If you are a business owner, you probably have an accountant. Sadly enough there are some common problems that arise when working with accountants. Having a good relationship with your accountant is very important.  This is because your accountant prepares and helps you to interpret the accounts for your business and ensures that you comply with various regulations regarding reporting and taxation.

As we can see, having a good accountant is important, however, if your relationship is not fruitful then you definitely need to think about changing.  If you decide to change you don’t want to end up with the same problems just working with different accountants.

I have been a practicing accountant for many years and during this time I have taken on several clients who left their previous accountants because of the problems they encountered when working together.

So let me highlight some of the most common problems previous clients have faced when working with accountants. I will also let you know how you could avoid or at least minimise them.

Little or no explanations for your results

There will be times when you will be expecting a certain profit but when your accounts are complete the results are different – usually not as good as you expected. Out of confusion, you try to look for an explanation so as to understand your business and identify how to improve your results. Unfortunately, your accountant can’t provide an explanation or any other insight.  This will definitely lead to problems working with your accountants.

How to avoid this

Try to speak to existing clients of the accountant you are considering moving to and ask how the accountant has responded in similar situations in the past.

You can also give the accountant a couple of scenarios that you have had and ask what may have caused them.  This way you will learn a lot from how they approach answering these questions.

Little or no advice is given

Some accountants are reluctant to give advice.  I had one client who asked his previous accountant if he should renovate his offices. The accountant simply replied, “That’s up to you.”

Technically speaking, that is a correct answer but what the client is really asking is “how do I make the decision.”

You need to be able to ask your accountant for help with major decisions.  Additionally, your accountant has access to all of your financial data and if he/she spots something that could help, you want them to tell you.

How to avoid this

When you meet up with a potential accountant, have one or two questions that you can ask. This way you will get a sense of how they reply.

You can also speak with other clients to see if they are always provided with relevant and useful advice whenever they need it.

Too much contact is with junior staff

In many firms, the principal can be very busy and often delegates the interaction with a client to employees.

While it’s normal, and more cost-efficient, for junior staff to do the number-crunching work, you want your accountant to share his/her expertise and experience with you. At least, the principal should review the file, become familiar with your situation, and provide analysis and advice. This is because the junior staff is unlikely to have the experience or the confidence to deputise adequately for the principal.

How to avoid this

When engaging with the accountant, ask who you will be interacting with, and let them clarify the purpose of the interactions.

Again, find out what happens with existing clients of the same accountant – not clients of his/her partners.

When the accountant is issuing the letter of engagement, you could consider asking that this letter be used to specify the type and nature of interactions that you will have with the accountant and his/her office.

Too much jargon

Many clients report that their accountant is no good at explaining things to them.  The clients give up asking because they don’t get the answers that they need.

Typically, what is happening is that the accountant is so familiar with the material that they unconsciously use jargon which is not easily understandable to most clients.

How to avoid this.

Test the accountant by asking him/her to explain something to you.  Bring a situation that you previously had or something topical for you now and discuss this with them.

You can also ask existing clients how they rate the explanations of the accountants.

Hidden commissions or biased advice

Many accountants earn commissions on sales of life and pension products or tax-based investment products.  They can also earn extra income by acting as resellers for software products.  These practices are more common with larger firms.

These accounting firms may have associated companies that sell software or financial services.  They may appear to be independent but the shareholders could well be partners in the accounting firm. If so, they should disclose any fees or commissions earned that could make them give biased advice when recommending something to you.

If they are a tied agent for a particular life and pension company, that should be disclosed as this relationship likely means that they will not have researched the whole market when selecting the product offered to you.

How to avoid this

Don’t be afraid to ask the accountant if they are earning any fees or commissions on any product they are recommending.

Consider asking them to operate on a fee rather than a commission basis.

Ask them to include a statement in their letter of engagement relating to transparency around fees and commissions.

Recommending systems that suit only them

Some accountants want their clients to use accounting or payroll software that they already use themselves.

On one level this is fine, as it delivers efficiencies to the accounting firm.

