Should accountants do more to support SMEs as business advisors?

Making a success of a small to medium-sized business (SME) is far from easy.

A good accountant can be a huge help – especially if he or she is prepared to go beyond the realm of traditional accountancy and offer business advice as well.

Colleen Wong, who runs successful start-up TechSixtyFour from her home in Teddington, Middlesex, says her life has become much easier since she switched to an accountant offering more comprehensive advisory services.

“Six months ago, I found an amazing accountant who supports small businesses such as mine,” she said. “The company has advised me on everything from VAT to tax-free childcare.

“Its a huge improvement on my old accountant, who was not equipped to support SMEs and caused me more stress than anything else.” Little wonder then that many accountants are expanding their services to better cater for the needs of SMEs.

Michael Beech, FMAAT, director at Michael Beech Accountancy, said: “Smaller business owners often wear a lot of hats.

“Unlike larger organisations, they do not have finance directors with specialist accounting knowledge, and often need guidance on everything from how to set up bookkeeping systems to tax planning.”

Here, we investigate how an accountant’s role is evolving – and ask whether accountants can or should take on the role of business advisors to their SME clients.

A changing world

Technological advances mean accountants now have more financial information at their fingertips than ever before – allowing them to help clients in lots of new ways.

“Our sector is experiencing a fundamental shift, largely driven by technology,” said Daren Moore (FCCA), group commercial director at TaxAssist Accountants. “While this is a challenge, it also presents a huge opportunity for us and our clients.”

However, new technology such as bookkeeping software packages is also allowing more small businesses to get by without an accountant, which is why firms need to take advantage of the information available to ensure they offer real value for money.

“Failure to embrace the technological changes currently dominating our sector is probably the biggest danger to our industry today,” Moore added. “Accountants need to recognise that client relationships and expectations are changing, and that this is likely to continue.

“We can’t afford to assume that what has always worked will continue to do so.”

A wider role

There is no doubt that the role of a business advisor is wider than that of a traditional accountant.

“Business advisors should have knowledge of many elements of business, from personnel to marketing and strategic development,” Beech said. “Accountants, on the other hand, have tended to focus more on the reporting element; the year-end accounts and tax planning side.”

Business advisors also have to be more proactive.

“In my experience, the main difference between a good accountant and a good advisor is mindset,” Moore said. “An accountant will base their client relationships around compliance-based elements, which are largely reactionary.

“Business advisors, on the other hand, help their clients understand and comply with rules and regulations, but also use their knowledge and experience to plan for the future.”

However, there are lots of ways in which the two roles overlap, making the switch easy for accountants with lots of relevant experience.

“Accountants can help SMEs as business advisors because they are privy to a lot of ‘business lessons’ learned via dealings with their clients,” Beech added. “By monitoring their clients, for example, they can gauge which business models work and which don’t.

“There are so many lessons to be learned by talking to business owners who are out there on the front line doing business in the local economy.”

The future of accountancy?

If you deal with SMEs, it is likely you will have to start offering a wider range of services to appeal to clients such as Ms Wong. But that does not automatically mean having to study for a range of new qualifications.

Moore said: “These changes are not necessarily going to be driven by professional qualifications, but by broader commercial knowledge and advisory skills that allow us to relate to our clients in different ways.”

You do not even need to describe yourself as a business advisor. “Accountants often give SMEs business advice without calling themselves business advisors,” Beech said. “Some do it during client reviews; it’s a means of offering better customer service that I have used myself.”

Just remember, however, that it is vital to stick to what you know!

“The future of the UK economy depends on helping SMEs. And I believe accountants can play a big part in that,” Beech said. “But if we are uncertain about something within an advisory session, we always go away and research the area.

“It’s better to do that than to give misleading advice.”

Jessica Bown is an award-winning freelance journalist and editor.