Should accountancy firms up their prices?

Two years ago, Alastair Barlow and Luke Streeter risked stable and successful careers at the Big Four firm, PwC, to launch their own business, flinder.

The gamble has proven to have paid off; they have gone from strength to strength—just recently adding another two members to their dedicated team.

Alastair Barlow speaks with Accountancy Age about the inspiration behind the business. He very clearly emphasises: “We are a business, we’re not an accountancy partnership.”

He continues: “When we left PwC, we wanted to really put our personality into the business, and our own culture or DNA. It’s an environment that Luke and I would have wanted.”

“We started on day one, as many do, with no clients, no revenue, no salary, and restrictive covenants in place.”

Although flinder has just turned two-years old, Barlow revealed that the planning for the business began long before that; the variety of experiences both Streeter and Barlow have gained throughout their careers has shaped the very foundations of flinder.

“All those experiences have created flinder—from the work I was doing with large multinationals, around consulting in finance function transformations, to the work we’ve done with smaller businesses,” says Barlow.

“That includes, most prevalently, the last three years we had at PwC, which was [when we spotted the] gap in the market as we were talking to small businesses, and we seized that.”

Barlow and Streeter may have started out with the benefit of their wealth of experience and an extensive knowledge of their chosen field, but, as Barlow explains: “We started on day one, as many do, with no clients, no revenue, no salary, and restrictive covenants in place.”

How does working at a start-up compare to a big corporation?

Barlow admits to really enjoying his 16 years at PwC. He says: “I had a passion for delivering high quality service—and that goes with a corporate role. I enjoyed it. I enjoyed the recognition.”

Nonetheless, he points out that, “whilst being in a big corporate culture was fine for a while, we wanted to spread our wings a bit and do it our way.”

Start-ups are increasingly offering more flexibility around work hours – working in the office or remotely – and the freedom to explore several different avenues within the business itself. For the younger generations who are now moving into the world of employment, it might not be surprising to know that there is an increasing surge of young workers applying for start-ups, rather than big corporations.

“It doesn’t feel like work. I genuinely love and have a huge amount of passion for the business, because we’re creating something that we truly believe in, and it’s ours.”

When asked whether young people are more likely to work for start-ups, Barlow replies: “I’m not sure if it’s the younger versus older, I think it’s a certain type of person or culture. Maybe, by definition, there are more younger people that qualify for that. For us, we are focused more on the culture we want to instill in the business.

“We now have a team of twelve people with us. We see them interacting with each other. We see the dynamics in the team-building.”

“We’re contributing to the economy, and in them. We’re employing people, contributing to our employees’ personal developments—we’re making them professional accountants, or data engineers. We’re helping them develop as people, and we’re helping our clients, too.”

It could be argued, then, that the main differentiating factor between the working climate of a start-up versus a bigger corporation is the ability to more easily see – and therefore appreciate – the benefit of internal interactions, developments, and growth.

“I work seven days a week sometimes; it’s a hobby to me,” Barlow enthuses. “It doesn’t feel like work. I genuinely love and have a huge amount of passion for the business, because we’re creating something that we truly believe in, and it’s ours.”

Moving on from PwC

But why make the move in the first place?

By his own admission, Barlow’s career at PwC was “very secure”. It provided “a well mapped out career path, a handsome salary, and a role that provided a lot of freedom and flexibility.”

“Some of our colleagues said: ‘You’re absolutely crazy to be doing this—why are you doing it?’” Barlow continues.

But, in Barlow’s own words, despite the risks, “you need confidence to breed success.” Clearly, the confidence both Streeter and Barlow had in their brand, and in their business idea, was enough to propel them forward into success.

“It’s a big risk. They say risk and reward go hand in hand—we wanted a big reward. But it wasn’t just about that. We believed passionately in this, and we believed there was a big gap there. Once we’d made the decision, there was absolutely no doubt in our minds that it would be successful.”

Does it come down to your personality type?

Different people may find that certain work environments get the best out of them—their preferable work environments may not benefit another individual in the slightest. It is all about finding the best work environment for you.

“I got a huge amount of value out of it—as they got their pound of flesh out of me.”

Barlow says: “People who work in corporate might get a certain fulfilment from being part of a team, contributing to a team, and the overall decision-making. But someone on the Committee makes the final decision.”

Working in a big firm such as PwC undeniably provides inroads into areas that are most likely far more difficult – or even impossible – to secure those same invaluable opportunities if you are a smaller start-up.

Barlow adds: “I was [at PwC] for 16 years. I got a huge amount of value out of it—as they got their pound of flesh out of me. Through them, I learnt another language, lived in a different country. I trained as a chartered accountant with them. I’ve got a wide skillset because of them, and credibility from it. But, for me, [it was simply the case that] I wanted to do my own thing, my way.”

