By ALLISSA KLINE
Business First

Some of the largest Western New York accounting firms are bracing themselves as the waning economy moves into the new year.

Some will pick up different kinds of work. Some will do less work in a particular area. And some could face the prospect of job cuts, a direct result of having less work to do.

The region's largest accounting firm, Freed Maxick & Battaglia CPAs PC, has not laid off employees as a means of cutting expenses. Instead, the firm is thinking twice before it hires new accountants, Managing Director Robert Glaser said.

"We made the decision here that we want ... to keep our people, try to expand our market share and bring some good to our clients," Glaser said. "It's not a hiring freeze, but we're very careful about hiring right now."

That decision is in stark contrast to the widespread layoffs taking place across the nation. In November, 533,000 workers nationwide in various industries were laid off, according to the U.S. Department of Labor. Industries hit hardest included manufacturing and construction.

Businesses in both those industries are clients at Freed Maxick, Glaser said. The result? Less work for those clients.

"We have been affected by our clients cutting back and being cautious about what they spend," Glaser said. "What that really means is specific projects are being cut off, and that affects our revenues."

The industry as a whole has been "relatively unscathed in 2008" when it comes to the economy, said Allan Koltin of PDI Global Inc., a consulting firm for accountants. But that could change in 2009 because accounting firms typically run 12 months behind general economic trends, Koltin said.

"What accounting firms are doing right now (is), if they have underperforming people, they're getting rid of them," Koltin said. "They're taking a much tighter stance on new-client acceptance and they're watching their billings, their account receivables, a lot tighter than they ever have been watched before."

At Lumsden & McCormick LLP, there hasn't been a reduction in staff to save money, Managing Partner John Oehler said. Instead, the firm is on track to bring in new employees. A handful of interns will begin work this month and another small group of recent college graduates is slated to start working for the firm this summer, Oehler said.

The difficult economy could lead to an increase in bankruptcy-related services, but there will almost certainly be less transactional and mergers-and-acquisitions work, Oehler said.

"I've got a feeling ... that we will be assisting some businesses and clients with budgeting and cash flow," he said. "Conservation and cash will be critical to businesses, and often they will want consulting regarding that."

At the other end of the spectrum, Glaser said his firm will probably perform more asset-based-lending support services for banks, which means the firm will monitor banks' collateral.

"That piece of the practice is stronger than it has been," he said. Tax-preparation assistance is also expected to rise.

To save money, both firms said they are looking at ways to internally cut expenses. Freed Maxick is pursuing a larger client base, watching expenses related to seminars and travel and looking at long-term investments, such as the recently announced acquisition of a Rochester-based accounting firm.

Lumsden & McCormick is reviewing costs related to insurance, stationery and software purchases, Oehler said. He stressed that layoffs are not part of the money-saving plan.

"I'm sure there are places we could cut back and reduce expenses, but we will not do it on the backs of our staff or staff morale," he said. "Those things that help us build our business we're not going to eliminate."

Glaser said his company is thinking about the future in a long-range sort of way.

"We're setting staffing plans on an 18-month horizon," he said. "There's a Plan A and a Plan B. You really have to think about both of those things."

 

 

With choppy water ahead, CPAs look at best ways to help clients

Area accounting firms are carefully leading their clients through some challenging economic times.

What are they watching? Tax preparation, for one.

"It's just the biggest," said Robert Glaser, managing director at Freed Maxick & Battaglia CPAs PC. "It's getting refunds back and getting research-and-development tax credits."

Other key issues include:

• Budgeting.

• Monitoring cash flow.

• Reviewing financial arrangements.

"We're advising clients to budget very, very carefully, to be very conservative on the revenue side and to look for cost savings on every expense line," said John Oehler, managing partner at Lumsden & McCormick LLP.

Oehler said his firm is encouraging clients to pay close attention to their cash flow.

"We think the conservation of cash will be an incredibly difficult task in 2009, given the economic and business conditions," he said. "We're urging clients to stay on top of their accounts receivable and those who owe them money."

Glaser's firm is undertaking similar work. CPAs there are advising clients about ways to reduce inventory costs, whether to proceed with an acquisition or whether the particular business should shut down, Glaser said.

"We try to act as part of their team in identifying those areas that need attention," he said.

Working so closely with clients means that accountants sometimes have an inside view into the economy, Glaser said.

"We monitor our clients on an informal basis to see what's happening with the economy," he said. "Collectively, we get a good sense. Through that, we can keep a pulse on what's happening."

So what's the collective sense? Rough times could be ahead, both Glaser and Oehler said.

For now, both firms busy themselves with assisting clients.

"Clients will no doubt want to know ... how to control accounting and compliance costs, so we have to be prepared to address those questions that clients raise," Oehler said. "They'll no doubt ask us if there's more they can do to reduce costs or more we can do to reduce their costs."

-Allissa Kline