Setting SMP strategies to meet global

challenges
SPEAKERS
Anastasia Chalkidou, Nishi Shetty, Dato' Lock Peng Kuan

Anastasia Chalkidou 00:00

Hello and welcome to this Accounting for the Future session on setting SMP strategies to meet global
challenges. We will be talking about the unique challenges that global economies are facing causing
entrepreneurs to look to their financial professional advisers more than ever. Our deeply experienced
panellists from across the world will share with you their insights as they dissect how SMPs can create
the right strategies to help businesses flourish. Before we get started, we invite you to send in some
questions, which you can do at any time using the Question area on your screens. We'll go through
those in the Q&A session at the end of the presentation. Turning to CPD, if you're an ACCA member,
you can count this webinar towards your CPD if it is relevant to your career, you can apply the learning
in the workplace and provide evidence you've joined us today. For that evidence, we have provided a
personalised CPD certificate in the Resources area of the session.

Anastasia Chalkidou 01:01

Before we dive into our discussion today, let me make some introductions, starting with myself. I'm
Anastasia Chalkidou. I'm from Greece and I'll be moderating this session. I'm an accounting director
and co-founder at Quantum Bits, a small consulting firm based in Athens, Greece. I'm a member of the
ACCA Advisory Committee Greece and a member of the ACCA SME Global Forum. My fellow
panellists and highly esteemed professionals are Dato' Lock Peng Kuan from Malaysia, who is
managing partner in audit and assurance at Baker Tilly in Malaysia and an ACCA Global Council
member. And of course Nishi Shetty from the United Arab Emirates, founder and managing director at
Niche.

Anastasia Chalkidou 01:48

Welcome, everyone. I'm sure we're going to have an insightful discussion today. So let's start our
discussion. I'm sure all of us can create a long list of challenges that SMEs are currently facing in their
day-to-day business. Inflation, recession, supply chain shortages, climate change, the challenge of
digitalisation that was highlighted during the last two years by our experience of Covid. Based on your
experiences and your cooperation with your clients, what are the issues or challenges that you would
highlight as the most important ones? I think I will give the floor to Nishi for this kickoff question.

Nishi Shetty 02:32

Thank you, Anastasia, for the opportunity to speak today. I set up Niche about six years ago and I'm
the co-founder of the firm. Prior to Niche, I worked at one of the Big Four and in that role I worked with
a lot of large organisations. We work with large organisations now but we also work with a lot of small
organisations, plus Niche is a small firm in itself. So this experience of working with large organisations
and small organisations has given me an ability to compare and contrast the working styles of both
larger and smaller companies.

Nishi Shetty 03:16

And one of the bigger differences that I have noticed is that small companies work more on passion
and less on processes. And that's actually one of the most beautiful things about small organisations.
Because the level of passion, the level of energy, is something that you don't normally see in big
organisations. But what also happens is, when these small organisations grow, they get to a point
where passion alone is insufficient. You have to formalise, you have to create a structure, you have to
create processes. And what we have often noticed is that most businesses don't handle that transition
very well, for a variety of reasons. Perhaps the business is still focused on products and markets and
funding, the more tangible items.

Nishi Shetty 04:13

And the internal health of the organisation is more intangible, it's a bit difficult to understand exactly
what impact it's having on the company. So a lot of times we find that the internal health is suboptimal.
And when I talk about internal health, there are three components to it, I would say: the people, the
processes and the IT systems. Ideally, all of these components should work in an optimal manner. And
the interrelationship between them should also work optimally. We find that, in a lot of instances, it just
doesn't work. There are different kinds of problems. And this is very interesting. It's something that we
work a lot with, there are a lot of clients that we advise on this particular aspect.

Anastasia Chalkidou 05:07

That's a very interesting approach indeed. When comparing small and large companies, you can find
bits and pieces where they look alike. But as you say, passion can make the difference, either
negatively or positively! We will have more chances to discuss that. Let's continue with Lock.

