STAYING COMPETITIVE WHILST MAXIMISING INCOME

Johnny Webb & James Woods November 2009

Copyright May 12 BDO. All rights reserved.

KEY OBJECTIVE TODAY STAYING COMPETITIVE (IN A DIFFICULT ENVIRONMENT)

1. Operations and Finances (Internal Focus) 2. Client Care (External Focus)

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MY BACKGROUND
University of Manchester Institute of Science of Technology BSc Management Sciences 1988 1991 Goldblatt McGuigan 1991 1996 BDO 1996 to date Current Role (External) - Head of Forensic Accounting, Transactional Support and Corporate Finance in BDO Belfast - Honorary Treasurer and Main Committee Member Chartered Accountants Ulster Society Internal - Member of BDO Finance Committee - Member of BDO HR Committee - Member of BDO Risk Committee - Past Member of BDO Marketing Committee

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BDO - BELFAST
Full Service Offering

Audit and Assurance

Corporate Tax
Personal Tax Wealth Management Forensic Accounting Corporate Finance Business Recovery Public Sector Consulting Autonomous Partnership in NI

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TEAM OF c.135
Partners Directors Managers Seniors Trainees Support Staff 12 12 39 14 42 16

Total

135

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INTERNAL STRUCTURE OVERVIEW

Partners (12)

Marketing Committee

Finance Committee

Risk Committee

HR Committee

Team Sub-Group

Team Sub-Group

Team Sub-Group

Finance Director

Risk Manager

HR Manager

Internal Resource Group

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OPERATIONS AND FINANCES

Key Objective

- Fees and Cash

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IMPORTANCE OF TERMS OF ENGAGEMENT

Scope of Engagement more importantly, highlight what is not included Duty of Care who is placing reliance Liability Cap now more focus Fees and Disbursements clarity is important Abort scenarios Your Continuing Instructions

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NOW THAT THE WORK IS FINISHED: PRACTICAL IDEAS ON CASH FLOW MANAGEMENT
1. Tight Terms of Engagements 2. Consider Monthly Billings/Intra Month Billings 3. Frequent Communication 4. Professional Fees Finance Schemes (eg BoI) 5. Settlement Discounts

6. Formal Routes

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WORKING CAPITAL AND LIQUIDITY

Working Capital is the amount of money a practice has tied up in funding its day to day operations directly impacting its banking position.
Working Capital WIP + debtors creditors Working Capital Ratio - (WIP + debtors - creditors) fees For Practices, as creditors normally relatively small Lockup (WIP & Debtors) Other ratios Debtors Days - (debtors fees) x 365 Creditors Days - (creditors overheads [exc. wages]) x 365

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LIQUIDITY
Liquidity is the ratio of free cash flow in a practice and the level that this services interest commitments

Interest Cover

- Free cash flow/interest

Free Cash Flow

- EBITDA less working capital, less tax, less capital expenditure

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NEW CLIENTS VERSUS EXISTING CLIENTS?

Most Professional Service firms spend proportionately more on marketing to new clients than to existing clients However, with existing clients:
Trust is established Marketing and research costs to win new work generally lower Follow-on engagements are commonly won in non-competitive situations Greater possibility of moving into new areas of service lines

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CLIENT CARE IN BDO.

BDOs Client Care Programme focuses on the following: Talking to our clients and developing deeper relationships thus giving us commercial insight and broadened knowledge of the client. Increasing service through client understanding by pre-empting discussion with colleagues from other service streams Stimulating an innovative culture bespoke solutions Identifying growing clients and aligning resources towards them

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CLIENT CARE IN BDO.

What do we do?: Key Account Management Programme Client Listening Programme Regular client meetings and contact High Partner to staff ratio with clear lines of communication to Partners Regular networking events, tailored to the client

Regular and targeted Direct Marketing activities eg eNewsletters, flyers

CPD Courses The Database .. Network of referrers Friday afternoons

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BENEFITS TO THE CLIENT

1 Providing a tailored service - that will pre-empt the issues they are facing

Giving access to an aligned team - one that will have a clear oversight of their business and the issues it faces Offering a proactive service offering - solutions will be taken to them rather than them having to ask for input Giving more creative solutions - we will deliver creative business solutions bespoke to them rather than selling a product Providing assistance in developing sector knowledge - the delivery of pooled sector knowledge that will benefit them commercially

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BENEFITS OF A CLIENT CARE PROGRAMME

Feedback we have received from clients on our approach: It is their client relationship - the fact that they know our business very well and they have excellent staff continuity I think from a client relationship point of view, I have experienced better service and quicker responses from BDO, meaning there has been little delay in receiving responses when I requested feedback

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BENEFITS INTERNALLY.
Staff become more involved and engaged in clients business More interesting work - innovation and creativity Increases the chances of identifying business opportunities with clients Develops depth of knowledge of the sector allowing staff to become more involved in more complex and strategic issues

Greater chance of winning more profitable work

Move from being service provider to being trusted business adviser Client more likely to recommend you to others

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