In the latest issue of Music Week, we take an in-depth look at the world of music accountancy, as a host of leading firms explain why theirs is one of the most important roles in the business.
For the feature, we hear from top names at Thomas St John, CC Young, Gelfand Rennert & Feldman (formerly known as Skeet Kaye Hopkins prior to a 2019 merger) and Harris & Trotter as they reveal the challenges raised by the coronavirus pandemic and reflect on some common misconceptions about their sector. And there are a lot of misconceptions...
“That’s an easy one: ‘accountants pay bills and fill in tax returns’, right?" said Tim Smyth, director at Thomas St John Accountancy, a firm shortlisted for Accountancy Firm Of The Year at the 2020 Music Week Awards. "Unfortunately, this often turns out to be the case, as a lot of accountants allow the client to define the process. They don’t spend time thinking about the delivery system required to provide a consistent value-add service. They are reactive. There are certainly a few who provide a great service to their clients but, this is usually at the cost of technical proficiency… I think most accountants in the profession today are faced with a choice of either reinventing themselves as agile specialists or just trying to ‘ride it out’. One thing is for certain, customers are smarter today and don’t afford the same untested respect they did in the past. If you’re not providing value and communicating that value clearly, your practice is in decline.”
One of the big topics addressed is when it is exactly that artistsneed to enlist the help of an accountant. It’s a lot sooner than you may think…
“The earlier the better,” Karen Bennington, director and head of the touring department of Music Week Award nominated firm CC Young told Music Week. “Making sure that you are set up correctly means there are less problems to fix later on. Do you have a partnership agreement? Are you registered for self-employment? Have you registered with collection societies? At CC Young we tailor our services accordingly. Early involvement means that we can the help to provide advice and guidance as the artist’s career becomes more established and they look to sign record and publishing deals.”
“There is no particular set level,” agrees Ewen MacNeil, director, business management at Gelfand Rennert & Feldman – formerly known as Skeet Kaye Hopkins prior to a 2019 merger, who were the winners of the inaugural Accountancy Firm Of The Year honour at last year’s Music Week Awards. “In our view, as soon as an artist becomes serious about pursuing music as a profession its worth speaking to a specialist accountant.”
He continued: “Many clients come to us from personal recommendation when they are first signing a recording or publishing deal. Normally, that means an advance of some description. For many it is the first time they have received substantial funds. Setting them up properly and managing their ‘spending’ expectations can be challenging. Good budgeting and a financial plan is essential. Particularly in the current climate, understanding increasing financial regulation worldwide, keeping abreast of rapidly changing withholding tax rules, and keeping up to date with new forms of exploitation and the revenue flows from those is one of the biggest challenges.”
For MacNeil, the important work of accountants in the music business cannot be overstated.
“The industry continues to become increasingly complex which, in turn, brings with it a greater number of commercial, financial and taxation areas that need to be considered,” he added. “Experienced specialist business managers, who have a comprehensive understanding of all aspects of the music industry, can help new and established artists alike and can save them significant amounts of money whilst allowing them to focus on their creativity. Being part of a team that assists new artists navigate the early years and helps established artists fulfil full financial potential will hopefully ensure the industry, as a whole, will continue to thrive.”
For all this complexity, however, part of the modern accountant’s job is making the otherwise financially overwhelming or unintelligible make sense to artists and their teams.
“Accountants often have a tendency to talk in accountants terminology and it can leave clients struggling to understand anything,” says charlotte Harris, partner at Harris & Trotter, who are also nominated for a Music Week Award at this year's event. “I’m able to explain things in a logical and clear way. There is no point in having a great accountant who makes no sense to you and its vital for me that a client understands how much money they have as that’s key to making any decisions.”
* To read the full accountancy special report, see the new issue of Music Week, available now, or click here. To make sure you can access Music Week wherever you are, subscribe to our digital issue by clicking here.
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