Dato' Lock Peng Kuan 05:26

Thanks, Anastasia. So just to expand a little bit on the introductions, in my day job I actually have many
dealings with SMEs, as I'm involved in the IPOs and the listings of many clients who start to become
SMEs. Throughout the years I've seen their journeys from SME to bigger and stronger companies. I've
seen how they started, how they grew and eventually how they became public companies. Specific to
the questions you've raised, coming out of the pandemic, as you mentioned, with the rising interest rate
and also inflation, companies around the world are just faced with higher costs of doing business. And
therefore they need to transfer these costs to consumers. This in turn will make things more expensive
for consumers, which then puts pressure on their spending power and strains companies' profit. So it's
actually a vicious cycle. At the same time, as we're talking about this, companies that are trying to get
back on their feet are faced with a shortage of skilled labour and talent. The competition for talent is
actually very fierce.

Dato' Lock Peng Kuan 06:30

In fact, this is not just something faced by SMEs, it's the same for SMPs like us. We are always
competing to get talent, and not only with other firms. There is fierce competition between countries to
attract talent. We have seen many manufacturing companies unable to meet their orders because of a
shortage of raw material. We've also seen that construction companies are more careful in their tenders
for new jobs due to concerns about cost overrun. There may also be a shortage of labour. All this
makes these contracts unprofitable when the projects are completed. So some businesses are short of
workers and the hospitality sector in particular is finding it very tough to bring back staff who left those
industries during the pandemic due to all these external factors. Internally, our SME clients are also
telling us that their businesses are no longer appealing to the younger generation, who prefer to start
something new on their own. They just want to be the boss. This often happens with the help of
technology. And that's why they will be faced with a lot of succession planning issues as well.

Dato' Lock Peng Kuan 07:46

My last point is about technology. For those who want to expand, this could involve a big investment in
technology, which may require a huge capital outlay. Most funds from SMEs have been set aside for
children's education, for medical needs and for retirement. Their only other option is to obtain financing,
which can be difficult, especially in the post-pandemic era. So we are talking first of all about talent,
then succession issues, adoption of technology and funding requirements. These are some of the
challenges that we have been hearing from our SME clients. I'll stop here for the time being and pass
you on to Anastasia.

Anastasia Chalkidou 08:25

Thank you. Thank you both. I think you're both covering very hot issues and your comments are
coming together very nicely, because Nishi mentioned people and processes and IT, the idea that small
businesses struggle or have difficulties combining the proper processes and people and IT to get the
result that they want. This links perfectly with what Lock said about technology and lack of skills. I must
confess that, in the country where I'm from, there were 10 years of recession before Covid. Greece was
really in a growth phase when Covid hit the country. So everything changed: the way businesses are
working, the way people are thinking about their wellbeing and the balance they want in everyday life.
This made them set different priorities, which resulted in making different choices, in working abroad.
So SMEs find it a bit difficult to compete with larger companies, let's say, which can of course offer a lot
of packages that are much more appealing for younger generations. So this is also an area that is very
important. So – people, processes, IT and the always hot issue of pricing can be highlighted from your
comments. And it's really to the point.

Anastasia Chalkidou 08:35

Do you think that sustainability or climate change is also something that is running in parallel with all
these challenges that we have to face? How is this interacting with the rest of the issues that we
mentioned?

Dato' Lock Peng Kuan 10:25

One point that I wanted to make is that we are not necessarily competing with the big boys. But I
believe that all SMEs will have their unique selling points. That's why the very first thing that all SMEs
want is actually to look for and identify their DNA – why are they successful? I've also heard the phrase
that all great ideas and great innovations come from SMEs, and all big corporations started as SMEs as
well. So do not underestimate the power of SMEs. But it's more about finding what they are very good
at. SMEs have one great strength, which is their agility, and that's something that bigger organisations
can adapt to. Just adding that as a very quick response.

Anastasia Chalkidou 11:15

That's very important and can indeed attract the young generation, who want a variety of different
options. SMEs can be more flexible, that's true. We need to highlight that. Nishi?

Nishi Shetty 11:30

Yes, so just touching on sustainability and climate change. As you mentioned, great innovations, great
ideas, come from SMEs and we find that a lot in the sustainability and climate change sphere as well. I
have clients who are specifically working on these areas. So that's one end of the sector. Then at the
other end of the sector, you've got the other businesses which are into other things. We find that a lot of
them are still focused on their survival, and so on and so forth. And stuff like sustainability, climate
change etc are still not tangible issues, I would say. There are some who are very environment-
focused. As an organisation, we try to minimise the use of paper and all of that. So there are a number
of organisations that do that. But by and large, many organisations are still focused on their survival,
especially with all the other challenges that they're facing on a day-to-day basis. So you've got both.

