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Compulsory or Discretionary?

The accountants’ business model has been around for centuries, worked brilliantly and were built on trust and very effectively optimised the business community’s lack of financial acumen and expertise. If we as accountants worked hard, built-up our specialist financial knowledge and delivered it in the ultimate blanket of trust and confidentiality, in most cases, we couldn’t go wrong! It certainly worked for over 150 years and provided excellent livings and reasonable levels of wealth for many generations of accountants. The business model was simple: Accountants’ business model has been around for centuries, worked brilliantly and were built on trust and very effectively optimised the business community’s lack of financial acumen and expertise. If we as accountants worked hard, built-up our specialist financial knowledge and delivered it in the ultimate blanket of trust and confidentiality, in most cases, we couldn’t go wrong! It certainly worked for over 150 years and provided excellent livings and reasonable levels of wealth for many generations of accountants. The business model was simple:

  • The market needed our services on the two fronts of regulatory and compliance needs
  • We had financial and technical expertise which clients didn’t have themselves
  • We delivered these services in an efficient and generally productive way
  • We made good money!

Our services were simple too and involved delivering compulsory commodity style services that clients had to get from someone, the question was only, “From whom?” Not only this, but the services were very straightforward to understand:

  • Accounts preparation and write-downs, often from incomplete records
  • Auditing of virtually all corporations and regulatory organisations
  • Preparing and submitting tax returns for individuals and corporations

I call these traditional services, compulsory purchases by clients, as they had to have them because without them they would get in big trouble with the authorities and more than likely also get into financial trouble. However, much is changing and software now offers many more solutions to these compulsory needs – not all, but increasingly more and more.

Advisory style services are not compulsory, but discretionary and of course this means accountants have to change their positioning and stance. Compulsory or discretionary? Of course we would prefer compulsory, but unfortunately things are changing and we have no choice! Perversely, our need to change and refine our positioning is compulsory, not discretionary!


Quote of the Week

The business world is ever changing; it has become more diverse and more complex. Chartered accountancy, if it is to prosper, must be prepared to change with it.

– John Hannaway, President, CAI


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The Advisory Services Edge: Your Road Map to Transform and Grow Your Accounting Firm

L. Gary Boomer

 


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Accounting Today’s editors talk with thought leaders and change-makers from across the public accounting profession

Behavioral economics and accounting by Accounting Today