Fast-forward tax busy season and reduce furloughing staffby
In these turbulent, unprecedented times, accountancy firms are having to think on their feet about how to retain staff, amid falling profits, as clients cut back.
The Financial Times reported the Big Six had a virtual meeting organised by the ICAEW early this month about potential damage to reputations if they took up the taxpayer-funded furlough scheme.
Accountants furloughing staff
BDO is the biggest accounting group so far to announce plans to furlough, with 700 staff having jobs frozen. Other options considered to reduce costs, but keep staff in work, have included voluntary sabbaticals or pay cuts – as Grant Thornton has introduced.
But is there a different approach that some accountancy firms could take to ensure they continue to prosper, while minimising the jobs lost or frozen?
Fast-forward to January
Perhaps there is an alternative, at the heart of which is busy season. Could some accountancy practices effectively fast-forward to December and January? That is, making use of staff time in lockdown to get ahead on tax returns, sending tax e-checklists, letters, or emails to clients to retrieve tax returns and accounts information.
If accountants were to make a big push to get tax returns data in for, say, the next two months, they may see a massive benefit further down the line.
Optimising staff time in lockdown
With many clients probably having plenty of spare minutes, it could be the ideal time for staff to retrieve tax information. A phone call or virtual meeting could do the trick. Once data is in, staff can start producing tax returns.
In this scenario, with lots of valuable work being completed, it is worth keeping staff on, rather than furloughing them.
Clients can benefit too
Clients also benefit from this work. The sooner tax returns are done, the sooner clients know how much tax there is to pay. This gives them early insight into cashflow, a major issue for many small business right now. This doesn’t mean the client has to pay any tax early, so there’s no disbenefit there either.
Accountants could also incentivise clients to send in data early, for example, a special offer to save X amount on their returns.
For the accountant, it might not mean an immediate cash injection this summer, but perhaps revenue will come earlier than it would otherwise – October or November, rather than December or January.
A more hellish busy season than normal
The other way to look at it is what happens if accountants don’t take this approach now?
Many firms would be doing some of this work at this time, in a normal year. By not doing so they are potentially lining themselves up for a massive backlog of work at the end of 2020 and an even more hellish early 2021 – as if January isn’t already stressful enough usually.
If firms can afford to pay staff to do the work now then, it’s going to have a positive impact in the longer term. If they don’t, it could mean delaying greater pain until later.
Doing nothing towards busy season during the lockdown means more accounts and tax returns to do than normal – and in a much smaller window.
Come Christmas, accountants might not be able to cope, with this increased workload coupled with insufficient manpower. That could lead to lots of overtime or having to outsource – creating another financial burden.
Furloughing staff now, while dealing with the immediate issue of reduced short term revenue, may unravel in the long run. Instead, making the most of having them now to bring essential tax work forward could put your practice in a strong position.
If your accountancy firm wants to learn more about how to cope during the coronavirus crisis, please visit the IRIS ‘Here to help hub’ - containing many useful guides, articles, and other key information.