Anastasia Chalkidou 12:33

Yes. I would summarise your words by saying that it's not always about the big issues, it's about the
issues that are relevant to us as small companies. Sustainability is everywhere. We understand the
context, we understand the need to address such issues. But yes, as you said, sustainability has the
other aspect of viability, of small businesses' survival, of adapting to new challenges. So let's keep that
as our final comment from this first part. And we can move to the second theme and talk a little bit more
about our interaction with clients and how we can reach out to receive that information from them and
see where we can be even more useful than we are now as SMPs.

Anastasia Chalkidou 12:43

How can we reach out to our customers and hear from them what challenges they are facing? And how
can we deal with them? How are you dealing with those issues in your day-to-day business? Are you
having regular discussions with your customers? Does face-to-face work best? Or is remote, more
flexible communication better? How does technology fit into that equation? How is technology helping
you to adapt to these needs? I will start with Lock this time so that we can continue our discussion.

Dato' Lock Peng Kuan 13:00

Certainly. The pandemic opened a lot of doors in terms of the way we now communicate or have a
conversation. It's opened up all these new ways and given our clients greater access to us. I think our
greatest asset is the knowledge that we have. And then we have many conversations with our clients
and our global networks which provide us with a good assessment of the market in general. In terms of
technology, I think we have learnt that we must first adopt the technology, then encourage our clients to
do so as well. In fact, from our own experience we have learnt that the use of technology has an
important role to play, not only for those who are paying for it – ie the management. If I go back to the
point I raised earlier about succession planning, how we communicate with our clients, we need to
bring our businesses into the digital era to be more attractive to younger generations. And we need to
leverage our experience and knowledge of the older generations. This is also important for companies
who want to reach out to customers who are more tech-savvy now. If I can mention ESG, it's not only
about big organisations – it applies to all SMEs as well. So it's about communicating and talking to the
clients, talking to them about why ESG is equally important for SMEs. These are some of the
conversations that we love to have, and we had a fair few of these conversations throughout the
pandemic.

Anastasia Chalkidou 15:41

That's true, yes, technology can unlock many aspects of communication. Communication brings
information and information can lead to more informed decisions and more informed planning. Nishi?

Nishi Shetty 15:59

Yes, as Lock mentioned, because of the pandemic, the adoption of communication technology in
particular has been really, really rapid. Everyone is comfortable using Zoom and whatnot to
communicate. I think the number of face-to-face meetings has come down, but they're still there, we do
go and meet the client. And I think it also depends on the circumstances. Sometimes it's better to just
sit down and talk, depending on the gravity of the point. Sometimes it just works better when you're
face-to-face, but certain other things you can communicate better over the phone or WhatsApp or
Zoom.

Nishi Shetty 16:37

And just another point related to what I said before about the internal health of organisations, because
that's an area we work with a lot. I would put my clients into two categories. One is clients for whom we
are providing those specific services. The other is clients for whom we are providing different services
but, in the process, we find certain internal health issues. If we are working on those specific services,
there's a more structured approach to communication, there are probably regular recordings and
meetings etc. But with other clients, when we are providing some VAT or accounting services, we find
certain issues in the process as a byproduct of our original service. And then we think it's better to
communicate that to them, it makes sense just to let the client know. In that case maybe it's a phone
call or, if it's serious enough, what I would call an intervention, a more formal call where we say, 'Look,
guys, you you need to look into this.' So yes, there's a lot of that as well.

Anastasia Chalkidou 17:51

Yes, indeed. What I have seen from our experience here at Quantum is that it's been a year where
every company, small or large, has been dealing with planning for the financials, trying to understand
the aftermath of the Covid recession and how they can move forward by taking advantage of what they
have learnt during this time and how their services or products have adapted to the new market
requirements. We've had a lot of discussions with customers that have their own brainstorming teams.
And to be honest, we have a large clientele of small, not-for-profit companies. And we learnt a lot from
them about these funding exercises and planning for your financials, tools that we could develop
internally. We are blessed to have IT and accounting services together here at Quantum, so we
developed tools that were really adapted to the needs that we were hearing that they have. For me, it's
that matching that is very important. You can identify trends, as you said, Nishi, from discussions with
customers, but then you need to communicate with them to see whether it's something that they would
choose to buy as a product or a service and see where you can adapt to make it appealing for your
customers. So that matching is really the key.

