Receipt Bank Blog>Advice>Advisory made simple: What does advisory mean in today’s digital world?

Advisory made simple: What does advisory mean in today’s digital world?

06/11/2020

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advisory-digital

A guest blog post by James Watson, Director at PennyBooks Limited

What does ‘advisory’ mean?

It’s the ‘exciting’ stuff, not the stuff you have to do. Bringing the numbers to life, and helping a business make more informed decisions using better financial information.

The classic definition of ‘advisory’ for accounting firms would be workstreams falling outside compliance and audit. For smaller businesses – business plans, forecasts, enhanced management reporting. For larger or growing businesses – advising on M&A, due diligence, business recovery.

Historically, the work has also been a good excuse to charge the big bucks!

Is that a fair definition? 

In theory it is, but really when it comes to SMEs, ‘advisory’ should be seen as any opportunity accountants can offer guidance to their clients, or help them understand and run their finance operations better. 

The challenge to any accountant should be to work as efficiently as possible to get the so-called ‘compliance’ tasks done, to maximise the time available for these other interactions. This is where you can really help, and your clients will love you for it.

What impact has digital had?

The digitisation of the accounting Industry has helped to blur the lines between core compliance and advisory work, bringing benefits for both accountants and their clients.  

The availability of tools like Xero and Receipt Bank means that small businesses now have access to current financial data in the cloud. These digital resources offer a world of insight, and reporting options once restricted only to larger businesses.

The tools automate processes saving clients time, they cut down on the admin work and provide better workflows. The cloud also provides a current source of truth* for financial data, which can be accessed by anyone across multiple devices and formats.

*Warning – This source of truth is only the truth if your bookkeeping is accurate and up to date!

How does this work in practice?

It’s powerful – the accountant’s service offering has fundamentally changed. In pre-digital times you may have met your client six months after their year end to prepare and file annual financial statements and a tax return. 

Clients get a set of accounts they don’t really understand or need, a tax bill they didn’t really know was coming, and an accountancy bill they’ve got to try and pay at the same time. Add in the big headache from trawling through 18 month old backup and explanations. Put like that – it’s really not an attractive service offering.

Move the same client onto Xero and Receipt Bank, keep the bookkeeping up to date, and you can run them simple management accounts throughout the year. They can track their tax bill through the year, and you can invoice them monthly to help their cash flow. 

The client gets numbers they can actually use to support their decision making, and work out how their business is performing. Receipt Bank is helping them cut down their paperwork and manage that better. It’s win-win.

James is a special guest at our Instagram Live on Friday 13 November at 2pm. Join here to ask all things advisory.

Is that actually ‘advisory’ through?

Yes! I know it sounds simple, but just moving a client onto these systems, and supporting them to use them properly in our view constitutes advisory work. You are giving them the data and the tools to help them make better decisions. You’re saving them time, and helping to make things run better.

Clients should also become stickier for accountants. You are creating more touch points throughout the year, you have what you need to meet your client for a monthly or quarterly review. You have better information to help them prepare a business plan, and be able to track actual performance against it.

Having access to the financial data puts you in control and helps you do your job better. The sentence ‘I see you have bought some new equipment last month’ sounds so much better than ‘have you bought any equipment recently’?   

Is this all too good to be true?

It’s important to remember that these tools only work if they are used properly, and things are kept up to date. They don’t do everything for you, and the automations have their limitations. They are not always the answer to everything!

Part of the accountant’s role is to make sure they train clients properly on the tools, and set up their own processes to help make sure that things are up to date. Garbage in, garbage out.

So where next?

A big part of advisory in these digital times is helping clients navigate through the maze of other add-on applications. There are hundreds of these to suit all types of businesses and industries. 

A well-prepared firm should have their preferred applications which they know inside out, can recommend to a client, and can help them integrate and use with their lead accounting software.

App advisory can be big business, and could be offered to any client regardless of size. If it’s done right the result should be smoother processes, better data or information, efficiencies and time savings. Again – benefits here for both accountant and client, smart accountants will be using that time saved to improve their offering.

What else does ‘advisory’ cover?

Advisory should be seen as just a mindset shift for an accountant. There are so many ways you can help clients these days. Well-written blogs, guides and resources available on your website. Podcasts and webinars on useful topics. Update emails and newsletters bringing clients up to speed on things.

As soon as you shift into this mindset, there are advisory opportunities everywhere you look.

How does PennyBooks fit in here?

We are trying to be as transparent as possible on our service offerings, which are clearly defined in our monthly packages. Our mantra is getting the basics done well. This is actually where we see we can offer the most value to our clients.

Efficient bookkeeping processes to give clients accurate, up-to-date figures. Good discipline and communication around payroll and VAT. Accounts and tax returns filed in good time after year end, and quick responses back to clients. We don’t promise the world to our clients, but we do what we said we would well.

This is the foundation for everything. Done right, a small business has what they need to grow and shine, and we’ve taken away their accounting headache and we have time to offer them advice as part of the package. 

If you don’t do the basics right, you may as well build your house on sand.  


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