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San Fernando
Monday, Mar 18, 2024

Money Talks, Accountants Listen

The San Fernando Valley Business Journal invited a group of partners from area accounting firms to discuss issues accounting firms face these days. The five represented firms of different sizes and practice areas and engaged in a lively give and take about their profession. At the end of the hour-long discussion all had given their thoughts on multiple topics, including what makes a good client, fee pressures, operating a successful accounting practice, and taking their own advice. Question: “What makes for a good accountant?” Scott Sachs: It is somebody who is going to be more than a technician in an office to do your taxes. It is someone with broad-based business acumen. Maureen O’Gara Adford: From a client’s perspective, it is someone they find who is collaborative and proactive. Michael Kaplan: Someone who thinks outside the box and isn’t just going along with procedures they are learning in school. They can think practically and adapt. The most important is an astute listener. Q: “How has your role changed in recent years, regarding the types of services you provide your clients?” Ken Ray: Working capital is a little tighter now. People like us to take a look at tax savings (and) tax deferrals to put working capital back in the company. They come to work every day and are worried about collecting their receivables to stay afloat. They are not looking five, 10 years from now. That is our job to say, ‘Where do you want to be? What is the goal here?’ Q: “Are clients short sighted?” Ken Ray: Oh, I think very much so. Maureen O’Gara Adford: They are into the day-to-day operations. Todd Van der Wel: They are not looking strategically in five years — where they are going to be, how their business is going to transition, how are they going to retire, and things of that nature. What we bring is that perspective. Scott Sachs: Many business owners have not been through tough times like we’ve seen in the past two years. Many business owners are in a state of paralysis when it comes to making those tough, critical decisions. Q: “What makes for a good client?” Ken Ray: There are more rewarding clients. The clients that really look to us to help them with the future, as opposed to coming in there and banging out an income tax return. Michael Kaplan: The more challenging the client, the more interested you are. You truly feel like you are helping them grow. Q: “Do you have clients who think they know better than you do?” (Laughter from group.) Michael Kaplan: We always do. We’re … from the outside. They’re running their business because they know their product. A lot of people … are engineers, and when it comes to running a business, they don’t have that background. They have to rely on others. Scott Sachs: Successful people and successful businesses know what they are good at and know their limitations. Outstanding entrepreneurs understand where they lack in skills, and it is a great collaborative relationship with their partners — their accounting firm — to work as a team to drive them forward. Todd Van der Wel: It is a sign of strength for clients to let us come in and find the issues and the problems. Our auditors will come in and find weaknesses. Our tax people will come in and find a structuring issue they may not have thought about when they negotiated a deal. Q: “What do you expect from your clients, and what do they expect from you?” Ken Ray: Clients don’t leave CPAs too often. You really have to make them unhappy. What we find is they don’t know what to ask of us. It is our job to educate them on the things they are not familiar with. Scott Sachs: Expectation setting and goal setting is critical to the building of a successful relationship between the accountant and the client. We all go in with the best of intentions, but an accountant should start out that relationship with formalized goal setting. Q: “Have you discovered a situation involving a client who has committed fraud? And if so, how do you respond?” Todd Van der Wel: Absolutely. I think we all probably have. Michael Kaplan: It’s a matter of communication. It’s sitting down with a client and explaining to them what they have done. In some cases, they have not even realized what they’ve done. Scott Sachs: It (fraud) is out there. I don’t think it’s pervasive, but it’s out there. It happens at all levels. If it’s a public company, it typically is not upper management. You might have a small scale fraud of somebody in the middle of the process chain. Q: “At what point do you walk away from the relationship?” Todd Van der Wel: If the CEO and CFO aren’t taking the fraud seriously, that is a strong indication the firm would walk away from the relationship. If the CEO and CFO are very attuned to what is going on and understand the magnitude of the impact on the financial statements, you both stay in the relationship. Q: “What are the key ingredients to operating a successful accounting firm?” Michael Kaplan: It is managing from the inside and the outside. The outside is managing the client relationship and being proactive and bringing ideas to them. Then on the inside … it is managing your employees, (and) managing your receivables. Ken Ray: For us, technology and personnel are they two keys to running a successful firm. Maureen O’Gara Adford: It’s taking our advice that we give clients. Q: “Is it tough to take your own advice?” Scott Sachs: It shouldn’t be. Michael Kaplan: It’s not tough, but the problem is … we are doing it so often for our clients that sometimes we forget to do it for ourselves. Scott Sachs: What makes a great accounting firm are partners who realize the firm itself is a client. We have to treat ourselves and our firm as one of our most important clients. A truly exceptional accounting firm recognizes the importance and internal value of their people and their team. Without our people we are nothing. Q: “Not having run a business yourself, what makes you qualified to go to other business owners and operators give them advice on how to run their business?” Scott Sachs: We all build skills based upon our wisdom and experiences that we accumulate over time. We work with multiple clients every year, so it is a tremendous looking glass into the way companies operate. Over the course of many years, you build up a wealth of knowledge and wealth of wisdom and best practices from seeing what a number of people do. Todd Van der Wel: We really focus our people on industry sectors. We want our partners to work with 10 retail companies or 10 health care companies, so when they go into that health care company they can provide not only industry expertise, but operational expertise. Maureen O’Gara Adford: When it comes to business consulting and problem solving … you see 20 companies, some do it really well and some do it really poorly. When they (clients) have a problem, they have a sample size of one. We have a sample size of 20. Q: “Fee pressure is a big issue in the accounting business. How is that impacting your businesses?” Scott Sachs: In these tougher times, companies are looking at their expenses and looking at all their vendors. Accounting services are not immune to that examination. When we work with our clients we are not out to be the low cost provider. But we want to provide excellent value for fair fees. I think companies need to consider that sometimes you get what you pay for. Todd Van der Wel: We are not immune from clients coming back and saying you have to take a cut. We had instances in 2007 of clients saying ‘You’re going to take a 10 percent cut.’ They’ll say, ‘Our upper level management just took a salary cut of 10 percent. Tell me why you shouldn’t take a 10 percent cut?’ It’s a tough argument to have with them. Q: “Are customers still asking for cuts? What is the landscape like today?” Scott Sachs: In 2009, (was) when most our clients felt that pressure to reevaluate their cost structure. So we had some of those conversations. But I think it has leveled off. Clients recognize you can’t push too hard and ask for too many cuts otherwise it is not a solid two-way relationship. Michael Kaplan: We have to pay payroll, too. In 2009, it came to the forefront, but I think it’s plateaued now.

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