Dato' Lock Peng Kuan 19:27

I like how Nishi put this forward. It's not about talking to all clients in general, it's about being more
specific and pinpointing what they are actually struggling with. So I think categorising them and offering
tailor-made solutions to each of them is really helpful. Some SMEs may work in isolation, saying 'Let's
not talk to a competitor, let's not talk to an accountant. Maybe we only talk to an accountant when we
have an accounting problem.' We always encourage our people to come and speak to us so we
understand a bit better. That's when we will be able to offer some tailored solutions such as a health
check. Or we ask them, 'Are you having some problems that we need to address together?' So I think
it's important to open up and speak about it.

Anastasia Chalkidou 20:20

That's true. So communication remains key. Nishi? Sorry to interrupt you.

Nishi Shetty 20:26

No, no, I absolutely agree. Maybe one other point to note is that, when you find some issues which are
kind of pervasive, you find similar issues in other places, then you might think about putting it in the
public domain as well. So, the one-to-one is one side, but the other side might involve writing a blog
about it and publishing it on LinkedIn or something, just to put it out there.

Anastasia Chalkidou 20:52

That's a great transition to what we did with the Practice Room here at ACCA. It was a platform where
we could exchange our experiences and share, as you say, which is really important. Share with peers
from around the world what we are doing day-to-day to assist our clients, how we spot these key
factors in the way we work in order to concentrate on areas that perhaps can bring us more revenue,
but also improve our impact as SMEs. This was the core principle, let's say, and it really worked
beautifully.Just to inform our audience, you can find in the Resources area the link to Practice Connect
and the materials and the key takeaways from the two previous cycles of Practice Room sessions. You
can find a lot of experience and sharing there that can be used in everyday practice, which is really
helpful.

Anastasia Chalkidou 21:27

So to summarise, good assessments, adopt technology, adopt communication of course – whether
face-to-face or online, just keep communicating with your audience, with your clients, with your staff as
well. That's really important for identifying issues and challenges that might, as our speaker said, differ
based on industry, differ based on the size of a company, but you can still find common ground and
expand your business.

Anastasia Chalkidou 21:57

So in this journey to assist our clients, many areas where practitioners can provide quality services
have been identified and will be identified from all this communication that we mentioned. Where can
we as SMPs help our clients? What would you concentrate on? Which areas have you chosen or which
areas do you think will be relevant for us in the years to come? I will give the floor to Nishi this time.

Nishi Shetty 23:02

Right. Maybe I'll make a comparison between a large firm and a small firm. A large firm, for me, is like a
supermarket of services or even a department store of services. They've got everything in-house,
whereas we are small, we've got a limited, maybe niche array of services within. But what we also do is
we establish connections with a lot of other small firms who are specialised in their respective fields. So
while we may not have legal services or technology services in-house, we have the right kind of
connections which we can leverage to help our clients. So pretty much all of what we spoke about,
where we think there is a need, that's one of the first things that we do, we try and establish a
connection with the right type and right quality of service providers. And then we should be able either
to refer them or to provide a kind of a joint service for our clients.

Anastasia Chalkidou 24:03

That's very useful indeed. Again, that's at the core of our vision here too. We call it single point of
contact, and you described it perfectly. If an SME requires a service that we don't provide, we can refer
them to another professional that we have tested, with whom we have cooperated in other
environments, so that they can undertake the project, and we can be sure that it's always in line with
what we offer to the SME. So that's a very good point. And it gives us a competitive advantage as
SMPs, because we know the structure of the companies from our job. So it's really important to have
these references to give. It saves businesses time because they don't have to search and venture into
the unknown.

Nishi Shetty 25:01

Exactly! For a number of our clients, because we're the accounting service providers, we find that we
are the first point of contact when they want anything. You know, 'Hey guys, do you do this? Or do you
know anyone who does this?' This question keeps arising. So I guess we can do almost everything
through our connections.

