The accountancy profession in 2016 is very different to that of a decade ago; new technologies, regulations, client expectations, and of course, the move to the cloud is dramatically changing how practices are run.
Research by ICAEW found that businesses are looking for more than tax and compliance from their accountants with services like payroll, cloud accounting, and proactive advice on business planning and strategy in demand.
To differentiate your practice, accountants need to move toward value-added services like these:
1. Cloud-based accounting
When the government said ‘Make Tax Digital’, they basically meant ‘From here on, everything will be in the cloud’. Some studies say 64% of SMEs are already using cloud-based software, while others say 41%. But everyone agrees that cloud accounting is a technological breakthrough and the demand is only moving upwards.
According to Elaine Clark, founder of CheapAccounting.co.uk, ‘We are seeing more and more of our clients doing their accounts and bookkeeping themselves online. They are tech savvy so they can do this stuff themselves. They bank online, they shop online so they can do it themselves so unless accountants step up ...”
By doing compliance work on the cloud and getting to know your clients’ finances better, extra services will come out of the blue.
2. Payroll and auto-enrolment
For years, accountants have considered payroll a nuisance - mostly because of the admin work that comes with it. However, with the arrival of the cloud and automation, payroll has become an increasingly popular service to offer and also extremely profitable.
But payroll is only profitable if it is sold for more than it costs you to do the work. