In what condition will practices emerge from the coronavirus crisis?

Which accounting practices are going to come out of the coronavirus crisis in a fit state to continue?

It’s a harsh question, but one that comes in context of great change in the practice community – as some accelerate plans to operate in a more digital manner, trying to mitigate the risk of commoditisation of basic tax and accounting compliance services, and the implications for their people strategy.

Some have suggested that the ongoing crisis may push back further tax regulation – with IR35’s delay as an example – easing the burden on clients and practices. The rollout of further tranches of MTD, such as for income tax, may also go into the long grass – giving less tech-savvy practices breathing space.

But other issues may come to the fore that make the impact of digitisation-by-regulation academic. Businesses up and down the UK are getting in touch with their accountants, asking for help to steer through the government’s proclamations and get to a point where they can use extra funding or payment deferrals to stop their businesses going under.

However, without robust financial information to hand an accountant will struggle to help them access a Coronavirus Business Interruption Loan (CBIL). How can a business forecast for the future if it doesn’t know where it is now?

Many practices who have struggled to keep up with digital ways of working – whether running their business internally or liaising with clients – will see the coronavirus crisis as pushing them over the edge.

If you don’t have modern working practices in place, then it can be deduced that clients are unlikely to be on retainer – making it even harder to bill for services rendered during the crisis – or get paid at all.

Unfortunately, what we’ll see on the other side of the crisis is a depressed market value for many practices. Those who lose some of their clients in the coming months, because they cease to exist, or who struggle to hold onto their best staff.

It’s going to be a tough year ahead for practices that do work digitally, are able to be flexible with their team’s working practices, and that bill clients monthly. They will still find themselves stretched, going above and beyond for clients without being able to charge.

If one of your partners was planning to retire, do they need to stay in place for a further 12 months until the ship is steadied? Were you planning on moving office or consolidating your sites? Will that still go ahead?

Ultimately, whether your practice is well-oiled with a clear picture of your clients; robust internal processes; and systems, or it’s shambolic, the next few weeks are about clients’ survival and putting them on as sturdy a footing as possible. But if you’re not careful about how your own business is run, then it won’t survive either.

Even if your practice makes it through, I expect it to change the destiny of many practices’ future direction – some, I’m sure, will emerge stronger. And I hope these take the time, in the very near future, to take stock of where they are and think about medium-term planning at least. Others, I fear, will have accelerated towards their decision to call it a day.

Kevin Reed is engagement and communications consultant at Foulger Underwood