Anastasia Chalkidou 25:19

Yeah, that's true. At least we can be a point of contact. Lock, what's your experience?

Dato' Lock Peng Kuan 25:26

Nishi talked about connections, I think what connections are all about is creating a community, a
community similar to what we have at ACCA with the Practice Room. That's where we share resources,
share some of our problems. With a problem that you think is unique to you, when you read what's
being shared by the other practitioners on the platform, you realise it's not actually unique to you. There
are actually a lot of solutions out there. So what we need is just to communicate, 'What is the problem?
What are the possible solutions?' Going back to what we do, we spend a lot of time helping to create
awareness about some of the issues that could arise, so that they can be addressed early on. Very
often this includes sharing a common solution to these issues with them.

Dato' Lock Peng Kuan 26:13

During this time, many are also coming to us to value their companies, to gain access to finance and for
advice on how to better manage cashflow as part of their risk management and business continuity
plan. This is important for some large corporations, but it's vital for SMEs. We usually have a smaller
buffer when things start to go south. So we have to know what the cashflow runway will be. Especially
the last few years during the pandemic, the number one thing all accountants and businesspeople
assess is their cashflow buffers. So we enter into many partnerships. And we also organise some
roadshows to raise awareness about access to capital markets. We have an IPO and listing awareness
platform, which includes readiness assessments to help some SMP clients to identify the gaps in the
governance process and also the health check, both in terms of financial reporting and, in certain
cases, the status of the tax compliance framework.

Anastasia Chalkidou 27:12

Yes, Covid gave us a great opportunity to have more informed enterpreneurs, to give them the
opportunity to plan better and create more viable businesses that can expand and reach IPOs and rich
growth. It's very important what you mentioned, Lock, about networks and communities and the work
that they are doing. I would love to share my experience with this as well. Since our company was
founded here in Greece, I've seen how important it is to participate in mentoring or training for young
people who want to start up their own businesses. It was really an amazing experience for me as a
tutor to receive their feedback and see what challenges they are facing, so that I can adapt my
business in that way, but also so that they can make their first steps more informed and be more sure
about what they are planning and what they want to do. Learning about issues like cashflow
management, profitability and business planning, which is really key at the beginning, helps create
healthy companies and healthy startups that can expand afterwards.

Anastasia Chalkidou 28:36

So it's really an area where we can make a difference. Perhaps on a pro bono basis at the beginning,
but for us, it came back, you know, it really added value to our revenues as well because eventually
these companies expanded and came back as clients requesting our services afterwards. You give
such a positive vibe and then you receive it back multiplied, so it's also a very important part of the work
we're doing and the societal role that we have. Regarding strategic planning and planning the use of
technology, did Covid open up a lot of room there for accountants? What would you say, how do you
see that? We mentioned technology briefly and how we can incorporate it into communication with our
clients, but how do you see our role in how our customers are planning for this change?

Dato' Lock Peng Kuan 29:37

I think technological adoption has actually fast-tracked during the pandemic. What we need to do is to
keep the momentum going, because it's more about investing a portion of the revenue or cashflow into
technology. Technology adoption is a given, so we must continue to embrace what we have learnt
during the pandemic and not just let it disappear. We need to identify someone who is good at using
technology who can tell us what technology to buy and to invest in. It has to come from a user
perspective. I think, in the past, usually the management was looking into which technology to adopt
and pay for. But again, I think it has to come from users' demands: it has to be who is using it, where is
the pain point. They should be the ones deciding, not the one who is paying the cost. So I think that is
where we should start.
Nishi Shetty 30:38
Nishi, any final comments on that?

Nishi Shetty 30:40

Yes, just to add to that, because I touched upon the internal health of the organisation. One of the
curious things we've found is that even those organisations that are very tech-savvy or whose entire
product is dependent on technology or is technology, when it comes to internal processes, there's less
focus on technology. Sometimes we've seen strange issues where manual processes are used which
could easily be replaced by technology that's readily available on the market. A lot of technology is
being used to go out to the market, to deliver the products, to produce the products etc. But when it
comes to the internal processes, the use of technology could still be better. And that's an area where
we can help, pointing out those specific issues, the gaps, and then also pointing out the implications of
those gaps. That's an area we work on quite a lot as well, even assisting them to bridge the gap by
working with tech specialists. Because sometimes tech specialists speak a different language to the
business owners and it's difficult to align them – and sometimes the financial language too – so we can
come in the middle and bridge that gap.

