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Article | 6-minute read

What to look for in a great accountant

Business owners typically take an unbusinesslike approach when choosing their accountant. That may not be a problem initially, but it can hamper growth over the longer term. 

ANZ Financial Adviser, Mark Powell, has enough business-owner clients to have seen firsthand the difference a good accountant can make. “Any accountant can take care of the grunt work, such as sorting out a business’s annual tax return,” Powell says. “In fact, much of that grunt work is now being automated. As the accounting industry itself realises, the value ‘good’ accountants offer clients now lies more in providing quality business advice than just keeping the ATO satisfied.”

What makes for a ‘good’ accountant? 

There is almost always a big difference between how business owners should enter into business relationships with accountants and how they actually do so.

“Given how important finding the right accountant can be to the future growth of their business, you might assume business owners would devote a lot of time and energy to the task,” Powell says. “That they would thoroughly research who is on the market, then rigorously interview a shortlist of candidates, then agonise over deciding who is the best fit for their business.”

Few business owners do this.

“Technology has made geography increasingly irrelevant,” Powell says. “Nonetheless, business owners overwhelmingly partner with an accountant located close to them. The best-case scenario is that they may ask a friend or family member which of the local accountants they’ve had a positive experience with before making their choice.”

To be fair, this approach doesn’t necessarily cause problems early on. “When you’re just starting out, it probably doesn’t disadvantage you much if you’re working with a smaller suburban accountant,” Powell says. “It’s when your business does start making money and you’re trying to grow it that the difference between an accountant who is proactive and one who isn’t becomes apparent.”

Powell argues business owners who believe their accountant is no longer bringing much to the table need to be ruled by their heads, not their hearts.

“As is the case with lots of their other relationships, a successful business owner can often outgrow the accountant they started out with,” Powell says. “At that point, they need to make a hard decision.  They can go with their heart and remain loyal even though that may result in missed business opportunities. Or they can go with their head and switch to an accountant capable of helping them take their business to the next level.” 

How to find a good accountant

Whether they are selecting their first accountant or looking to ‘repartner’, Powell argues that business owners need to take into account rational and not so rational factors when making a hiring decision.

“You want an accountant or accountancy firm that has the relevant expertise,” Powell says. “Imagine you’ve launched a Mexican restaurant and are looking to franchise it all over the country or possibly the world. You at least want an accountant who has experience working with other successful restaurateurs. Ideally, you want an accountant who has assisted at least one other restaurateur to go from a single outlet to multiple outlets.”

Powell goes on to observe that industry-specific expertise is a necessary but insufficient condition.

“The business owner-accountant relationship is like a marriage,” he says. “You need someone who is in your corner but also willing to tell you some home truths when necessary. Business owners can become unrealistically optimistic about, for instance, the potential for their business to expand rapidly. A good accountant will encourage clients to grow their businesses and suggest ways they can do that. But they will also speak up when the numbers don’t stack up and a client needs to be made aware of hard financial realities.”

This means personal compatibility is important.

“It’s not so much that there are good and bad accountants as that there are accountants who are a good or bad fit for certain types of business owners,” Powell says. “Business owners should always pay attention to their gut feel about an accountant.”

What your accountant can do for you   

As small business software programs such as Xero, MYOB, QuickBooks and Reckon have achieved mass penetration, accountants have increasingly transitioned to becoming business advisers. More and more, business owners get their accountants involved in decisions about what suppliers to use, how to systematise and automate their business, even what staff to hire.

Powell says that while it can be useful to get an accountant intimately involved in a business, business owners should understand the limits of their accountant’s knowledge.

“An accountant can tell you that the data suggests running a $100,000 marketing campaign will result in a $250,000 increase in revenue,” Powell says. “But they probably aren’t going to be able to advise you on whether it’s a good idea to partner with an Instagram influencer for your next marketing campaign.”

Powell suggests business owners leverage their accountant’s core competencies. “Cash flow management, revenue projections, cost reduction strategies and longer-term business planning are where business owners are likely to get the most bang for their buck from accountants,” he says.  

What you can do for your accountant

Powell has two pieces of advice for business owners seeking a solid relationship with their accountant: communicate clearly and don’t quibble over the bill.

“In the digital age, it’s no longer necessary to meet physically with your accountant,” Powell says. “You don’t even need to supply the hard copy financial documentation that had to be handed over in pre-MYOB times. But accountants aren’t mind readers; you need to provide clarity about your goals and risk appetite. If you’re an ambitious restaurateur, you need to make it clear whether you want to end up with 10, 100 or 1000 outlets within the next five years. You also need to be clear about how much money you’re willing to borrow, or equity you’re prepared to sell, to reach that goal.”

The frequency with which business owners need to communicate with their accountants can vary widely. But Powell suggests at least one comprehensive conversation a year is required. “I’d suggest one serious catch-up, in person or via video-conferencing, a year, as well as getting in touch whenever you’ve got a serious business decision to make,” he says.

Given the role a good accountant can play in facilitating business growth, Powell says it’s a false economy to pinch pennies. “You shouldn’t accept being gouged,” he says. “But if someone is playing an important role in taking your business from $10 million a year in revenue to $100 million, do you want to risk losing them because they are putting their rates up by 15%? Like most things in life, you get what you pay for with accountants.”

What a financial adviser can do for you and your accountant

Almost all business owners have a relationship with an accountant. Relatively few have one with a financial adviser. Powell suggests business owners partner with a financial adviser once the money starts to roll in.

“It’s understandable that, in the early days of a business when there usually isn’t any surplus income to invest, time-poor business owners don’t seek out financial advice,” Powell observes. “But business owners who are fortunate enough to start generating large profits will benefit from expert investment advice. Leaving aside a handful who’ve got the necessary certification, accountants can’t provide personal financial advice. They can’t, for example, suggest setting up a self-managed super fund. Accountants can help you build a profitable business but if you want help investing the profits from that business wisely, you’ll need to talk to a financial adviser.”  

An ANZ Financial Adviser will be happy to talk to you about ways to get more from an accountant then invest the profits they’ve helped you make. Find out more and book an appointment.

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Mark Powell is a ANZ Financial Adviser. 

ANZ Financial Advisers are representatives of Australia and New Zealand Banking Group Limited ABN 11 005 357 522, holder of an Australian Financial Services licence. 

This information is of a general nature and has been prepared without taking account of your personal objectives, financial situation or needs. Before acting on the information, you should consider whether the information is appropriate for you having regard to your objectives, financial situation and needs.

© Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522.