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Opportunities and Challenges for SMPs
This document summarizes key findings from the IFAC Global SMP Survey. It discusses opportunities and challenges for small and medium practices (SMPs) globally and in Asia. The top challenges for SMPs in Asia are rising costs, pressure to lower fees, and attracting new clients. Over the next 5 years, SMPs in Asia expect the largest impacts from technologies like business intelligence/data analysis tools, CRM/document management software, and cloud computing. The document also provides an overview of IFAC resources available to SMPs.
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Opportunities and Challenges for SMPs
- 1. Opportunities and Challengesfor SMPs Moderator: Paul Thompson, Director, Global Accountancy Profession Support, IFAC Panellists: Mats Olsson, Member, IFAC SMP Committee Robyn Erskine, Member, IFAC SMP Committee Chiew Chun Wee, Head of Policy Asia Pacific, ACCA
- 2. Page 2 IFAC GlobalSMP Survey 2014 – About I • 5,083 respondents from 135 countries • Available in 21 languages • Report published www.ifac.org/smp
- 3. Page 3 • Top3 regions – Europe 46% – Asia 17% – Africa 15% • Majority of responses from – Sole practitioners (37%) – Practices with 2-5 professional staff (35%) IFAC Global SMP Survey 2014 – About II 46% 17% 15% 11% 5% 5% 1%
- 4. Page 4 IFAC GlobalSMP Survey 2015—Open Now
- 5. Page 5 IFAC GlobalSMP Survey Highlights Session 2 Robyn Erskine, SMP Committee Member MIA-IFAC Regional Forum November 18, Kuala Lumpur, Malaysia
- 6. Page 6 • Top3 challenges SMPs in Asia: – Rising Costs (58%) – Pressure to lower fees (56%) – Attracting new clients (55%) • Next 5 Years in Asia: – Regulatory environment (52%) – Competition (58%) IFAC Global SMP Survey – Highlights I
- 7. Page 7 Practice FeeRevenue Asia: • Majority SMP revenues in 2014 increased moderately (42%) or stayed same (33%) – Larger the practice – more likely to report increase • Majority SMPs in Asia believe revenues in 2015 in all areas expected to grow – most advisory • Tax planning (71%), corporate advisory (58%), business development (38%) most common in 2014 IFAC Global SMP Survey – Highlights II
- 8. Page 8 Membership inNetwork, Association, or Alliance Asia: • 32% of SMPs belong to a network, association, or alliance – Asia most likely region • 31% are considering joining one • 37% are not members • Larger SMP more likely IFAC Global SMP Survey – Highlights III
- 9. Page 9 Top SMEChallenges Asia: • Rising costs (66% high / very high) • Competition (58%) • Economic uncertainty (49%) IFAC Global SMP Survey – Highlights IV
- 10. Page 10 Access tofinance in Asia: • 67% reported that at least 1% of SME clients seeking finance had difficulty • However, for 49% less than 25% of total clients experienced difficulty • 32% High or Very High Challenge IFAC Global SMP Survey – Highlights V
- 11. Page 11 Financial Crimein Asia: • 55% reported that at least one client experienced financial crimes • But most less than 5% of SMPs total clients experienced • Most common – Asset misappropriation/ theft (39%) – Bribery (38%) – Financial statement/ accounting fraud (36%) IFAC Global SMP Survey – Highlights VI
- 12. Page 12 Member BodyPromotion includes: • Dedicated website sections and rolling banners • Direct e-mails to members • Newsletters and magazines Survey Reports • Global Report to be published in Feb 2016 • European SMP Survey Report with FEE • Member Body Country Reports e.g. Uganda Global SMP Survey 2015 – Promotion
- 13. Page 13 IFAC GlobalSMP Survey Highlights Session 2 Mats Olsson, SMP Committee Member, Chair Small Business Support Task Force (SBSTF) MIA-IFAC Regional Forum November 18, Kuala Lumpur, Malaysia
- 14. Page 14 Next 5years - technologies with most impact in Asia: • Business intelligence / data analysis software & tools (42% high / very high) • CRM / document management software & tools (37%) • Cloud computing (33%) IFAC Global SMP Survey – Highlights VII
- 15. Page 15 Technology DevelopmentsI Opportunity, Threat and Challenge • Technology is part of step change in accounting • Technology = opportunity – the future of practice • Technology = threat – commoditization, DIY • Challenge is how to implement technological change
- 16. Page 16 Technology DevelopmentsII Opportunities Presented by Technological Change • Profitable outsourced client accounting services (CAS) • Expand geographical scope • Real-time round the clock service • Time and resource available for analysis and advice • Rapid change and increasing complexity are driving up demand from clients for outsourced accounting services
- 17. Page 17 • Whatservices to provide? – non-audit services (compilations, review, AUP), advisory (corporate, tax, business development) and data (analysis and implications) • How to render services? – embrace IT (cloud, analytics), forge alliances / collaborate, manage talent and change pricing / marketing model Future Ready SMPs – What and How?
- 18. Page 18 Practice Management— General • The main resource is the Guide to Practice Management for Small- and Medium-Sized Practices • Eight stand-alone modules
- 19. Page 19 • News,views, resources, thought leadership • www.ifac.org/Gateway • Ten topic areas – Practice Management Resources — Global Knowledge Gateway
- 20. Page 20 IFAC Resources •IFAC SMP Committee: www.ifac.org/SMP • Follow us on Twitter: IFAC_SMP • IFAC Global SMP Survey www.ifac.org/smp • Join us on LinkedIn: IFAC SMP Community • Global Knowledge Gateway www.ifac.org/Gateway
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Editor's Notes
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- #18 So what do SMPs need to do, or at least seriously consider doing, to be ready for this challenging future? SMPs need to consider what they do and how they do it. In other words offer different services and manage their practices differently. First offer relevant services – to help SMEs build and innovate. Services may differ to what we have traditionally offered. Audit has slipped away as the bread and butter offering to SMEs. In their place we have other services, such as reviews, compilations, and agreed-upon procedures, and advisory, a fast growing area for larger firms. Second SMPs need to look at how they render their services that is, manage their practices. For example they need to consider how best they can leverage IT, forge alliances and collaborate, manage talent, and use new pricing model. Talent is arguably most important. We need to attract, retain, nurture and enable top talent. Words of advice from the futurist Dr. James Canton on how we can make ourselves and accounting firms future ready? Get in synch with marketplace trends that will shape future markets; Understand emerging innovation faster; Create a competitive talent strategy; and Embrace globalization opportunities. Please read more about Canton’s advice in the article ‘Is Your Accounting Firm Ready?’ on IFAC Global Knowledge Gateway.