Anastasia Chalkidou 32:17

We are used to bridging the gaps, you know, translating financial information to business and using
everyday language so our customers are aware of their finances. So yes, I understand that it's really a
very important role that we are playing here. And it can give a unique identity to what we do. Yes,
Lock?

Dato' Lock Peng Kuan 32:41

Following on from Nishi, for us it's not about adopting technology in everything that we do, but we
always have a philosophy of automating everything that we do. Technology adoption is a subset of
automations – ie we want everything to work on autopilot. So technology is helping us become what we
want to be. Automation is a very big target that we want to achieve, to automate everything that we
possibly can.

Anastasia Chalkidou 33:17

Great, thank you for your very insightful comments. Automation is really a huge discussion as well. And
a huge tool if we first identify during the planning stage the areas where we can automate and where
we need to keep using people and not automated processes. Closing this very insightful discussion, I
would like to thank our speakers and just summarise some of the issues mentioned today.

Anastasia Chalkidou 33:48

We talked about business, we talked about people, processes, IT, we talked about technology and the
fact that it's not under discussion whether we will adopt it, but rather how we plan to do it, how we can
assist SMEs in setting up their strategy and the resources to support this technological development.
Finding our unique selling point, finding our identity, is really important in this journey for us as SMPs
and as financial professionals. Listening to what our customers have to say, what are the challenges
that they face depending on their industry or their background or what they can do? Grouping them
could be a solution for us, putting them in categories based on what is expected from us and what
would give us a competitive advantage as SMPs. And of course, staffing and hiring people remains a
huge challenge for us as SMPs as well as for SMEs. The competition in the labour market is really high.
So we need to promote, as we said, our strong points as SMEs, the agility, the adaptability, the flexible
environment, the variety of issues that we can work on. I will give the floor to my colleagues here to
finish with the key message that they want to give to our audience. Lock, would you like to go first?

Dato' Lock Peng Kuan 35:29

Sure. I think SME clients now need SMPs with a multifaceted skillset to help them through this
challenging post-pandemic time. Therefore, I think that as SMPs we must be prepared to invest in
talent and technology ourselves so that we have the right skillset, infrastructure and knowledge to be of
use to our clients. It's a hefty but necessary investment in the long run. If we do not invest, the client will
just look elsewhere. And it's not just about investing in the right talent, technology and automation. It's
about upskilling ourselves and also our people through continuous learning and targeted learning. I
think that SMPs should also engage with each other more regularly, both formally in meetings like this
and also informally during social networking events, so that we can learn from each other and are able
to help our clients better as well.

Anastasia Chalkidou 36:25

Great, thank you, Lock. Nishi?

Nishi Shetty 36:29

Yes, I'll just put one comment out there, for all organisations regardless of what industry you are in.
Please do not ignore the internal health of your organisation. Because that is very, very important for
the long-term success and sustainability of the firm. You may not realise it but, if you don't look into
those productivity issues and effectiveness issues and employee motivation, your mistakes, errors that
are happening, wrong decisions etc, just because you don't have the right people or processes or
systems in place. While it may appear kind of difficult and time-consuming and costly to put those
systems, processes and people in place, in the long run, they more than pay for themselves. They're
really worth the effort.

Anastasia Chalkidou 37:25

That's great. Yes, great point. I would sum up with a very short phrase: there are no difficulties, just
new opportunities. And we are ready as qualified professionals, since we are talking under the ACCA
umbrella here, to face these challenges and actually adapt and expand our businesses to even more
areas and respond to these challenges very successfully. This wraps up the main part of our
presentation and now it's time to turn to questions from the audience. Thank you to our speakers and to
everyone who has attended the session today. It will be available on demand for three months, so
please feel free to share it with colleagues using the links on the screen. And don't forget to visit our
Resources area for additional materials. Thank you.