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Courting Clients
Though every relationship between an accountant and his or her client is unique, there are a few principles to keep in mind to ensure a smooth, long-lasting partnership. 'This is a business based on relationships,' says Lou Moran, partner-in-charge, Northeast Ohio tax services for Deloitte & Touche LLP. 'You have to build trust.' Here's what the experts have to say about cultivating a good rapport.
>> It is essential for both the accountant and the client to be open with one another. 'Communication is key,' says Jill Voight, a valuation leader for the Great Lakes region at Deloitte & Touche. 'I can't do as good of a job without [the client] participating.' If all the cards are laid out on the table, the accountant will be of more assistance to the client. 'I can come up with ideas and suggestions, but if it's not something they can implement in relation to their own company, then they're worthless,' Voight says. Account-ants should encourage their clients to be forthright with them, in turn guaranteeing their honesty with the client.
>> Listening to clients is key in fostering good communication. 'You have to be responsive to your client's needs,' Moran says.
>> Clients have to like their accountants in order to trust them and open up to them. 'Not everybody will like you,' Moran says, 'but you have to be a likeable person.' He stresses getting to know your clients on a personal level; find like interests and don't feel pressured to talk strictly business.
>> Finally, be persistent. If a solid relationship isn't built the first time around, keep trying. Moran remembers a particular challenge he faced in winning over a client. 'We didn't have that key relationship up front, but we didn't give up,' Moran says. 'We stayed close and in the end we were rewarded for that. ... We're now their go-to firm from a tax perspective.'
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Certain clients have left indelible marks on Christine Fuller's mind.
'At times there have been clients that have been on the floor crying,' says Fuller, a premium director at the Beachwood office of H&R Block Inc., a global tax and financial services company.
Some show up to the office in their pajamas. Others bring their dogs or children. Once, an unruly child pulled the fire alarm; another time, a boy yanked the computer plug while Fuller was working on his mother's taxes. Some bring in large cardboard boxes overflowing with receipts for Fuller to sort. Lucky lottery winners have come to her, too, often bearing shopping bags filled with thousands of losing lottery tickets to offset some of the taxes from the winning ticket.
These somewhat comical occurrences are enough to make any accountant want to pull out her hair.
Often underestimated and unappreciated, accountants do much more than audit businesses or file taxes. They give financial advice, rescue businesses from bankruptcy or help individuals build and maintain their net worth. And they don't just do it from behind a computer screen.
Inside Business asked a few area accountants to relay their most noteworthy tales of challenging clients and how they remedied the situation.
The following stories prove that beneath the green eyeshades lie corporate superheroes who often end up saving the day.
Everybody Has Some Fraud
A 2002 study forecast that 6 percent of revenues would be lost that year to
fraud — which generally appears as asset misappropriations, corruption schemes
and fraudulent statements — according to the report by the Association of Certified
Fraud Examiners.
'Everybody has some fraud,' says Tim Mayles, manager at the Sheffield Village office of Barnes Wendling CPAs Inc., a Cleveland accounting firm that primarily serves closely held businesses. 'It just depends how much.'
Two years ago, Mayles saw a client cheated out of more than $170,000 by his bookkeeper. The Cleveland-based manufacturer noticed that sales had dropped over the past three or four years, but costs had remained the same.
After some investigating, Mayles discovered an unwarranted amount of adjustments made to accounts receivable and sales over the past two years. He requested proof of payment from all customers whose accounts receivable had been adjusted with an unapproved credit memo. It appeared as if the bookkeeper had set up an account under the company's name at a local bank and deposited money she intercepted from incoming checks.
When the employee in question was confronted, she confessed to everything, but was shocked to learn exactly how much she had stolen. Her husband had a gambling problem and she had felt pressure from him to help pay his debts, Mayles says.
Mayles wasn't surprised that the woman was a trusted employee for 20 years. He says that's normally the case in a fraud situation. Many small businesses don't have very sound internal controls for this type of thing, he says. A certain level of trust builds over the years, making the valued employee an unlikely suspect.
And no matter how much an employee has stolen, it's always difficult to prosecute a long-time associate. But Mayles advises business who've experienced internal theft to do so.
'If you don't prosecute, you're just setting the tone that it's OK to steal,' Mayles says.
Since the incident, the client has implemented more checks and balances within
his business. Now sales are on an upswing. 'They're back where they should be,'
Mayles says.
Keep the Business Running
As long as there's been businesspeople, there's been accountants. 'The accountant,
the CPA in particular, is often referred to as the businessperson's psychologist,'
says Gerald Weinstein, chair of the Department of Accountancy at John Carroll
University.
Accounting is both a science and an art, Weinstein says, but accountants often have a difficult time proving they're more than just adding and subtracting machines. The profession isn't as black and white as it is perceived to be. There are alternatives to what can be done to best suit a client's needs, thus there are judgment calls to be made. Therein lies the art of the profession.
It was the fall of 2002 when a Cleveland-based wholesale distribution company took a blow: Its controller was killed in a car accident. Scott Hockenberry, a senior manager at the Youngstown office of Cohen & Co., was there to help the business pick up the pieces.
