While loyalty is a valued trait in any professional relationship, especially with your business accountant, it’s important to consider whether this commitment could be limiting your business’s growth potential.
In this article, we’ll examine the potential drawbacks of staying with the same accountant out of loyalty. We’ll incorporate insights from behavioural psychology to help you understand how attachments can influence decision-making. Additionally, we’ll guide you in evaluating whether it’s time to explore new options for your accounting needs.
Loyalty in professional relationships signifies trust and reliability. When you’ve been working with the same local accountant for years, you might appreciate the stability and continuity they offer. This trust can foster a productive working relationship and provide a sense of security. However, loyalty can also be a double-edged sword.
Behavioural psychology tells us that people often develop a psychological attachment to long-standing relationships, known as the sunk cost fallacy. This cognitive bias makes you feel that the investment of time and resources in maintaining the relationship justifies staying, even when the relationship may no longer serve your best interests.
This attachment might prevent you from exploring more advanced business accounting services or better-suited expertise. In addition, the endowment effect can lead you to overvalue the services of your local accountant simply because you already have them. This can make the prospect of change seem more daunting than it is.
Limited expertise: A smaller business accountant who was sufficient in your start-up phase might struggle with finding advanced financial solutions as your business develops. People often resist change due to status quo bias—a preference for things to remain the same. This bias can lead you to stick with an accountant who is no longer the best fit simply because changing feels uncomfortable.
Inadequate service: If your business accountant’s service levels do not meet your current needs, you might experience delays, generic advice, or outdated practices.
Missed opportunities: Sticking with local accountants who lack knowledge of emerging trends or new regulations can drastically impact the future of your company. The fear of loss, or the loss aversion bias, can cause you to hold onto your current accountant because you fear losing the perceived value of your existing relationship.
Understanding how these concepts play out in practice can be enlightening. Here’s a glimpse into what this could look like in real life and how you might benefit.
Imagine you’re an established Australian company that has expanded internationally. You’ve continued working with your trusted local accountant, who has been reliable and supportive for years. However, as your business grows, you encounter complex international tax regulations and compliance requirements. Unfortunately, your local accountant lacks the expertise in global accounting services necessary to navigate these challenges effectively. This gap leads to costly compliance issues and fines. Your attachment to this accountant, influenced by the sunk cost fallacy and status quo bias, prevents you from seeking a more knowledgeable financial management partner. As a result, your business's international growth is hindered, and you miss out on opportunities to streamline operations and maximise profits.
Consider another scenario where your company has relied on a local accounting firm for many years. While they have provided satisfactory service, they have not kept pace with the latest advancements in accounting technology and strategic financial planning. Modern tools and techniques that could automate processes, improve accuracy, and offer strategic insights are missing from your financial management.
This reliance on outdated methods slows your decision-making and causes you to miss opportunities for business expansion. The endowment effect makes you overvalue the services you currently receive, leading to a reluctance to explore new options. Consequently, your competitors who leverage advanced accounting business services and innovative technologies gain an edge in the market, leaving your business struggling to keep up.
To determine if loyalty is hindering business growth, look for these signs:
Lack of specialised expertise: If your accountant struggles with complex financial matters or fails to provide relevant insights, it’s a sign that they might not be keeping up with industry trends. This can indicate that it’s time to change accountants.
Inadequate service levels: Poor communication, slow responses, and generic advice can signal that your local business accountant is not meeting your needs effectively.
Stagnant growth: If your accountant isn’t helping you capitalise on new opportunities or effectively address financial challenges, it could be a sign that their approach is outdated.
Inability to adapt: If your business accountant is not adapting their services, it’s a sign that you should review your professional relationship.
Don’t let the fear of change hold you back from finding a better business accounting solution that can drive your company forward and support long-term success.
If you find that loyalty is getting in the way of your business needs, here’s how to overcome these barriers:
Define your needs: Clearly identify what your business requires from an accountant. This might include specialised expertise, strategic financial planning or advanced accounting technology. Understanding your needs will help you objectively evaluate whether your current accountant can meet them and support a sustainable business.
Explore a broader range of options: Investigate a broader range of accounting business services, including global accounting firms that have a local presence, like Findex. These firms offer more extensive resources and expertise that can support your business’s growth.
Seek recommendations and conduct research: Reach out to peers and industry professionals for recommendations. Their experiences can provide valuable insights.
Evaluate potential firms: Assess potential accounting firms based on their ability to meet your needs. Look for firms that offer specialised strategic services and a strong track record of supporting businesses similar to yours.
Transition smoothly: If you decide to change accountants, ensure a smooth transition. Communicate clearly with both your current and new business accountants to facilitate the transfer of information and ensure that all financial matters are handled efficiently.
Loyalty to your accountant is valuable, but it should not come at the expense of business growth. Understanding the psychological factors influencing your decision-making can help you overcome biases like the sunk cost fallacy and status quo bias.
Regularly evaluating your business accountant’s performance and exploring new options can ensure that you have the right partner to support your evolving business needs. By being proactive and open to change, you can set your business up for continued prosperity.
*Our business health check includes a summary of key discussion outcomes and next steps tailored to each business’ needs. While we provide examples of how we can assist, no specific advice is given in this session. Depending on the complexity, further investigations may be needed, which may incur charges.
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