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Accounting Essays | Problems Faced by Accounting Firms

The constant development of the enterprise activity that characterizes our days has created the need for frequent reorganization of a firm's strategy in order to gain a competitive advantage, which is a basic requirement for the survival of the company in the market.

On the other hand, the standards of a firm's structure, operation and financial level tend to change everyday not only in their nature but also in their quantity and quality. In order for a company to achieve these standards, there are some requirements that need to be met in a short or a long-term basis.

One of the most important issues that a firm has to face is that of attracting and retaining clients especially when operating in high competitive financial markets.

This paper examines the forms, the causes and the solutions of such a problem especially to the area of the financial services market and more specifically to the case of a small accounting firm.

It has been put effort to analyze the role and the importance of this factor to the whole existence of the firm as it can be observed in the today's market.

The reference to the particular issues related with this problem was considered as necessary as they all influence (in a low or higher level) the way that the firm responds to the problem.

A series of possible solutions is then presented as they also have their impact in the effort of the firm to confront the situation.

As it can be concluded from the presentation and the analysis of the problem, the effort towards that direction can lead to positive results only if it remains active and constantly adapted to the new trends of the market.

II. Problems that arise during the operation of an accounting firm regarding the creation and the retention of a customer's net a. Competitiveness of the market

The operation of an enterprise under the current market conditions is really a very challenging task. The existing circumstances tend to promote the large corporations with very extended margins of profit.

The major advantage of the enterprises of this size is their operational structure, which widens the options given to a client regarding his decisions, which can usually be formulated under the prospective of a specific interest or desired profit.

When coming to the area of small firms, the limited presentation to the market (due to the lack of capital for extended marketing) as well as the absence of very specialized staff (which - as an opposite - can be found to the large corporations) can influence the whole image of the firm to the market in a negative way.

b. Lack of strategic planning

The formulation of the strategy of each firm usually depends on the vision and the targets of the specific firm.

Moreover, the ownership and the capital structure of firms is also a critical factor in the deployment of strategic planning. Some small and medium-sized firms are owned by a small number of individuals or by an owner/manager. These firms are generally classified as independent.

Other small and medium-sized firms are wholly owned subsidiaries of larger organisations. Such firms are considered SMEs, but in practice they can fall back on the expertise and resources of the parent company.

The backing and support of a larger organisation arguably results in critical differences between these SMEs and independently owned SMEs.

The absence of a strategic planning (or an insufficient one) can cause a series of problems to the firm. The main indicator for the lack of a strategy in a firm is usually the difference between the targets of the specific firm and its vision, especially in cases that the above difference can be noticed all around the business activities.

The absence of organization, of effective marketing, of sufficient resources and of satisfactory customer support are usually indicators that the strategy of the firm is weak or non-existent and as a result the direct action from the management team appears as necessary.

c. Insufficiency of staff - lack of specific knowledge - lack of customer support

It is well known that the ability to achieve a successful sale is a basic requirement regarding the staff of a company that operates directly with customers. This is also applied even when the specific target of the firm is not sales-focused and that can be explained by the fact the characteristics of a sale can be found in almost every enterprise activity.

As for the area of financial markets, especially the accountancy, sales can be used when promoting a specific product or a project (of financial interest) or when handling the financial documents of a client.

In any case, the staff can be proved insufficient especially in the cases of the absence of knowledge on the industry or the specific products of the firm.

The level of the knowledge is not the only criterion in order for the staff of a firm to be proved as non-qualified for the requirements that this firm has put as a standard regarding its services to customers. Another important factor is the lack of motivation and the absence of active interest for the aims and the vision of the firm.

And we should notice here that although the first factor, that of the lack of knowledge, can be 'resolved' through the use of programs that are created especially for this reason (seminars, other methods of staff training), the second factor (lack of interest for the industry and for the specific firm's targets) cannot be improved and the only way of handling it seems to be the 'reconstruction' of the staff.

This is not necessary related with the 'premature' end of working contracts but also with the placement of the employees to different positions where they may be more productive (according to their knowledge and their competences).

We should notice here that, generally, the degree of trust between the service provider and the customer is directly influenced by the quality of the service and the by the bonding strategy and techniques of the provider.

Offering superior service quality and effectively bonding with the customer leads the former to trust the service provider, which in return results to affective commitment to the provider.

Developing this type of commitment appears to be particularly important not only for ensuring the maintenance of the relationship but also for further enhancing it, because it leads to an intention to further invest and strengthen the relationship with the provider.

On the other hand, according to the findings of S.P. Gounaris (2005) research, commitment decreases as the levels of trust between the two parties increases. This is a positive development for the relationship because calculative commitment has a negative impact on the customer's intention to maintain the relationship and to further invest in it.

d. Limited or non-existent marketing

The issue of marketing effectiveness is of particular significance to those associated with the management of financial services in the UK.

In recent years, the increasing liberalisation of the financial services market in the UK and its gradual transition from a sellers' market to a buyers' market have had a profound impact on organisations competing in the industry.

Coupled with political, legal and economic pressures and higher levels of service expectation on the part of customers, banks and building societies are no longer able to assume source loyalty Consequently, many banks and building societies have focused on a variety of customer-oriented strategies in their quest for sustainable sources of differential advantage.

From a point of view, we could say that business is considered to possess a high level of marketing effectiveness if it has a close association with customers, is driven by a common set of values within the organisation and demonstrates an external orientation to its markets.

First, customer relationships are distinguished by a service orientation, a thrust towards innovation and a broad view of the organisation from the customer's standpoint.

Second, the set of values must be apparent and identifiable, with an accent on quality and on the value of people.

Third, the external focus on markets acknowledges the importance of the marketplace as a key influence on corporate action. These principles define the creation and the operation of a successful marketing strategy.

In case that the above characteristics are not presented in the firm's culture, then its marketing strategy has been an unsuccessful one.

Moreover, regardless of the wide acceptance of the marketing philosophy in principle and the appreciation of its significance to modern day business, it appears that, in practice, only a limited number of firms implement the marketing concept effectively. It is therefore not surprising that most of the firms there have been called to enhance their overall degree of marketing effectiveness. We should also notice that the most significant predictor of the customer based performance measure (customer retention) and profitability (profit margin) is customer philosophy. All the other four marketing effectiveness dimensions - operational efficiency, strategic orientation, adequate marketing information, and integrated marketing organisation also exert a significant impact on customer retention. However, the regression analysis also indicates that, with regard to the growth based performance measure (sales growth), adequate marketing information replaces customer philosophy as the strongest determinant of performance. Thus, the emphasis placed upon each dimension of marketing effectiveness appears to be determined by the performance objective set by the financial services firm. However, one can deduce from the research findings that customer philosophy is of primary importance in a financial services context. The practice of the industry market has shown that there is a strong positive relationship between the kind of marketing culture a service firm has and its degree of marketing effectiveness. Even when the possible effects of firm size and geographical scope are removed, the relationship between culture and effectiveness remains significant. In other words, the number of employees working in a particular service establishment (e.g. five or 500) and the geographical scope of the firm (e.g. local or global) do not significantly moderate the impact culture has on effectiveness. While each component of marketing culture makes a significant contribution to the explanation of effectiveness, the import of a particular culture component (i.e. service quality) generally depends on the effectiveness component with which it is related.

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