WORKING WITH accountants across the UK during the past year, we’ve seen some very distinct camps evolving.
At one extreme are the traditionalists, who may decry the current economic situation, but would appear to be doing little to evolve into whatever the future may hold for accountants.
At the other extreme are a growing band of accountants who aren’t just rebranding themselves, but have found new ways to ‘add value’ to their relationship with their clients, particularly small businesses, which are, after all, the bread-and-butter of many practices.
These firms have realised that the problems with the global economy and the UK’s banking industry present a real opportunity for accountants.
Britain’s banks are not going to ‘get well’ overnight and as market research illustrates, lending to small businesses continues to be an issue. In addition, few small businesses would now think to go to their local bank manager for real business advice. Instead, banks are fast-evolving into sources of real-time information. To paraphrase the founder of Movenbank, banking used to be somewhere you go, now it’s something you do.
Small businesses aren’t getting the lines of credit they need, nor, some would argue, much support from the UK government. This is where accountants can step in. I’m not suggesting that small businesses don’t manage their finances well, but there is often room for improvement and accountants are ideally positioned to do this, such as spotting potential cash flow problems or patterns that the business owner cannot see. According to the 2020 Group, more than 40% of business owners would like their accountants to be more proactive.
Of course, this means working with small businesses in a different way. Traditionally, accountants see clients’ financial data ‘after the event’, for instance when it’s time to do the management reports. By this time, it’s too late to do much remedial work. Conversely, if the accountant had access to the client’s books at any given time, then they could collaborate with the client to forward-manage finances more effectively.
Integral to this, of course, is the adoption of new billing models (77% of businesses would like their accounting fees spread over the year to help with cash flow) and technology that makes this possible. While it could be argued that, of course, I would say that, we are hearing anecdotes from accountants all over the UK about how they are using online accounting to change the way they work with clients.
Add in new innovations such as live bank feeds and mobile apps for online banking and we’re also seeing clients who are fitting financial management within the working day, instead of it being an onerous task at the end of the week, month, or just before the tax return deadline.
Online accounting isn’t about replacing the accountant – it’s about a more transparent, collaborative relationship that is more informed and timely. As well as online accounting, accountants can offer other complementary services, such as debtor collection, cash flow forecasting and strategy planning. The modern accountancy practice is all about being a virtual CFO, who is there to help on a daily basis.
It’s a win-win situation. Small businesses reduce their dependency on seemingly cautious banks, while accountants evolve to survive – no small issue considering that most accountancy practices are themselves SMEs and therefore facing similar economic changes, not to mention potential threats from offshore number-crunching. Today’s challenging situation could be the key to the future of the accountant practice, as we know it.
Gary Turner is UK managing director of Xero
Image credit: Shutterstock
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