It has long been recognized that small- and medium-sized entities (SMEs) power the global economy. And accountants working in small- and medium-sized practices (SMPs) remain their most trusted advisor, according to a report released today by the International Federation of Accountants (IFAC).
Informed by a comprehensive literature review, the report illustrates the important relationship between SMPs and their clients—primarily SMEs. It examines the key drivers of the advisor-client relationship, including demand for—and supply of—SMP business advisory services.
Growth implications for SMPs, as well as how professional accountancy organizations (PAOs) around the world can support them, are also explored.
“Today’s SMPs are knowledge-rich service providers with great potential to expand beyond compliance to fill a variety of business advisory roles. The report highlights factors that can help them understand how to most effectively evolve and diversify their service offerings,” said IFAC CEO Fayez Choudhury.
“As SMEs have long been considered the ‘engine rooms’ of global growth and development, it is important that IFAC and PAOs help make SMPs aware of the opportunities that will help them and their clients thrive.”
A number of factors influence SMEs’ demand for advice, including both external factors, such as competition and regulation, and personal factors, such as the relationship and level of trust between the SMP and the SME owner-manager, as well as the size and nature of the entity.
Dependent on their size, competencies, location, and appetite for risk, SMPs are continuing to increase and diversify the array of business advisory services they provide to meet SMEs’ needs.
Despite competition from other service providers, accountants, especially SMPs, remain SMEs’ preferred advisors.
Due to the multitude of factors involved, client-advisor interactions between SMEs and SMPs are complex, but generally these relationships are long term and based on a solid foundation of trust and communication.