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2021 Xero practice heathcheck quantifies accountant resilience
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How well have practitioners weathered the storm?

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Having helped their clients weather the pandemic, many accounting firms have a brief chance to take stock this autumn and look ahead to the challenges of recovery, growth and MTD.

22nd Sep 2021
Editor in Chief AccountingWEB
Columnist
In association with
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In many ways the accounting profession has grown up in the past two years and embraced a variety of trends that used to hover on the fringes of professional practice: flexible and remote working patterns, cashflow and funding forecasts, and advice and cloud app stacks.

As is customary, cloud accounting platform Xero surveyed its UK customer base during April and May 2021 to assess the pandemic’s impact and see how practitioners were performing.

Not too badly, it appears, according to Xero UK director of accounting partners Glenn Foster in his introduction to the 2021 industry performance report: “The accounting and bookkeeping sector is resilient. In fact, according to our study, it’s thriving… The industry rolled up its sleeves when the going got tough. Accountants and bookkeepers quickly became financial support ‘key workers’ for businesses navigating the pandemic.”

Signs of growth

As the economy suffered, some accountants prospered by showing leadership and offering practical support to clients when they needed it. According to Xero, 51% of UK respondents said their client base was growing faster or at a similar pace than before the pandemic and only 4% reported a decline.

Life was a little tougher for smaller firms, Xero found. Nearly one in five sole practitioners (19%) and 16% of small practitioners experienced no growth or even a decline as advisers struggled alongside their small business clients.

Moving up the scale, medium-size firms showed signs of resilience, adding on average 21 clients in the past year, at an average annual fee of just over £1,500.

The skills crunch

As a result, 30% of firms in the study said they were looking to hire more full-time staff in the year ahead. Among the fastest-growing practices, 45% said they were looking to boost full-time employee numbers during the next 12 months.

Whether large or small, the most pressing challenge of helping clients recover from the pandemic, mentioned by 59%, was being hampered by the growing shortage of skilled accountants.

This conundrum is not new. Client service challenges, staff shortages and building skills within their teams were mentioned as major concerns by most of the entrants to the Accounting Excellence Awards this year.

Xero and AccountingWEB joined forces last week to explore these issues with pacesetting practitioners Pamela Phillips of de Jong Phillips and Jonathan Bareham from Raedan in a 60 minute practice healthcheck webinar.

For both accountants, the big lesson from the pandemic was the benefit they gained from staying in regular contact with clients. But they needed to pull out all the stops to maintain that level of service and were constantly looking to build business advisory skills within their teams.

Both Raedan and de Jong Phillips were among the top 11% of performers identified by Xero’s benchmark research. In both cases, however, most of their growth was organic.

“Our revenue’s grown, not from adding lots of clients, which we’re happy to do as well, but… from all of the additional work we do for our clients,” Phillips said. “And all that additional work is possible because they’re online. As soon as we’ve got a client on Xero, we can plug that client into so many other things and advise them on so many different areas that will help their business.”

To find out more about Xero’s 2021 practice benchmark research, make sure to watch Jonathan and Pamela in our latest practice healthcheck webinar.

Replies (3)

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By johnjenkins
23rd Sep 2021 10:32

Come on John, you've only got to read the comments on here to know what's going on in practice. I see a big difference of opinion between high techies and low techies which will cause a lot of problems especially for HMRC. MTD is causing this, not the pandemic. A lot of good Accountants will be retiring which will leave a gap that software will not be able to fill. We need to be very careful how quickly high tech moves, otherwise there will be a huge price to pay for the small business. Once the small business disappears then we all in big trouble.

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By HLB
23rd Sep 2021 18:18

MTD ITSA has been put back a year. Yay.

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Replying to HLB:
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By johnjenkins
24th Sep 2021 09:26

I wonder why. Now all we have to do is get rid of quarterly updates.

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