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Punxsutawney Phil predicts a long winter on Groundhog Day - but do UK accountants feel the same way?
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Practice renewal: Avoid Groundhog Day syndrome

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Now that the official tax return deadline has passed, practitioners have a chance to plan for much-needed internal improvements. With a little help from Punxsutawney Phil, John Stokdyk takes a peek at how the shadows are falling on practitioners this Groundhog Day.

2nd Feb 2022
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On 2 February every year in Gobbler’s Knob, Pennsylvania, a groundhog named Punxsutawney Phil emerges from hibernation to see what the weather is like.

If the rodent can see his shadow, he retreats to his burrow for another six weeks in anticipation of a prolonged winter. If the sky is cloudy and he sees no shadow, however, spring should arrive early.

The news from Gobbler’s Knob this morning was bleak, as Phil is heading back underground after seeing his shadow for the first time in several months.

UK accountants will understand how the rodent feels as they emerge from weeks of dealing with tax returns in search of the first stirrings of spring. We often mark this time of year on AccountingWEB by posing the question, what would you do differently? (2016 edition, also see 2020 Nomisma whitepaper).

February priorities

In an Any Answers post yesterday, member rmillaree revived the post-deadline tradition with a question on the most important tasks for 1 February.

Like the original poster, a lot of the priorities mentioned by other members were around tidying up the office, paperwork, outstanding jobs and even the garden. One member, JD, had a simple priority: “Sack D clients”, while I'msorryIhaven'taclue was planning to revamp the firm’s letters of engagement.

Elsewhere, bigdave1971 was also looking for ideas to lessen the stress and make practice life more bearable, with ideas coalescing around fee increases and paperless processes.

Hefty backlog

Even if deadline penalty relaxations lessened the jeopardy for late filing during the past two self assessment seasons, the early February discussions point towards an incipient practice software surge detected by our market research project during the autumn.

To set the scene for practice revival this spring, it’s worth noting that practitioners have been on a non-stop compliance rollercoaster ride since the first wave of MTD for VAT went live during the summer of 2019. Brexit and the pandemic piled new compliance work on top of existing commitments. And then there was our old friend MTD for income tax, coming back to haunt us ahead of the April 2023 go-live date – since delayed until 2024.  

There is also the final instalment of the MTD for VAT transition, with several hundred thousand voluntarily registered businesses due to go into the online filing system from 1 April this year.

According to regular contributor Richard Sergeant, there’s a lot of desire for change out there, but not a lot of time to spare as accountants are still trying to clear the backlogs that built up during the pandemic.

Practice management software boom

Responding to our previous article in November, however, Andrew Dick of GW Dick & Co (aka North East Accountant) also foresaw a boom ahead: “2022 will not be a big year for practice management software... it will be huge as MTD ITSA just can't work without it.

“There is so much more that could be done in this space too, for example, auto-filing after client approval, so the winners will be the more innovative cloud ones, such as AccountancyManager, Karbon, Pixie, Senta and not the established practice suites.”

Our latest insight survey, which concluded in early January, confirmed Dick’s view that cloud specialists were leading the pack. TaxCalc, AccountancyManager, Taxfiler and IRIS were the most commonly used practice management applications, but the cloud contenders were enjoying the fastest growth compared to previous survey findings.

The specialist cloud PM tools were neck and neck with integrated suites in terms of customer satisfaction, but the tools bundled with the core accounting engines – Xero Practice Manager and QuickBooks Online Accountant – still have a way to go before they match the functionality of the established PM brands and cloud challengers.

Smaller, more technologically adventurous firms were the first to embrace online practice management, but the 2022 survey reported medium and large firms were gaining more returns on operational efficiency and revenue growth from software and were keener to invest in improvements this spring than small practitioners.

Paul Lodder, product domain expert at Dext, noted similar trends among the company’s customer base. Having experienced periods of app fatigue where “everyone was overwhelmed and no one was skilled enough with all the apps to be effective,” practices are narrowing things down to a handful of apps that work across the whole customer base, so everyone within the team is able to use them effectively, he explained.

“There’s more appetite to implement technology to create capacity – so you may only need to recruit two accountants rather than four – and larger firms can get the systems and controls in place to offer virtual finance services, strategic meetings or quicker turnaround of management information,” said Lodder.

Back in the North East, “Everything is up for grabs” for small practitioner Andrew Dick. “For us, MTD is upending the entire system,” he said.

