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Client cashflow struggles remain top concern for the profession


As small businesses struggle through the latest coronavirus restrictions, 67% of accountants are concerned about the ongoing impact on their clients’ cashflow. 

13th Nov 2020
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Fears of clients’ cashflow drying up topped a new industry survey by practice management software firm Senta for accountants’ biggest concerns, beating other anxieties - such as meeting tax payments and staying on top of government policy - by a staggering margin. 

With a second lockdown bringing uncertainty for the upcoming months of business, cashflow anxiety is clearly even more prevalent. As cashflow struggles push businesses ever closer to the cliff edge, accountants are experiencing the knock-on effect of an increased level of client price sensitivity. 

To combat this concern, accountants plan to keep prices the same as previous years rather than increasing them. 

Free fees 

Amplifying concerns amongst some accountants are the mounting fees that they’re hesitant to ask their cash-strapped clients to pay. The survey showed an even split in how accountants are approaching this delicate pricing topic; half are choosing to offer discounts or payment holidays, while the other half are holding firm on their pricing. 

The AccountingWEB community has also voiced distress about knowing where to draw the line and ultimately giving away too much for free. Beever and Struthers’ manager, John Toon agreed in a recent webinar from Senta that free work is always going to be a risk in professional services. 

He stressed the importance of setting the expectations of pricing to the client straightaway to temper the expectation of overworking and undercharging. “If we do a good job, hopefully they’ll stick with us when we come out the other side,” he said. 

Lockup in lockdown 

For Toon, it’s about doing the basics properly: “Number one is actually keeping on top of lockup and knowing what it is and where it's heading. The next one is billing quickly and enforcing credit.” 

He suggested implementing a direct debit or subscription-based payment schedule, which would ease the pressure off clients and reduce the impact of work on ledgers. 

The survey showed a 37.5% increase in lockup across the last six months, with a further half of accountants reporting that it remained the same.

Peter Disney, managing director of Wood and Disney, has sustained minimal lockup in his practice for some time: “Everything we do is quoted for and paid for in advance,” he explained in the webinar. “We explain the value - if they don’t accept it, it doesn’t get done.” 

He assured listeners that clients need to understand and appreciate your value: “If they don’t, then you’re with the wrong client in my opinion.” 

Personal cashflow 

Toon commented that accountants tend to work on business cashflow when there is also the added dimension of the personal cashflow to consider. 

“There’s a wider impact on the client’s personal cashflow,” he said, such as the impact of their business performance and what they may have to waver or give up to survive. 

Disney introduced a business advisory programme to help build resilience with clients who were struggling, with resources all relating to cashflow. They are currently testing it in free demonstrations. 

Diversifying services 

The survey also showed that many accountants are looking to diversify their services, such as implementing credit control management, tax diagnostics, and budget reviews. 

Toon commented that it is the accountant’s priority to be empathetic with the problem but pragmatic with the solution: “Our role as supporting businesses through crisis management has always been there,” Toon said. “It’s just been massively amplified over the last few months.” 

Senta’s Elizabeth Carter praised their cloud-based platform for supporting this year’s intense workload: “It’s enabled remote working and the management of teams in a considered and organised way.” 

Optimistic outlook 

While 85% are predicting an increase in workload, there was a general feeling of positivity; 45% of respondents felt optimistic about the future, even with a heavily increased workload. Only 23% reported dreading the next six months. 

Fortunately, there is a greater and growing awareness within the industry and society as a whole about the importance of wellbeing: “People are generally a lot more cognitive about it,” commented Carter. “This has provided a catalyst for a lot of organisations.” 

She explained that the survey all came back to relationships: “Retaining a really strong relationship as a trusted adviser to their client is what’s going to push them through.” 

The accountant/client relationship is seeming positive, with 94% reporting an excellent correspondence even after the events of this year.

The pandemic has motivated businesses to proactively seek advice and guidance, accelerating a time in which the accountant professional has never been so important. 

“Cashflow is going to be critical for clients - and for accountancy firms,” said CEO of Senta, James Kilford. “A big rise in work is anticipated - and there’s a desire to implement change and diversify services. These are exciting times ahead.” 

You can read the full results from the survey by downloading Senta’s Planning for the near future research


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