It's painful – but the best will survive recession

Firms are struggling. Not rocket science of course, but Begbies’ figures give
a truer extent of the problem beyond just anecdotal evidence. Scarily, 500 firms
a month are setting off Begbies Traynor’s Red Flag index which measures criteria
such as county court judgments against a firm and analyses information filed at
Companies House.

As in all recessions, the under-achievers will be the first to struggle,
those with weak structures and, if you excuse the pun, bad practices. But one
bad decision in the wrong place and time can also drag down good firms: those
over-leveraged after making a big acquisition and in the process of finessing
their newly expanded empire have been caught on the hop.

At an individual level it must be hard for partners who have worked towards a
good payoff and retirement by the seaside, to see their plans go up in smoke.
But remaining philosophical and detached (if that’s at all possible), the
recession will surely lead to the shake-up that was needed in some quarters of
the profession to bring themselves into the 21st century.

Consultants to practices tell Accountancy Age that many firms have failed to
get to grips with assisting their clients with an all-round service while moving
away from just providing pure compliance. When we come out of the other side
there will be fewer practices, better managed and more focused on keeping their
clients close to them, and that’s no bad thing.
A fitter, albeit leaner, profession.

But it’s going to be painful, and insolvent firm Titcheners is one of just 74
in the past 18 months ­ and bear in mind insolvencies traditionally increase
after the technical end of the recession. So it seems like survival of the
fittest, with plenty of casualties on the way.

Oppose this clumsy bill

The Financial Services Bill proposes to make banks reveal what their
best-paid staff are earning. This comes as part of the government’s attempt to
curb excessive risk taking in the City. But in its current form there’s every
chance that the bill will also cover the income of advisers, and therefore
personal accountants, to the richest bankers.

The intention was never to capture accountants and personal advisers to
bankers in the bill and it’s not beyond the realms of expectation that Whitehall
experts who put the bill together could have excluded the possibility from the
outset.

But they didn’t. That leaves the profession to make its voice heard on this
issue and to watch over the bill’s passage carefully. The government will need
reminding of the flaws in this clumsy piece of proposed legislation. After all,
accountants are not to blame for the credit crunch.

Further reading:

Firms struggle to stay
afloat

Lessons to be learned from
Titcheners’ collapse