Whether it’s a set of accounts, a tax return job or a VAT update, accounting processes follow the same steps: requesting data and documents; chasing up missing items; gaining approval and filing the form. “The practice management piece is the essential hub of the business. You cannot do that on a spreadsheet with quarterly submissions. When stuff comes in constantly, how do you handle and track that with an audit trail?” Dick said.

Dick plans to spend the rest of the spring experimenting with specialist cloud apps. Currently a Sage user, he’s waiting to see if the revamped Sage for Accountants can meet his compliance and practice management needs: “I don’t think there’s a cloud compliance product that’s right yet. Until a cloud product can actually deliver what I want, why move?”

Seems like we’ve been here before

In the 1 February Any Answers thread, AccountingWEB member Hugh Simpson re-enacted the role of Phil Connors, the jaded weatherman played by Bill Murray in the film ‘Groundhog Day’ who is doomed to re-enact the same events every day until the spell is broken.

In Simpson’s words, the outlook for the month ahead was: “Attend to the tasks tomorrow and then the day after and then the day after and...”

One way to avoid the annual tax hangover-spring optimism-summer lethargy-autumn treadmill is to heed the age-old advice many accountants give to clients, but rarely apply to themselves:

  • Determine your intended destination and goals
  • Set realistic targets to aim for and turn them into an operational plan
  • Put in measurable milestones to track your progress; and
  • Review your performance against the plan (with an independent witness or adviser if you need the extra discipline) and make appropriate adjustments if needed.

There are numerous articles and case studies on AccountingWEB on these processes and an entire practice automation hub devoted to the subject. Before you settle back and look for other distractions, bear in mind that the characteristic that marks out most of our Accounting Excellence Award winners is the degree to which they follow this sequence.

There are plenty of opportunities to hear from them first hand, including the 31 January deadline day Any Answers Live webinar with Sharon Pocock and Gary Jacobs.

A multiple award-winner and all-round practice MVP and agony aunt, Pocock has already set out her priorities for the year. “2020 was a nightmare – we were all in crisis mode,” she told Monday’s webinar audience. “So the big thing for me is to share the plan for 2022 with the team and keep to the plan.”

As with Dick & Co, the biggest priority at Kinder Pocock is to get clients set up for MTD and fine-tune the underlying processes: “We’ve got to communicate that to clients early and get them into the pilot.”

Beyond that initial focus, Pocock will be devoting a lot of effort to developing her team and training new members to handle the changing workloads around MTD and advisory services.

Like Pocock, 2021 Practice Pioneer Award winner Nigel Adams is intent on sharing and testing ideas with his colleagues and letting them refine the detailed implementation processes. “They’re the ones who are going to be driving it,” he told AccountingWEB.

Adams, founder and MD of Ad Valorem, has learned from a decade or more of practice transformation to make changes in “baby steps” rather than expecting everything to happen at once. “You pile that on to your team and it becomes overwhelming,” he said.

“If you go straight for gold, there’s a chance you’ll miss the mark in terms of implementation. The firm owners might think they’re doing a great thing, but people in the team don’t understand why they’re doing it.”

At Ad Valorem, the shift towards more advisory work started with incorporations, but another simple step might be to list all the clients for whom the firm could prepare management accounts, cashflow forecasts and budgets.

“What is the simplest thing you can do to implement change? All you do is eat a little bit at a time, introduce simple steps people can understand and develop it from there,” Adams suggested.

If the past two tax seasons have been a struggle because of Covid, MTD and other complications, just remember that next year and the years after don’t have to be as bad. You have the means to improve your working life. The clearer your plans and the earlier you get started on them, the more likely you will be to make visible improvements.

As Pocock put it: “If you’ve got a plan, it takes the weight off your shoulders [and you’ve] got actions in place. It does really work.”

For further advice on how to build an internal practice tech stack, tune into the forthcoming Tech Stack Sessions series on internal processes on 18 February, with sessions on workflow and onboarding systems to follow.

Replies (2)

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By KenKLM
03rd Feb 2022 10:47

My guess John is most small practitioners are exhausted after the last 2 years dealing with Covid and the relentless stress of change that HMRC are apparently hell bent on imposing in favour of software / APPS ….. that are only as good as their users . So I say take a break guys .. recharge the batteries … reduce your stress levels ... get some fresh air and regroup .

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By User deleted
03rd Feb 2022 13:08

...and retire if you can!

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