This article originally appeared in the May 2010 issue of Smart Business Philadelphia magazine.
If your accountant is not serving as a partner who can advise you on broader issues, it may be time to look for a firm with a more robust set of capabilities to address your changing needs.
"At the end of the day, what return or value do you desire for the money you spend for accounting, tax and consulting services?" says Stephen Christian, managing director at Kreischer Miller. "The business world is much more complicated today — ever more complex federal, state and local tax laws, increasing international operations, and compliance with international accounting standards and enhanced business risks. Your accountant can serve as your counselor on these and other issues. Or your accountant can just ‘keep score’ by simply assisting with your company’s financial statements and tax returns. It’s your choice."
Smart Business spoke with Christian about how to select the best accounting firm for your needs and how to make the most of that relationship.
How do accounting firms differ?
Accounting firms basically fall into three categories. There are large, international firms that are compliance oriented, process driven and tend to work best with large Fortune 1000 corporations. At the other end of the spectrum are smaller, local accounting firms that generally are more tax focused and may be resource challenged given their size.
The third group of firms sits somewhere in the middle and provides the skill set and resources of national firms and the entrepreneurial feel of smaller firms.
All three types of firms serve their clients well, but each offers a unique customer focus.
How does a business owner decide which type of firm a company needs?
Before embarking on the process of finding a best-fit solution, management needs to determine what it values in a relationship with an accountant and identify the company’s specific needs and expectations — cost, service, tax advice, international capabilities, regular business counsel?
The requirements of management of a large, publicly held company are one thing, but the needs of a $100 million privately held distribution company may be quite different. Will the relationship be more compliance oriented, possibly driving you to a low-cost provider, or more consultative in nature, directing your search to different, more value-added skills?
How can partnering with the right firm create value?
Partnering with the right accounting firm should provide a greater opportunity to grow and prosper. The firm should have a deep knowledge of your industry and business, and spend time with you discussing various business and tax strategies, opportunities for performance improvement, compensation and benefit issues, and risk mitigation.
It will not necessarily have all the answers, but it is going to be able to have a dialog with you regarding relevant issues and who you should talk to in order to get more information.
By creating a strong relationship with your accounting firm, you will get an outside, independent perspective. It will be beneficial to receive input from someone with significant experience serving other businesses, who will bring to you the ideas that are working for similar companies and try to prevent you from making mistakes that others have made.
What resources can business owners use to ensure they select the right firm for their needs?
Lenders are a great resource, as well as attorneys and other professionals and trade associations. For example, if you are a contractor and you participate in the Construction Financial Management Association, ask fellow members about their experiences with accounting firms.
Once management begins the selection process, they should focus on four main things: industry and technical expertise; the passion and enthusiasm to serve you; the chemistry between your team and the accounting firm’s team; and the expected amount of partner and manager involvement with your account.
The accounting profession is about leverage of people, but maximum value is derived from spending time with the firm’s senior members.
What would you say to business owners who are reluctant to leave their current firm to find a better fit?
Often, a company’s needs change, requiring consideration of a change in accounting firms to better meet the organization’s objectives. The current service provider may have been on the scene for many years and established a strong personal relationship with management. The needs of the company, however, should trump the long-standing, personal relationship.
Management should determine in an unemotional way whether or not the current firm is the best fit for the company and proceed accordingly.
In situations where perhaps management is reluctant to terminate a longstanding relationship, there may be a piece of the services that can remain with the current firm while bringing in a new provider to better accomplish the balance of the work.
If the right firms are engaged and have only the company’s best interests in mind, they will easily work together in serving the client. ●