Enhanced Practice Management and New Service Opportunities in

SME Sector

2, DECEMBER -2014

M FARHAD HUSSAIN FCA

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Member Council & Past President - ICAB

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF BANGLADESH

WHAT ARE WE GOING TO COVER TODAY?

1. Introduction.

2. Key Aspects of Practice Management.

3. Practice Development.

4. SMPs as Trusted Business Adviser of SMEs.

5. New Services.

6. Challenges to Practicing Chartered Accountants.

7. Way Forward Thought.

8. Conclusion.

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What is Practice Management?

Practice management covers a wide array of topics,both operational and strategic, to do with running asuccessful accounting practice.

The theories, techniques, approaches and tools ofpractice management are same as it is in a business.

Why Practice Management?

Effective management is essential to the success ofany organization including accountancy practices. It isabout recognizing opportunities and taking advantageof them to the benefit of the organization

1. INTRODUCTION

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1. Strategy and planning — Practices need to

build a strong foundation to ensure their

success. A strong foundation starts with a clear

strategy and a plan to execute it.

2. Business development—As practices grow,

they will increasingly need to consider

issues relating to practice development

2. KEY ASPECTS OF PRACTICE MANAGEMENT

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3. Networks—In order to gain new clients and access expertise, many practices use different forms of networking.

4. Marketing—Attracting and retaining clients is a primarychallenge facing practices, and securing new clients is one ofthe main drivers of future profits. This makes marketing andclient relations one of the keys to success.

5. Information technology—It is critical for firms to adoptbest practice in respect of emerging technologies.

6. Risk management —Risk management is important topractices especially in those areas where the number andnature of statutory, legal, ethical and other compliance issueshave increased over the years.

KEY ASPECTS OF PRACTICE MANAGEMENT

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Size Total Number of Practicing Member

Total Member of Chartered Accountants

10 Partners 2 20

9 Partners - -

8 Partners 1 8

7 Partners 2 14

6 Partners 3 18

5 Partners 4 20

4 Partners 11 44

3 Partners 18 54

2 Partners 52 104

Proprietor 77 77

170 359 1499

3. PRACTICE DEVELOPMENT

SIZE OF THE CA FIRMS AND NUMBER OF PRACTICING CHARTERED ACCOUNTANTS IN BANGLADESH

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31950

12635

986

102

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PRACTICE DEVELOPMENT

SIZE OF THE CA FIRMS AND NUMBER OF PRACTICING CHARTERED ACCOUNTANTS IN INDIA

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1. Development of strategy: Diversification in professional services.

Coping with competition.

Coping with increased regulation.

Customization to work.

Face – to- face interaction with the client.

2. Satisfaction on three goals (the main mission of the firm): Service

Satisfaction

Success

Success will normally follow service and satisfaction.

PRACTICE DEVELOPMENT

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PRACTICE DEVELOPMENT

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3. Appropriate mix of staff:

Relative mix of juniors, seniors and managers

4. Leverage and profitability:

Profits come from firm’s ability to leverage professional

skills of the senior with the efforts of junior.

5. Profitability and growth:

The firm must grow to motivate and retain best staff.

Without growth the dynamic of the profit is lost andmorale will suffer.

6. Types of practice:

Types will vary according to needs of the service seekers.

7. Strategy for being more valuable to clients:

Greater focus on human resource.

Being more systematic.

8. Increasing firms capability:

Increase knowledge of client industry.

Study industry newsletters / journals.

Attend industry meeting with client.

9. Focused client service:

Going extra mile on current engagement.

Increasing the amount of client contact.

Building business relationship.

PRACTICE DEVELOPMENT

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10. Enhance client value:

Involve clients in process through brain stormingsessions.

Hold continuous meetings with the client.

Make report more valuable.

Help client use what is delivered.

11. Improving profitability.

Raise fee levels.

Lower variable cost.

Fix under performers.

Increase volume.

Lower overhead costs

PRACTICE DEVELOPMENT

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An SMP’s client portfolio typically comprises mainly, if

not entirely, of SMEs. Many SMEs depend heavily on

their SMP for a range of services.

The environment in which the SMEs operate are in a

constant mode of change and development in respect to

regulatory environment, consolidation and expansion.

The accountants are the most frequently used source of

advice out of all advice providers.

Introduction

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4. SMPs AS TRUSTED BUSINESS ADVISER OF SMEs

Country Marketing Finance Energy Technology Infrastructure Market Environment

Labor Issues

India √ √ √ √

Pakistan √ √ √ √

Bangladesh √ √ √ √

Nepal √ √ √ √

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A SURVEY REPORT ON CONSTRAINTS FACING SMEs IN SOUTH ASIA

SMPs AS TRUSTED BUSINESS ADVISER OF SMEs

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Expertise: SMEs often lack a full range of managerial expertisein-house and outsource the services of SMPs.

Integrity and Trust: As members of a regulated profession withcodes of ethics, accountants enjoy "institutional" trust.

Responsiveness/proximity: SMEs rate highly SMPs’responsiveness to their demands. Many owner-managersappreciate personal attention from their advisers and valueeasy access.

NEED FOR SMPs AS BUSINESS ADVISER

SMPs AS TRUSTED BUSINESS ADVISER OF SMEs

New emerging areas for Chartered Accountants

1. Practice Specialisation.

2. Management consultancy.

3. Internal Audit.

4. Valuation services.

5. Services related to change management.

6. Corporate Finance.

7. Tax Compliance advice and planning

8. Performance management services.

9. Servicing global organization.

10. Outsourcing.

11. Insolvency.

12. Risk assessment.15

5. NEW SERVICES

Human Resource.

Change management.

Management of information technology.

Business development.

The changing nature of competition.

6. Challenges to Practicing Chartered Accountants

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7. WAY FORWARD THOUGHT

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THOUGHT 1

ARE OUR CUSTOMERS

SATISFIED?If YES, what more do they deserve

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THOUGHT 2

Specialise in taxation

Specialise in service taxes

IFRS Specialization Business Consulting Partner

Business Development has become our part time service.

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POSITIONING

THOUGHT 3

Belongingness in the Organization.

Relationship with left employees.

Pride in the Organization and Creation of internal Culture.

Good News Board.

Today’s Special at office.

Vision exercise.

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OUR INTERNAL BRANDING

THOUGHT 4

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BUILDING FIRMS WORK CULTURE

o Usually ego comes and everything else walks out.

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EGO IS A MONSTER

THOUGHT 5

We must try to take profession away from number

crunching towards interpretation and value added

services.

Enhancement can take place with a little effort and in

some cases no cost by way of having stronger focus in HR

and change in work culture.

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8. CONCLUSION

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