'This was the first time I ever encountered a real sudden departure like this,' Hockenberry says. 'It's not just having the person out of there, it's the sudden shock to the organization. It takes some time for them to bounce back from something like that.'
It was an especially difficult time for the company's president, who had to not only act as a grief counselor to his employees but also deal with a decrease in productivity while looking for a replacement.
Though the controller had documented his record-keeping system, Hockenberry had some trouble locating the information in the computer system. He now advises clients to have a reference manual on hand that outlines all job procedures. Once the information was found, Hockenberry explained the financial records to the company owner.
Finding a replacement for a beloved employee was another challenge.
'You're looked at kind of cold with hurrying to replace him, but you had to keep the business running,' Hockenberry says.
It was difficult for the employees to accept a replacement when they were still grieving.
'One day somebody's there and the next day they're not,' Hockenberry says. 'It can create a big impact on the company when you rely so heavily on somebody.'
A human resources consultant was brought in to counsel the client on the best way to ease a new employee into the company.
Hockenberry and the consultant also had to integrate the new hire into the workplace and make him feel welcomed and comfortable. Though the healing and replacement processes took time, Hockenberry says things now seem to be running fairly smoothly for his client.
To Help, Not Hurt
Jill Voight, a valuation leader for the Great Lakes region at Deloitte &
Touche LLP, once caught a client in a lie. About six years ago, while working
at Ernst & Young, Voight was sitting across from a client, listening as
he told her one horror story after another about how poorly his business was
doing.
Voight sat, puzzled. All the research she had done on the company suggested it was doing quite well. It had a strong name, prosperous patents and more than 60 percent of the market share. She suspected the client might be trying to persuade her to give him a low value. Her suspicions were soon verified.
The client proudly introduced Voight to the company heir, his teenage son, who was working for his father over the summer. She explained to him her reason for being there and how she helped his father's business. In turn, the son told her about exciting developments within the company and three new product lines that the client had failed to mention. The client looked at his son and through clenched teeth said, 'We weren't going to tell her that.'
'I felt kind of bad for him because he got caught in front of his own child,' Voight says.
Embarrassed, the client apologized to Voight. She then explained to him that she was there to help, not hurt, his company.
'It's critical that we have a true picture of where it's going, the good, the bad and everything in between,' Voight says.
The client was trying to drive down the value of his company by portraying it as a risky business in order to pay less in taxes. This is a common motive among small-business owners. But, Voight says, most clients are upfront.
'I do believe the vast majority of people running businesses do want to do
the right thing,' she says, adding that this was a unique situation. 'They don't
expect us to have a perfect forecast, but they do expect it to be reasonable.'
A Way to Help
Dave Gaino, chairman of Moore Stephens Apple, an Akron-based accounting firm with an office in Westlake, had worked with a healthy industrial company in Akron for more than 20 years when he noticed its revenue decreasing two years ago. The client simply blamed the poor figures on the bad economy. But after three or four quarters of the same excuse, Gaino began to feel rather helpless.
'Sometimes it was emotionally trying to go back to the office and say I feel bad,' Gaino says. 'I would say, There's got to be a way we can help.' '
Sensing there might be a bigger issue at the heart of the problem, Gaino brought in a sales consultant to determine why the company's revenues were slipping. After talking with the client and analyzing the company's sales, the consultant realized the problem: The sales guy was more of a marketing guy.
'A sales mentality is different from a marketing mentality,' Gaino says. 'You have to be willing to hear those nos' and keep calling. Marketing can't be the only tool to get customers.'
Several of the client's employees had retired within the past two years, and their replacements seemed to be hurting the business more than they were helping it. They were talented people, just not right for a sales job, Gaino says.
With the help of the sales consultant, the client was able to phase out the sales employee with a better replacement. Four months later, the new employee booked a record amount of sales. 'It appears as if it was a tremendously successful move for the company,' Gaino says.
Since this success, Moore Stephens Apple has added a sales consulting and coaching subdivision to its business resource center that offers human resources and technology consulting. This more holistic approach is the wave of the future for his profession, Gaino says.
Facing the Unavoidable
The old adage goes that there are only two things guaranteed in life: death and taxes. Karen Randall, tax manager at the Akron office of Bruner-Cox LLP, once had a client who believed the latter was avoidable.
A few years ago, a man came to her less than a week before Christmas asking for some help with his last-minute shopping. He had failed to file his taxes for five consecutive years, and the IRS was on to him. Deeply upset by this, his wife had been begging him to settle with the U.S. government. He decided that the perfect Christmas gift for her would be for him to file his tax returns.
Randall was baffled. In her 21 years of public accounting, she had never seen someone wait so long to file taxes.
'You have to smile at yourself,' Randall says. 'How in the world can someone survive without doing tax returns?'
The client had simply been afraid of what he'd find, and inevitably, what he'd owe, she says. When Randall was through with the paperwork, in time for the holiday, the client was pleased to learn that he would actually get a refund.
Now, when tax season rolls around, if he's not the first, he's the second one through the door.
Send us your best stories from accounting's front lines to
editorial@inside-business.com. We'll print the best stories in a future
issue.