In this month’s newsletter Alistair McAlinden and Sandy Walker of KPMG LLP reveal that working with an accountant can have wider benefits for your business than you might think
AS sponsor of the SLTA’s business performance survey, “Big Four” accountancy firm KPMG LLP – a multi-disciplined firm providing audit, tax and advisory services across a global network – is on a mission to get closer to the licensed trade and hospitality industry north of the Border.
“Our increased focus on the licensed trade started 18 months ago,” explains Alistair McAlinden, who leads KPMG’s Hospitality and Leisure team in Scotland KPMG’s Restructuring practice in Edinburgh. “You can consult a specialist licensed solicitor so why not use an accountant with specialist sector knowledge, too? That was our thinking behind further developing this area of our business.
“The hospitality industry is very important for the UK economy and the Scottish economy in particular,” he points out. “Look at our fantastic city centres with their evolving restaurant, bar and hotel scenes then the towns and villages the length and breadth of the country that also rely on the industry for employment and tourism – we need to recognise how important they are.”
KPMG LLP, whose client portfolio includes Gleneagles Hotel, Skibo Castle, Macdonald Hotels and Apex Hotels, is keen to work with more hospitality industry providers of all sizes to help them manage their finances more effectively and provide professional advice that could help them save money and become more shrewd operators.
“We’re no longer just bean-counters,” says McAlinden. “The days of the scowling accountant hidden away in a dark office poring over numbers are long gone – operators should consider their accountant to be an asset to their business, not someone who is there to find fault.
“Although we are a UK-wide and global firm we don’t just service large clients – we are happy to work with everyone from sole traders to plcs and that is one of the messages we want to get across to the Scottish trade.”
According to Sandy Walker, a manager who works out of KPMG LLP’s Glasgow office, the vast majority of licensed trade operators are very good business people but there are others who fail to put proper cash controls in place. “These operators could find themselves putting their business and livelihood at risk,” he says.
“You’re so focused on running your business you can easily fall behind with management of cash because you’re tired after a long and busy day serving customers, but then a key supplier says they can’t deliver because you’ve not paid for your last order – not only could that very quickly prove catastrophic for your business, you’re going to have disappointed customers who will then go elsewhere.
“That’s where we can come in – we see ourselves as business advisers, not just accountants.”
In order to gain a stronger overview of the licensed trade and hospitality sector, McAlinden and Walker have had to “live and breath” the industry. “We’ve spent a lot of time meeting and listening to a wide cross-section of operators, agents, solicitors, bankers and trade bodies to glean knowledge and get views on the state of the market,” explains Walker. “Some people thought it strange that we made appointments to meet them but didn’t tout our own services.
“It’s been about learning what are the key issues facing the industry in Scotland, what type of professional advice people need and finding out how legislation is impacting on their businesses – these are the questions we’ve been asking. In the same way that broadening your range of craft beers could boost profitability or moving away from just wet sales and introducing food can increase sales, more proactive and efficient management of your business’s financial affairs can improve cash flow.”
McAlinden points to changes in society as a reason why some licensed trade operators might experience difficulties. “Go back 40-50 years and the pub was very much the hub of the community,” he points out. “Today, the local pub isn’t always seen an asset – for some it’s a nuisance so publicans have to do their best to be good neighbours if they want to avoid conflict.
“That said the licensed trade is often an easy target for legislators in an age when most responsible operators are trying to do good for society, run an honest business and offer employment – clearly the National Living Wage, introduced in April, has implications for all SMEs in the sector as does lowering the drink-driving limit. Almost two years on from the introduction of that legislation we hear many operators blaming it for a slump in profits.
“When you add to the equation the deep discounting in some parts of the off-trade, ever-increasing overheads and the ongoing raft of legislation that many operators struggle to keep pace with, it makes sound business sense to build a good relationship with your accountant who is in a position to offer wide-ranging advice.”
Both McAlinden and Walker believe that having a good network of professionals to turn to is more important than ever for the licensed trade. “That’s why being a member of a high-profile trade association like the SLTA is crucial – a trade association will fight your corner if you have a problem and collectively has a stronger voice and more clout when it comes to addressing the wider industry issues that affect all operators, big and small,” says McAlinden.
“There are so many issues that put financial pressure on operators,” continues. “If footfall is low you can take proactive measures but if you’re a start-up and don’t have funding in place, what do you do? How do you go about securing funding? And how do you spend that money wisely if you don’t have hands-on industry experience? There are lots of ways we can help.”
One of these is the KPMG’s Small Business Accounting offering. For as little as £125 per month, a small business can get an online accounting and bookkeeping package, together with tax and payroll support and access to a dedicated KPMG accountant. You can be starting up or at an advanced stage of your business journey – whatever your situation you can get help with invoices and expenses, management and year-end accounts, tax, payroll, and many of the other key financial areas of your business that need attention.
“It’s a very small price to pay for removing the fear factor – it’s about making finance work for you,” suggests McAlinden.
But there are also wider financial implications to consider. “We’ve had low interest rates since 2009 but what if they suddenly go up?” asks McAlinden. “Would you be prepared? What if a new operator comes along and sets up a business across the road – how would you cope with the inevitable early dip in sales as curiosity sets in and your regular customers start going there too?
“If you run a family business and are reluctant to change through fear of offending the previous generation then there are people who can help you through that and offer advice – collaboration has never been more important. We won’t simply hand you a complicated report – the information we provide is easy to understand and in bite-sized chunks.
“We want to make things as easy as possible for you and when you sit down with us you will soon realise that there some very simple cash management methods that can make a real difference to the way you run your business, freeing up time so you can spend it with your customers, training your staff and looking at different ways of growing and developing your business.”
Find out more about KPMG’s Small Business Accounting offering.
Alistair McAlinden CA is Director leading KPMG LLP’s Restructuring practice in Edinburgh and KPMG LLP’s Hospitality and Leisure team in Scotland
Sandy Walker CA is Manager within KPMG LLP’s Restructuring practice in Scotland and part of KPMG LLP’s Hospitality and Leisure team in Scotland