Challenges facing the accounting profession in 2021

by | Feb 10, 2021 | Content, Research

It would be nice to think that with 2020 behind us, we can move on and start to think about new challenges and opportunities this year – but, as we all know, COVID-19 will continue to be the main concern on people’s minds for the foreseeable future.

January alone held plenty of challenges for accountants, including coping with self-assessment season under lockdown, quickly responding to Government policy announcements, and supporting clients with new rules following the end of the Brexit transition period.

With more changes to come, and businesses feeling the pressure of lockdown restrictions, accountants continue to be a vital source of information and support.

Here are some of the main challenges to prepare your firm for this year.

Client cashflow concerns

A survey by Senta at the end of last year found that client cashflow struggles were the top concern for accountants, beating all other issues such as meeting tax payments and keeping up with Government policy.

That sentiment is backed up by our upcoming research report, as 43% of the small businesses we surveyed said cashflow was “extremely” or “very” challenging – more than any other issue they faced.

Look out for the full report, which will be published on our Insight page later this year.

For many businesses, existing cashflow problems could get worse as national lockdowns take their toll.

This year, accountants will need to provide continued support with monitoring and improving cashflow, as well as building their clients’ resilience against any future shocks.

This is one topic you could produce content around to promote your firm’s expertise and complement your work. For example, a set of tips to improve cashflow, a guide for a sector you specialise in, or some software recommendations could get your clients and other small businesses thinking about their cashflow before they contact you directly.

Policy changes

HMRC has introduced various relaxations to tax policies in response to the pandemic, including allowing COVID-19 as a “reasonable excuse” for tax deferrals and penalty appeals, and waiving late-filing penalties for self-assessment returns as long as they’re filed before 28 February.

That’s good news for anyone struggling to meet their usual obligations, but it might make things complicated for accountants.

This year is also likely to be an eventful one when it comes to economic policy, with many waiting to find out how the Government plans to balance the books after spending around £280 billion on its COVID-19 crisis response in 2020.

A Budget date has been set for 3 March 2021, but there could be another major fiscal statement in autumn, especially if the Government holds off on tax rises for the first part of the year.

Accountants will have the challenge of quickly getting to grips with any major changes that are announced, and communicating them clearly to their clients as soon as possible after the Budget takes place.

 

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PracticeWeb clients who receive our Budget report will have a bulk of this work taken care of for them, as we’ll publish the key announcements to your news feed on the day, as well as producing a full report that will be in your inbox by the following morning.

It’s then up to you to use it how you choose, whether that’s by getting it professionally printed, making it available for your clients to download, or repurposing the content to create a blog post for your website.

If you’re stuck for ideas, here are some of the tips we shared following last year’s report.

Then there are the upcoming changes that we already know about, including the VAT reverse charge for construction services in March and the extension of IR35 to the private sector in April, alongside changes to income tax and national insurance thresholds in the new tax year.

All this means it’s a good idea to make a communications plan now that you can put into action quickly and easily when the news arrives. Sending a prompt email to your clients will help to reassure them that you have things in hand, as well as saving you the hassle of answering the same questions several times on the phone.

I explained how accountants could promote the business grants that were announced at the start of January in this blog post, but the advice here could also apply to any new policies that affect your clients.

Replacing lost clients

In a recent economic update on the coronavirus crisis, Chancellor Rishi Sunak admitted more than 800,000 people have lost their jobs in the past year – and he warned that we should “expect the economy to get worse before it gets better”.

The harsh reality is that not every business will make it through the crisis, and the Federation of Small Businesses predicts 250,000 small businesses will fold in the next year if they don’t get extra Government support. Others are likely to look for ways to cut back on costs, with 80% saying they do not expect their performance to improve in the first three months of this year.

Accountancy firms will be looking for ways to fill the inevitable gaps in their client base as a result, by expanding to new markets or diversifying their services.

Startups might seem the obvious solution for some accountants, as people who have lost their jobs due to the crisis take the plunge into self-employment, but others might be cautious about the workload and risk involved in working with first-time business owners.

In either case, it’s important to know your target market and be geared up towards them. If you do decide to target new businesses, make sure your services and fee structures are arranged so that it’s worth it for your firm, and your branding and marketing efforts are aimed at the right people.

Similarly, if you’re starting a new service or targeting a new sector, the most important thing is to do your research and plan your approach with your client in mind. Historically, businesses with strong brands recover faster from crises than those with weaker brands, and that’s not just about looking good and standing out from your competitors – it’s about having an underlying purpose that’s relevant and appealing to your target clients.

It’s also about trust. Accountants who were able to build strong relationships over the past year by supporting their clients when it really mattered will have a distinct advantage when it comes to retaining those clients and attracting more.

Small businesses who didn’t feel their current accountant’s service was up to scratch might also be looking for a new option, especially now that self-assessment is out of the way. This could be an opportunity to show them your firm is the right choice.

Let us take one challenge off your hands in 2021, by handling your firm’s content.

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