticipate the questions you’ll be asked. Ensure the team will give consistent replies;

It was in the context of this final point that I had an idea last week – when I drafted this blog post. It’s all very well insisting that the team rehearse their pitch and take questions from the managing partner but that won’t always be convenient. Also in a close knit team there may be too much familiarity and a lack of spontaneity. Maybe there’s a role for an independent to attend such rehearsals. I’m not saying I have a lot of time to provide such a service but I’m sure it would be very valuable were I to do so. What are the other options and how effective are they?