The GoProposal Podcast

The GoProposal Podcast

The 5 Levels Of Accountancy Firms. Which One Are You?

February 11, 2017

What I want to do, is talk you through each of the five levels, explain what the characteristics are of each of them, how you transition from one to the next and what the ultimate two levels of an accountancy firm are.
Now I’ve been working with leading accountancy firms around the world for quite some time now, helping them to systemize and automate their business and so I’ve got to see lots of different accountants, got to really understand them from the inside out and understand what the challenges are, where they think they are, and actually showing them where they can get to and where they really need to get to, moving forward.
And what I’ve discovered, is there’s actually five levels to accountancy firms
If you don’t want to read this, just watch this video. It’s exactly the same.

Level 1 – Chaotic
So the first level of accountancy firms is chaotic.
Now you might laugh but everyone has to go through this phase. Basically, it’s when you start out in business. Hopefully it’s a phase that you’re going to pass through, you’re not going to stay there for too long.
But whenever you start anything, there is no way that you can know all the answers, you cannot see the full extent of any journey before you start it, so whenever you get into business, whenever you start your accountancy firm, it’s always going to be chaotic to start with.
Now that’s absolutely fine because you’re going to be getting customers, you’re going be getting staff, you’re going to be setting up systems, you’re going to be delivering your service, etc, etc.
So you’re going to hit so many challenges and you’ll have been through your training to become an accountant but perhaps no-one’s ever shown you how to run a successful, thriving systemized business before. So you’re always having to try and figure that out.
Now the word chaos isn’t as actually a negative a phrase as you might think.
I’ve got this wonderfully old dictionary that I nicked off my parents’ bookshelf many years ago and the definition of chaos in this is ‘the shape of matter before it was reduced to order’.
And so whenever you start anything, there’s always going to be disorder to it and in order to move beyond the chaos, you’ve got to start bringing order to proceedings and that’s the next level that you need to move to.

Level 2 – Compliance
So the next level of accounting, is where accounting’s been for the last hundred or so years, which is the compliance level, or just the accounting level essentially.
So this is where, for a long time historically, accountants have brought value to their clients. This is where accountants have been seen as valuable people in the world, very useful allies to have in your business, very trusted people, a great profession to be a part of and this is where accountants have made all their money….. up until now.
So this level is all about ensuring that that client is legally compliant and that you’re accounting for what’s happened in the past. So you’re making sense of all the numbers and presenting them to your clients.
Now in order to get to this level, you will have had to have put certain systems in place to allow the delivery of that compliance function. This is where, like I say, accountants have made their money for many, many years, where they’ve delivered the value.
The problem with this is cloud accounting has come along, the likes of Xero and kind of revealed how you do your tricks really, they’re like the masked magician in the fact that I now, as a business owner, know how to submit my VAT return, I know how to produce payroll quite easily, so why am I paying you all of this money again?