However, if the software does not have the functionality that you need then it may not be the best fit for your business.  For example, if you want to use cloud systems but they only work with desktop systems then their proposed solution is not a good fit for you.

How you can avoid this

Ask upfront, if the accountant has any preferences for which software systems they like clients to use and ask how flexible they are around this.

Do a system evaluation before you buy the software and implement any software to make sure that it’s a good fit for you.   I have an article on selecting accounting software called “How to choose accounting software”.

Mismatched Expertise

A friend or business associate may have recommended a particular accountant to you because they were very happy with their service.  However, you may have different needs from your accountant.

For example, your friend may have PAYE income and a rental income portfolio. On the other hand, you have an engineering business.

Clearly, your friend will be looking for basic accounts and tax advice while, you could be looking for support with budgets, product costing, and maybe business planning.

Your friend’s accountant may or may not be a good fit for you.  Pretty soon after starting to work with this accountant you will know whether you have made a mistake or not.

How to avoid this

Try to understand what sort of client base the accountant has.

Does he/she specialise or have sufficient experience in your particular sector?

Consider asking some questions along the lines of how do they handle particular situations unique to your sector. Consider asking if they can outline their experience with your sector.

Lack of contact during the year

Many accountants have little or no contact with their clients other than the few days or weeks when they are working on your accounts.

This may suit some clients but most clients will require some accounting inputs during the year.

Issues arise where it would be helpful to talk to an accountant.  You may have questions that you would like to ask.  There may be legal or technical changes that you should be made aware of.

Not having contact could lead to sub-optimal decisions or non-compliance with certain requirements.

How to avoid this

Talk to existing clients and establish what sort of contact they need and get.

See if this is covered in the engagement letter.  If not, consider including something around this.

Unexpected Fee Notes

Sometimes clients ring up with queries that they think are minor and the accountant should be able to answer off the top of their head.

On the other hand, the accountant sees a more complex issue and undertakes some research and investigation to make sure they are giving the best answer.

The result is that the accountant invests significant time and then bills for this time.

The client may not be aware of the amount of time that has been input and is very surprised when a large bill comes in.

How to avoid this

It’s normal that the costs of responding to minor questions would be covered in the annual fee but issues that take more than 15-30 minutes to address may be charged separately.

In the engagement letter, include something to specify that the accountant will flag when something is going to trigger a separate bill.

You can then have a discussion to see if your request is something that justifies that fee.

Also, check with existing clients of the accountant to see how queries are dealt with.

Why is AccountsPLUS different.

Over the years while working as an accountant, clients have often commented that I am very different from other accountants that they have worked with.  When I try to drill down to understand what they mean a few common responses come up.

They tell me that they can understand me way much better.  They say that I give advice about improving performance and profitability.  Furthermore, they can see that I want them to understand the accounts.   They comment that I have a better understanding of their business because I am more hands-on than other accountants they worked with.

I think it comes from my background and experience.  I relate well to non-accountants because  I qualified first as an engineer and I had no experience with accounting before starting to train as an accountant.

Later I went into industry and my role involved supporting management to understand the financial impacts of their decisions.  In fact, I could see the difficulty they had in understanding accounting information, but I knew that this was down to the way the information was presented.

I also have significant experience working on projects to improve profitability.  I can see how the accounting data can be used to drive the business and I try to use business software to organise the most relevant data and make it available to management.

The bottom line is, my background is very different from most other accountants.

Conclusion

In many ways, the accountant-client relationship is a project.  You need to have a good project definition upfront.

You need to identify what you expect from your accountant and then have a discussion to ensure that your accountant shares your understanding.

Be very careful to do your homework before you decide to hire an accountant for your business.  You are likely to be working with your new accountant for several years and the relationship needs to be excellent. This is the only way you will avoid these common problems when working with your accountants.

If after reading this article, you feel like you need to change accountants but are not sure what to do,  I have an article on changing accountants that might be very helpful – How difficult is changing your accountant.

Over to you

Have you been experienced frustrations when working with your accountant?  What type of problems did you face?

I would love to hear from you, so please leave a comment below.

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