Always expect the unexpected

What are the challenges to our fee income 2019-20 and beyond?

Grudge purchases

For most business owners it is hard to place a value on costs that merely keep Her Majesty’s government off their backs: filing annual accounts and tax returns. This annual compliance chore is often completed well after the accounts period end date  and is a fait accompli.

Fait accompli is an interesting phrase. It is defined as “a thing accomplished and presumably (presumed) irreversible”. In other words, any advice we as advisers give – on these historic numbers – will be received as a “I told you so” remark. What clients need is something relevant what they are doing now.

As far as we can ascertain there are no upsides to after-date compliance work other than meeting filing deadlines and tax payment deadlines.

What percentage of your fee income is pure compliance?

This is an interesting question.

Most practices, especially smaller practices, will likely have a significant proportion of their fee income generated from the supply of pure compliance services.

If so, and if you accept that clients, by and large, see your fees as a grudge purchase, then it makes sense to take a fresh look at the services you offer and consider how to transform fees into services that have perceived value.

What are valued purchases?

The phrase “value added” has been bandied about in our profession for many years. It was sold by practice development pundits in the 1990’s and beyond as a way to increase fees by repackaging compliance work and representing to clients – for vastly increased fees – as “Business Builder” or specialist tax-mitigation services.

For the average, smaller business owner, being exhorted to buy tax planning or business development services is rather like selling leather seat options to a car owner that just wants a seat cover to hide the mess his kids have made – and will continue to make.

What is actually required is a strategy to transform ALL the services we offer, and that we are paid for, as offering the client value, and importantly, value that seem relevant and appropriate to their circumstances.

The way forward?

If you want to engage in this process, to transform grudge into valued, take a look at the ideas I have shared in my Fee Builder workbook and associated features. In my opinion if you stick with the “grudge” services, you will likely continue to leach fees to less qualified practitioners, and to accounting package software developers, who will soon be adding an annual accounts and tax return facility to their offerings.

The door is steadily closing on markets that we have traditionally considered to be our sole domain, and there is no future in relying on the past for inspiration.

Read more on this topic:

Add new income streams to your practice

 

Bob Edwards

Bob has been working with practices across the UK offering novel ways to improve cross-sales and increase new client acquisitions. He is also interested in "step changes" in legislation that offer challenges, and therefore opportunities, for practitioners to provide new recurring and one-off support services to clients.

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