Abril 28, 2011

Taxi drivers, Accountants & Consultants

Archivado en: English — Etiquetas: , , , , , , , — legisconsulting @ 11:25

First post in English of what I hope will be a long and interesting list… And it is about services we do not provide.

Settling abroad

I am aware, by my own experience of the problems of a Company settling abroad, and I’m aware of the situation of a foreign Company that settles in Spain

A company in a foreign market depends much more on local accountants and management consultants to guide, advise and inform them than the that same company in its home country where it knows the rules an the market. And this is why I think the relation between client and accounting firm has to be much closer and more proactive and efficient.

On the other hand, I know a foreign company in the Spanish Market needs explanations, details, time and work (without extra cost) that local companies don’t. But if you have ever been on the other side, it’s easily understandable.

Being abroad they need to place more confidence in the consultants than in the advisers who know their own market.

Did you ever live this situation?

You are a foreigner arriving at a new airport. You take a taxi to go somewhere that you do not know is just 500 meters away. And the driver takes two hours to drive you there after a full tour through the bordering provinces.

Unsuspecting (business) tourists

I recently met –the first and only one in my professional live– a quite big Spanish Accountants & Consultants firm that just reminds me this situation

Their main market seems to be foreign companies wishing to establish offices or branches in Spain. Most of them big enough to settle abroad. And even some multinational companies with limited presence in Spain

They have the obligations of

  • Bookkeeping: that with the racked and chaotic accounts I found they obviously didn’t do
  • Tax compliance and treasury management: I couldn’t see that part, but, how can you do that with such accounts?
  • Provide advice on local law; and what I saw was some absolute obvious illegal advice. Probably only because of simply ignorance
  • Provide a proactive help to their clients: and under a judicial claim they simply didn’t help at all.

Unfortunately these firms –of which I met only one but I guess could exist more– are ‘formally legal’; Maybe not right; maybe not efficient; maybe not qualified enough; maybe no proactive work; maybe not ethical; maybe simply ‘not service’… But legal!

Like you, taking a taxi in a foreign country, those companies do not know the instruments and ways to achieve their goals and simply trust the ‘driver’.

But what happens with such drivers?

Risks, costs and ‘excuses’

As I mentioned previously, local advisers have more ‘power’ and less ‘control’. And even in cases like this in which the clients were medium/big companies and have their own control systems they couldn’t –and still can’t– have an overview of the real situation. And this unfair management generates risks that will undoubtedly result in costs:

  • The absence of strict accounting:
    • Tax office claims
    • Clients and providers claims
    • Administrative liabilities
  • The absence of strictly legal HHRR proceedings
    • Social Security claims
    • Tax office claims
    • Employees and contract staff claims
    • Labour authority claims
  • The absence of exact and professional qualified tax advice
    • Tax office claims
  • The absence of proper advice on management or administrative action
    • General costs increase
    • Legal uncertainty

Unfortunately, the firms like the one origin of this post do not fulfil their basic obligations. And the worst part is how easy it seems to find excuses to justify these costs or claims when the recipient of the explanations does not know the law, the rules and the market.

Fences, cliffs and ambulances

It is quite clear that when they get complaints, we (lawyers) also get work. But I do not think this is an ethic way to get clients, work or cases at the courts.

Richard Susskind, a very important law firms consultant, often pronounces a phrase that I fully endorse and assume as the centre of my professional values “they (the clients) would rather have a fence at the top of the cliff than great ambulance service at the bottom”.

Myself –like most lawyers and accountants in Spain– strongly prefer the fence to the ambulance and this is what I try to do with this post: build a fence that protects foreign investors in Spain from the large sinkhole that these firms mean.

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