How well have practitioners weathered the storm?by
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.
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.
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AccountingWEB’s interim Editor in Chief has been with the site since 1999 and returned to the editorial hot seat in March 2020 to support the team through the pandemic. When not tending to the needs of AccountingWEB members and geeking out on their technology habits, he devotes much of his time to an oddball collection of stringed instruments...