Adaptable small firms focus on value
For many clients, smaller, specialised and local accounting firms are a natural choice for flexible, personalised service.
Smaller accounting firms are part of the fabric of many New Zealand towns and cities but they, like the large firms, have to adapt to a rapidly changing market.
Accountants expect their service delivery and revenue streams to change radically, according to our Top 30 Accounting Firms research. In the new environment, sustainable success will require different and better skills.
These market changes may be driven by technological change, but the new accounting skill set is not directly related to technology. Adaptability was the number one skill required, nominated by 85 per cent of firms, followed by emotional intelligence (83 per cent) and then critical thinking (75 per cent).
Our research show these firms are particularly challenged by staffing issues, rather than technology. Sixty one per cent reported staff retention as their top challenge while 54 per cent nominated their staff skill set.
Staff turnover was also the biggest threat to client trust, equal with the impact of a recession.
That sounds like a lot to manage – and it is – but accounting firms are remarkably positive about their ability to adapt, in particular through deepening their relationship with clients and delivering more high value services as well as traditional compliance.
For some, that means embedding themselves in their clients’ businesses.
Hudson Taylor was one traditional accounting firm that reviewed and changed its model over the last few years. Partnership is the new goal.
Traditional compliance-based and core accounting has become much easier due to technology such as Xero, making it hard to compete on price, associate Mark Hudson said.
To shift its focus to advisory and growth services, the Wellington-based firm changed in four significant ways: it moved to a more digital office model, brought on the next generation of partners, upskilled staff to be people oriented and to support a diverse range of services, and became flexible to adapt to client needs.
Hudson Taylor now acts as extension of client business, rather than as an external adviser.
“Two key ways that we achieve this is actively partnering with businesses and actively identifying growth opportunities,” Hudson said.
“One example is our partnership with Entity Solutions, who are an Australian company that recently entered New Zealand.
“While providing the core accounting services, we have also helped them grow new business and connected them with our networks. We regularly connect clients where we think there is potential for growth and synergies.”
For Auckland-based boutique firm Oxygen Advisors, providing an outsourced CFO function for start-up companies has become an area of specialisation.
The CFO has a seat at the executive table, providing companies with both strategic and functional support. Like the executive CFO, the outsourced CFO not only delivers and interprets management information, but also works on the gnarly challenges of business finance and capital raising.
“In 2017, we helped our clients raise approximately 20 to 25 per cent of the early stage capital raised in New Zealand,” Oxygen director Matt Dold said. “We don’t do compliance.”
All of Oxygen’s clients are early stage companies, mainly tech focused and on a fixed-fee retainer. To ensure strategic engagement, Oxygen maintains a very low ratio of one senior staff member to every ten clients.
In addition to assisting with strategic, capital raising, new product development and R&D initiatives, Oxygen will also assist with more dayto-day services such as bank reconciliation and accounts receivable.
For Wellington-based GoFi8ure the client relationship is about three things: efficiency, effectiveness and sustainability.
Technology is a key tool for driving efficiency and GoFi8ure claims a software “skill matrix” including more than 52 apps over 18 different industries.
“By keeping up to date with industry apps, our experienced team can identify areas of weakness within a client’s business and provide a customised solution to ensure their business runs more efficiently,” executive director Lisa Martin said.
The firm also offers a “warrant of finance” service which involves reviewing the client’s accounting ledger or information to identify and address areas of risk and inefficiency.
“People buy with their hearts and justify with their heads,” Martin said. “They pick the people who make the best personal connection with them.”
“We develop close partnerships with our clients. They see us as a trusted adviser who is loyal to them and their business.”
Success is about being transformational rather than transactional. Gone are the days of accountants only connecting with clients once a year.
“Less is out, more is in,” Martin said.