How to help your clients through difficult timesby
Although the UK has, so far, narrowly avoided a technical recession, many business owners are still struggling with a combination of high costs and reduced consumer demand due to the high costs of living.
Cloud software giant Xero recently published a report into the challenges that accountants have faced helping their clients adapt and thrive in the current trading environment and AccountingWEB caught up with Jo Copestake, UK sales director at Xero to discuss the findings.
What are the best ways accountants can help their clients who may be facing difficult trading conditions?
There are many UK small businesses that are facing difficult conditions, and right now they need support. At the end of the day, they will be at the heart of economic recovery. We’ve been talking to many of our accounting and bookkeeping partners about current and future challenges for them and their clients. Our recent report summarises what we’ve learned, and identifies key actions accountants and bookkeepers can take to support the UK’s small businesses.
Accountants are often the most common source of professional advice, coaching and mentoring for small businesses. During the pandemic, 58% of small business owners said their accountant was their most trusted business adviser. And their role is more important than ever, as economic pressures affect small businesses’ ability to plan ahead and to predict and manage their costs.
By turning to accurate and up-to-date data, accountants can help their clients make rational decisions at a time when emotion and stress may be heightened. Helping clients understand their business data and using it to make fact-based decisions can help to provide some clarity in uncertain times.
While traditional accountancy focuses on working with historic data such as financial records, there’s a real opportunity for accountants to focus on the future and help clients plan for what could come next. Accountants have a wealth of experience in working with businesses facing similar challenges and at a variety of stages of growth. Their experience can be invaluable to small businesses, but this requires a mindset shift from dealing with the hard and fast accuracy of the past, towards anticipating what the future may hold and acting as true business advisors.
What’s Xero focused on over the next 12 months?
Supporting accountants and bookkeepers and their small business clients to navigate challenges and changes is our number one priority. We’re continuing to develop the Xero platform to give accountants and bookkeepers the tools to make it easy to have more future-focused conversations with their clients. Whether it's looking at short-term cashflow, or using the business snapshot and the new management report packs which can be tailored for clients.
We are also investing in developing the Xero platform to make it easier for our customers to prepare for upcoming changes. This includes developing the Xero Go app to help sole traders manage their financial admin and meet the requirements for digital record keeping that MTD ITSA will demand. The Xero Go mobile app is complemented by an adviser-facing Xero Go partner plan, so that accountants and bookkeepers servicing sole traders can meet increased reporting requirements efficiently, thanks to the digitisation of expense records and income data provided by Xero Go.
We’re working with accounting bodies, bookkeeping bodies, the government and HMRC to ensure the introduction of MTD ITSA will be as effective as possible. This builds on the wealth of experience we developed around MTD for VAT to make sure that our customers and partners are ready for the change.
How is Xero working to bring its practice tools together in a more unified experience?
When it comes to client data, we know having consistent records and a single, central source of truth is critical. We’re working hard to enhance and connect our practice tools to help practices work more efficiently, collaborate with clients more effectively and get the most out of the entire Xero platform.
Right now, we’re updating our technology to make sure our practice tools all align ‘under the hood’ so data can seamlessly flow between Xero Practice Manager (XPM), Xero HQ and Xero Tax in the future. Our ultimate goal for our practice tools is to provide you with a fully integrated experience where you can manage one client list, one staff list and one set of user permissions – all in one place.
We're making good progress on creating this unified experience. In fact, last month we announced that all practices who are new to Xero will be able to benefit from having a single source of truth for their client data across all practice tools. And in time, we'll be supporting our existing customers to migrate their data to the new experience.
How does Xero see the UK accountancy profession developing over the next 2–3 years?
The trends we’re seeing now will continue, changing the way accountants work with their clients, but their role will become even more important. We’ll continue to see this macro shift of accountants and bookkeepers moving away from being data processors and dealing with paper audit trails, to streamlining processing using automation-driven tools, real-time data and key advisory services.
Now that HMRC has set out its 10-year digital transformation vision, the industry has a key role in driving digital understanding and adoption – especially amongst small businesses. This increased digitalisation will also be driven by changing consumer habits and more businesses using digital tools. For us, it’s all about working closely with our community to ensure we’re developing the right tools to suit the changing needs of accountants, bookkeepers and their clients.
How can Xero help accountants and bookkeepers become more sustainable?
We see two sides to the opportunity for accountants and bookkeepers when it comes to sustainability. For your firm, prioritising sustainability can help to reduce your carbon footprint, attract and retain staff, as well as giving clients another reason to choose you as their advisor. The other opportunity is the tangible value you can add to your clients’ businesses by helping them measure, manage, report on and mitigate their carbon footprint.
Our research amongst accountants and bookkeepers shows that while three-quarters don’t yet provide sustainability advisory services, 70% would like to expand their service lines. By educating and upskilling in this area, advisers can expand the conversation with their clients to include measuring and improving sustainability practices in their business strategy.
Xero’s Small Business Sustainability Hub houses educational content and resources to support small businesses and their advisers to learn more about topics like how to measure a carbon footprint, reducing energy and plastic use, and carbon offsetting and certification.
At Xero, we’re committed to working with others to help our customers get access to tools that can help them take action. Xero integrates with a number of apps such as Ecologi Zero to help small businesses and accounting firms take the next step in their sustainability journey.
AccountingWEB and Xero are holding a webinar on Wednesday 14 June at 2pm about “How to help your clients through the cost of living crisis and difficult financial times” where we'll hear from two accountants, Paul Layte and Jessica Pillow, about the practical actions they are taking with their clients. Register now for your free place.
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