The gap between firms will widen in 2014

The gap between the successful and less successful UK accounting practices will get much wider in 2014, says Steve Pipe.

In many senses this is a “safe” prediction , since the gap has been widening in recent years anyway.  But there are also some particular reasons why 2014 will probably see an acceleration rather than merely a continuation of that trend.

Austerity will continue to change everything

The economic recovery is fragile and slow, and the need for many more years of austerity is an accepted fact. Life will continue to get tougher for clients due to a “perfect storm” of:

  • Prices increasing faster than earnings – leading to falling real incomes
  • Higher taxes – reducing real disposable income even further
  • Negative real interest rates – reducing the income and wealth of savers
  • Less generous pension arrangements – meaning shorter and less comfortable retirements
  • Cuts to services provided by the state – forcing us to start paying for things we used to get for “free”

This is precisely why the Chancellor warned that 2014 will be “a year of hard truths”.

And the hard truth for accountants is that...

Continued...

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Comments

Would be interested to see    3 thanks

Sheepy306 | | Permalink

Would be interested to see that Intuit research and who was polled, 88% of clients want cloud based services from their accountants? I have a good quality client base but only 1 client who has any interest in the cloud. Just think what that % would have been without me and my clients, sorry Intuit.

nigel's picture

Intuit survey links

nigel | | Permalink

Our coverage of the survey Steve refers to is here and includes a link back to the full results.

Cloud Software    1 thanks

amphur | | Permalink

Come off it Nigel, most clients wouldn't know cloud software from a spreadsheet. And if it's quality for money then most cloud bases software fall way short. Not having a contra account facility for example!!! 

 

Transparency    2 thanks

Sheepy306 | | Permalink

Thanks for the link Nigel, I missed that article back in November.

I'm not convinced by those figures, had you polled the people attending the 'futureaccountant' conference then I'm sure you'd have got at least 88% support (infact I'd be worried if there was even 1 attendee that wasn't in full support) but I simply cannot believe that this is a random sample of owner managed businesses in the UK, it just seems rather convenient and way out of touch from my perspective and those gained from AWeb in general, which is a shame. I do still wonder exactly how the people were selected, it would be interesting and useful to know. There's always a risk to the reader when a firm pays another firm to tell them what they want to hear, although I'm not saying that's what has happened here.

It also never ceases to amaze me that a 'small' business can be one that has 250 employees! I realise that this isn't necessarily your definition.

Kent accountant's picture

Contra accounts

Kent accountant | | Permalink

Eh?

Just set up a contra bank account easy peasy ;)

A Pipe dream?    1 thanks

mjshort | | Permalink

To be a 'most successful firm' I assume that you have to pay Steve Pipe & AVN money.

EH

amphur | | Permalink

 

Ok so you have your dummy contra bank account. Now what about contra account. You know, the supplier that is also a customer and you counter one against the other. Quite easy when you know but hardy quick. First you have to set up a new customer and supplier making sure the names are slightly different. Then create a customer invoice. Customer> new invoice>receive payment> contra bank account>deposit. Then create a Supplier bill. Supplier>enter bill>pay one supplier>contra bank account. In a perfect world the contra bank account will balance at zero. It the real world they never do and the value of the invoice or bill will show a balance due which needs posting accordingly. As you say easy peasy.

 

Kent accountant's picture

@amphur    1 thanks

Kent accountant | | Permalink

Do really go to those lengths to deal with contra items?

Why?

Entries in the 'contra bank account' bank receipt and bank payment to contra off agreed amounts - job done.

No other entries needed.

I also think you're missing the point if you can't see cost and time savings associated with cloud software. 

Accountants can provide remote support throughout the year, user friendly dashboards geared towards the business owner not the accountant, automated bank feeds..

...the list goes on.

Plenty of clients are aware of the cloud software and do want to use it.