Brexit: How to protect your practice
Many accountants would like to believe that Brexit is having little or no effect on their own businesses or clients, but a survey by Accountex provides strong evidence that even as early as January a good number were already noticing the impact.
Such is the nature of this fearsome beast that even half a day seems to change its nature, meaning that in the two months since that survey was concluded there have been many major developments. It is hard to believe that anyone could imagine that these would not have increased rather than reduced the consequences of what might be the most significant economic (and social) decision taken in our lifetimes.
According to the Accountex survey, 40% of respondents said Brexit had already impacted their business’s financial planning decisions. While 33% of accountants in practice have seen an increase in the number of clients turning to them to analyse the risk posed by Brexit and provide advice in recent months.
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These stark statistics should provoke two immediate reactions. An article next week will address the first of these – how can I manage to generate opportunities from clients needing advice?
This piece addresses the second: regardless of the risks posed to clients, how can I protect my practice from the risks that it will face as a result of Brexit?
Arguably, before considering business generation it is at least as important to put in place the necessary protections to ensure that our own firms do not suffer over the coming months as the uncertainty causes short-term problems.
That is particularly important since these are then likely to be succeeded by issues arising from whatever outcome is finally implemented by the government or, as seems increasingly possible, Parliament - not to mention our friends from across the Channel.
The first step should be to compile a list of clients who might literally struggle to survive as a result of changes that Brexit is going to bring or merely as a result of the aforementioned uncertainty. This could include companies supplying goods or services to European customers/clients who may find cheaper options if tariffs are implemented.
Next, there are those that rely on European goods and services to ply their trade. It could also cover businesses that were already on the brink of closure and who may be pushed over the edge by tough economic conditions.
The next stage might require a high degree of diplomacy since you should establish whether it might be advisable to cease providing services, require fees to be paid before doing work and/or collect any outstanding debts while the clients are still able to settle them.
It might also be a good idea to establish whether any private clients are planning to emigrate. This could have a number of consequences including the loss of business and the difficulty in chasing fees.
To the extent the clients are going out of business or will no longer require services, your future fees will contract. It may then be necessary to cut your cloth accordingly. This will presumably mean generating additional business or cutting costs.
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There may also be issues regarding auditing licences, particularly if you provide services to clients in Europe or have EU registered auditors working in the UK. This is likely to be a longer-term problem but might best be addressed when there is still time to make alternative plans.
Staffing will generally become challenging. Almost every accountant I know is struggling to fill vacancies, particularly at managerial level. This is hardly likely to be improved if there is the expected exodus of European workers, returning home or going elsewhere rather than continuing to operate in uncertain conditions in the UK.
The support staff situation is likely to be even worse, since many may struggle to obtain the necessary visas to work in this country. While others could be scared off by the problems likely to arise if there is a no-deal Brexit relating to areas such as social security, healthcare etc.
Individual practices will face other problems too. For example, if you let or sublet part of your operating premises to struggling businesses or those with European connections tenants may hand in notice or become insolvent.
While news about the Irish question has quietened down of late, any firms based in Northern Ireland could have their own unique issues to deal with, particularly if a hard border is imposed by the European Union.
Perhaps less intuitively, if you do not sell the services that clients require in connection with their Brexit concerns, competitors may do so. That could lead to the loss of clients since we know that when another firm gets a foot in the door there is every chance that they will eventually take away all of the services that you currently provide.
Some readers may feel confident they will notice no difference whatever form Brexit eventually takes. However, being prudent individuals, most accountants like to foresee and overcome potential problems in advance. If nothing else, taking a few important steps may help you to sleep more easily at night.