Being a finance business partner in practice

How to move from compliance to advisory

Moving from compliance to advisory

Shifting your practice from compliance to advisory

From compliance to advisory

The benefits of moving from compliance to advisory

How do you shift from compliance to advisory?

Transitioning from compliance to advisory

The seven lines above are search engine optimised article titles, found through a web search for “compliance to advisory”. It’s (still) a hot topic for discussion in practice accountancy and has been for well over a decade. In fact, if practice accountants were to form a secret society, I’d recommend “compliance to advisory” as an identifying phrase: it means little to nothing to most people, but at the very least should elicit a groan of recognition from our members of the Institute of Financial Accountants (IFA).

Exactly what “transitioning from compliance to advisory” means varies, but it boils down to a call to action: accountants in practice should be moving beyond regulations and tax returns into the bountiful world of business support. The assumption played out in these articles is that compliance and regulatory work is no longer valued as highly as it once was. It’s not a baseless assumption: through member engagement, the IFA has seen an increasing proportion of member turnover come from providing advisory services.

The call to transition has been out there for years; so has the prophesied death of the practice accountant at the hands of cheap accountancy software. Indeed, a lot of the talk surrounding “compliance to advisory” is bound up with the conversation around digitisation. Digital transformation, by freeing up time from menial tasks, can empower accountants to focus on the human element – on adding value for your practice and your clients. That’s the theory but putting it into practice requires weighing the benefits against the costs, not least the time spent planning and the need to bring your impacted stakeholders (clients and staff) around to a new way of doing things.

So far, at least, practices specialising in compliance and regulatory work remain alive and well. Compliance work remains the backbone of what most accountants in practice offer to clients. Some elements and processes can be automated and simplified by digitisation, but the ever-changing regulatory landscape still needs a human touch to steer puzzled business owners through the maze. The more requirements change, the more the need for professional guidance stays the same.

The move from compliance to advisory, then, might not be necessary to survive; but it does offer practices a way to thrive – to adapt and improve profitability and differentiation in a competitive marketplace. And it’s not a dichotomy; moving into advisory services doesn’t mean moving out of compliance work, even if the conversation sometimes makes it seem that way.

I think “finance business partnering” best captures how practice accountants can straddle compliance and advisory work, to their benefit and that of their clients. I’ve worked as a finance business partner (FBP) in several Government departments, and I like to describe the job as management accounting where both words – management and accounting – are vitally important. An FBP has one foot in the finance function, and one in business management.

In a large organisation like a multinational corporation or a Government department, FBPs are the bridge between the world of the business and the world of the accountant. Diverging incentives can lead these two worlds into conflict, to their detriment and that of the business as a whole: the FBP is there to keep them talking to each other, in language that both sides understand.

FBPs also help an organisation’s decision-makers see the big picture: by making the numbers make sense to the business, they counsel and advise decision-makers to make sound financial and business decisions, with a view to the long term and an understanding of the macro context the organisation is operating in.

I was most successful as an FBP when I was able to take a complex financial picture (red flags and risks and all) and communicate it to non-financial managers in a way that made sense, held their attention, and helped them make good decisions.

FBP success required:

• Financial accounting knowledge (including regulatory and compliance)
• Management accounting tools
• Business acumen and knowledge of the business area
• “Big picture” contextual awareness
• Soft skills – the human touch

“Soft skills” is a bit of a misnomer: it’s often the hardest part of the job. Sometimes all the data in the world won’t get you and your client where you want to be: that’s where the human touch shines. Finance business partnering isn’t transactional – it’s relational.

I’d go as far as to say that the word partner captures the relational aspect of what practice accountants do for their clients better than the word adviser. Advisers are experts – that’s good – but they can be impartial, and an adviser doesn’t necessarily have our best interests at heart.

A partner is inherently trustworthy, because the word itself is about relationship and mutual interest. A partner has their client’s best interests at heart, so they’re not going to let them go wrong; which is why compliance, regulatory and reporting work is all vitally important to effective partnership. But a partner wants to do more than maximise a client’s current position: they want to help them grow and thrive.

How might an FBP in practice help a client thrive?

• Planning, budgeting and forecasting
• Cashflow forecasts (and cashflow management)
• “What if” analysis, and scenario planning
• Costing and pricing
• Performance measurement and management
• Critical success factors (CSFs) and key performance indicators (KPIs)
• Strategic and/or business plan review
• Investment and options appraisal
• Environmental and competitor analysis
• Risk management
• Data analysis
• Listening, talking and supporting

This isn’t an exhaustive list, but it’s a decent starting point, covering everything from business fundamentals to strategic planning and decision support. Each one offers a way to add value to clients; to work more closely with them; to improve their performance; and to differentiate your practice. They aren’t replacements for financial accounting: advisory isn’t replacing compliance. They’re additions, which build on the skills and experience accountants in practice already have. They can work to your benefit and that of your clients, empowering you to add value a small business owner can’t get elsewhere – value you can mark up. And that’s the kind of constructive, mutually beneficial relationship that finance business partnering is all about.

The IFA is running a four-part webinar series on strategic planning and  business partnering in the first half of 2023: all the topics bullet-pointed in this article will be covered over the four webinars, which are aimed at helping accountants in practice and SMEs become effective finance business partners.