“What I find to be very disappointing is the standard of the accounting”

“It’s hugely interesting and exciting times,” Barlow tells Accountancy Age. “There’s a lot of change and disruption going on—and the technology players are trying to disrupt it further.”

In recent years, there has been an influx of technology and software companies coming into the accountancy market, providing prospective clients, firms, and practices with ways to implement and safeguard their data as the world moves online.

“[Technology and software companies] are trying to influence technology for the better—and they absolutely are,” Barlow agrees. “They are gamifying the process, and that’s creating a whole shift in what accounting is.”

“I don’t think it helped when the likes of KPMG came into the market, and they are cutting price, ‘loss-leading service’—splashing across The Financial Times that they are going to make all high street accountants redundant. I don’t understand that. I think that’s bad for the profession.”

Nonetheless, this can cause an element of friction with those accountancy firms that are more traditional in their viewpoint.

The issue, as the co-founder of flinder points out, is that there was “a dumbing down of that gamification process, and the technology players coming in were providing a mixed message as to what the extent of that technology could do.”

Barlow highlights that, going forward, there will be “a bit of an education process there for the end users, or clients, as to what exactly technology can and can’t do, and the value an accountant can still bring.”

Beyond the blurring of the lines between what accountants offer and what software companies provide, Barlow tells Accountancy Age of a far bigger problem he has seen in the UK’s accountancy industry: the staggering differentiations in quality.

“We obviously see other firms as a snapshot when we take on clients from them. Some of those times when we take clients on, what I find to be very disappointing is the standard of the accounting that we have taken on. That’s even from firms that have high reputations in the marketplace. I think there’s a huge variety of scale or quality in firms, which is hugely disappointing.”

Considering the fact that a lot of the services accountants provide are standardised with strict guidelines and compliance, the question remains: why is quality of service varying to such a degree?

He concludes: “I don’t think it helped when the likes of KPMG came into the market, and they are cutting price, ‘loss-leading service’—splashing across The Financial Times that they are going to make all high street accountants redundant. I don’t understand that. I think that’s bad for the profession.”

Technophobes in accountancy

Even for those in the industry who are resistant to the implementation of technology in every aspect of their day-to-day lives, it is becoming increasingly difficult to compete in the market without conceding to change.

Barlow says: “[As] more people start using technology, there will be the expectation that accountants can leverage technology: workflows, reporting applications, OCR scanning, integration from one application to another. It’s no longer just about the finance system—it is the finance system and other peripheral systems around that. You know, CRM systems, or whatever they may be.

“We certainly expect our team to have understanding and experience [around technology]. That’s why we have a Data Engineering team, so we can connect data from one application to another and push boundaries on what we are doing with our own technology.”

“Prices have shot down”

There has been plenty of controversy in the media in recent years, surrounding the likes of audit. Barlow cites his belief that what the issues in accountancy mainly boil down to is that of pricing.

“It’s a complicated profession; that’s why accountants are so expensive. They deserve to be paid what they need to be paid.”

Barlow emphasises: “I think, in the last five years or so, prices have shot down.”

“It’s a vicious circle,” the co-founder adds. “A company will want a cheap, competitive audit, but the expense of a firm tendering low price means that they need to find efficiencies or put undue stress on the team—they can’t fully deliver it for that price.”

“People might start to realise that it is unsustainable as a service to charge prices so low,” he muses. “Equally, accounting may balance out, and firms may say: ‘OK, we need to up our quality, we need to up our prices.’ Hopefully, the laws of economics will get to that point where it does level out.

“Firms are pushing prices down in order to compete for them, and to have those brand names in there.

“It’s a complicated profession; that’s why accountants are so expensive. They deserve to be paid what they need to be paid.”

“Data will be a huge player.”

What will be the next big movement in accountancy?

“I think what [flinder is] doing is at the pinnacle of accountancy right now,” replies Barlow. “There are probably fewer than a hundred firms in the UK doing what we’re doing with data analytics and reporting.

“Is that a breakaway? Is that the peloton? Will other firms catch up? Is this the next wave that’s going to move through? Or is the next wave going to be something to do with the buzzwords: blockchain, AI, bots—that sort of thing.”

“Accountants don’t have the skillset for it”

He adds: “Data will be a huge player. Not even going as far as the bounds of AI or blockchain, but simply doing data properly. Most accountants right now don’t have the skill set to do that.”

“Will it be the next big thing or not, though?” he asks. “It should be, but accountants just don’t have the skillset for it.”

Barlow then predicts: “It could be that other big businesses come along – that aren’t in accountancy – and they take that business from them, and it becomes something that isn’t part of the accountancy service.”

He concludes: “It’s what accountants should be all over, but a lot of them aren’t.”

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