How to help clients in the months ahead
Xero operations director Damon Anderson offers his insights on the challenges ahead for businesses and advisers the first half of 2021.
The pandemic has forced businesses to think on their feet, innovate and digitise, but it hasn’t been easy. Xero Small Business Insights show that small businesses experienced their largest year-on-year decline in revenues since May, with job growth still below pre-crisis levels.
Accountants have been on the front line helping businesses through a difficult year, and like so many of us, have been under immense pressure. Plus, our research found that 60% of small businesses relied on their accountants for pandemic survival. This demonstrates the vital role they’ve played.
Many will be looking to their advisors for guidance as we move closer towards 2021, particularly with the added pressures of Brexit. These are the areas we believe you can provide the most support in the months ahead.
Emerging business models
Covid-19 accelerated new business models as established businesses were forced to adapt and more people struck out on their own sole traders and freelancers. These shifts open up new opportunities for accountants moving more into advisory work or supporting clients in such as company formation, accessing capital, or managing cash flows.
A good place to start is by helping prepare business plans. As part of this process of mapping out key business indicators and market conditions, you could advise on growth transitions, such as when to hire and scale - using cashflow forecasting techniques. This will also help you predict and forecast payments, sales, purchases and tax liabilities, while also helping clients to apply for loans.
With the right skill set and tech tools, you will be in a good place to provide huge value to these emerging businesses.
Rise in ecommerce
Analysis shows that small businesses that used apps to manage their business before the crisis saw 12% smaller revenue losses than other small businesses, and 12% fewer job losses. Ecommerce apps have helped enormously.
Many shops have been forced online over the past year and some of them are unlikely to stop selling online any time soon. By diversifying product ranges and reaching new audiences online, many retailers have actually done better than before.
There’s been a huge increase in businesses using ecommerce platforms like Shopify. For accountants, this means businesses will require more advice around platforms, online payments, salary payments and accessing capital.
The tax and compliance revolution
April will mark the second anniversary of Making Tax Digital. Implemented to enable a more flexible and resilient tax system, MTD so far only applies to businesses over the VAT threshold. Over the next few years however, it will be mandated for income tax and corporation tax. Business owners have had a lot to contend with in 2021, but will also need help planning and navigating the next stages of MTD in 2022 and beyond.
This drive to digital can extends across all tax filing and compliance activities.
The pandemic highlighted the importance of cloud-based tools in helping accountants carry out important tasks remotely. Solutions like Xero Tax allow firms to file taxes and produce accounts from any location and at any time. This type of cloud-based automation streamlines work, saves time and cuts costs.
Government regulation and support packages
When the lockdown began, accountants had to move fast to ensure their clients got access to the right government support. Although we are through the initial shock of the pandemic, accountants are very familiar with how new measures continue to emerge to support different sectors and stages of business recovery. These burdens are significant, even before you take into account Brexit changes.
Businesses have got a huge amount on their plate right now, and this will only continue in the months ahead. They’ll be leaning on their accountants even more.
Keep the lines of communication open. If any of your clients operate in sectors affected by the new lockdown restrictions, give them a call to offer up your support and advice.
With the client relationships you’ve built on or maintained throughout 2020, you can go into 2021 in a position to help small businesses through another challenging year.
If you’re an accountant or bookkeeper in practice and want more information on Xero Tax, sign up to the Xero partner programme, where you’ll get the tools, resources and dedicated account management to help get your practice and clients set up. Visit xero.com/xero-tax-partner
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Damon is an international leader in fintech with over 15 years of experience delivering cutting-edge digital marketing and payments technology.
As Director of Operations at Xero, Damon understands the ins and outs of accounting and bookkeeping. With extensive fintech experience, he understands how regulatory challenges like Making Tax...