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Referrals
Make the Grade at
Accounting Firms
Trusted advisors often minimize the importance of their role in leading clients to the right resources. Typically, clients will look to a trusted advisor, such as their accounting firm, for advice in tackling challenging financial issues. In many cases, however, they don't expect their accounting firm to undertake their business problems. Rather they are looking for guidance on what to do next and where to go to for help.
When your client is lacking topical expertise or industry contacts, a referral to a qualified or dependable contact translates into a significant value-add. It's the first, and arguably the most, important step in getting your client's business on the right track, headed toward success.
Referring, Not Consulting
The recent Enron/Arthur Anderson debacle and a Congressional trend towards legislating CPA firms out of consulting has caused clients to question how accounting firms can give them critical business advice while maintaining their independence and integrity.
As Rich Miller wrote in a recent Business Week article, "The implosion of Enron Corp. in a mushroom cloud of scandal has profoundly rocked Americans' perceptions of financial markets, accounting practices, and corporate ethics." [See enclosed Business Week article, "A new Credit Crunch.]
CPA firms that previously had been referring lenders on their own or consulting directly for these services are taking another look at these practices and in many cases are looking for alternative solutions such as professional finance agency representation. Leaner professional services firms that don't have an in-house financial team or experience, also appreciate the benefits of having access to an outside agency qualified to help their clients navigate today's turbulent waters.
Beyond GAAP, The Necessity of Financial Due Diligence
In the aftermath of Enron, balance sheets and financial deals are being scrutinized more closely than ever before. In his Business Week article, Miller says "Worried that other Enrons are lurking in the shadows and stunned by the meltdown of such high-profile companies as Kmart Corp. Investors are treading cautiously. But banks are getting stingier, too. Stung by the demise of Enron and other high-profile bankruptcies, they're tightening lending terms and cutting off companies that don't pass muster." Now, many accounting firms are beginning to refer clients who need debt financing directly to a large or credible brokerage agency, much as they do with their clients to Marsh McLennan or AON who are seeking insurance or risk management services. Whether it's a case where it appears that financing will be difficult to obtain, or if the client simply wants to increase the chances of heading off an unfavorable outcome, a debt financing agency, like Primagency, is a sound alternative.
A national finance agency provides an additional level of due diligence by going beyond generally accepted accounting principles (GAAP) and evaluating the collateral assets and analyzing cash flow. This process accurately evaluates the potential borrower's financial health, adding value to both the lender and the CPA firm. Along with decreasing the accounting firm's liability and increasing the likelihood of success, the benefits of connecting clients to an established brokerage agency includes leveraging a deeper lender network and stronger purchasing power to secure financing with optimal terms.
No one knows your clients' financial needs better than you, their CPA. With a long-term partnership and first-hand understanding of their financial standings, you are best qualified to evaluate your clients' situations and how to best satisfy their needs. A national finance agency can be an important component in your business advisory arsenal moving forward.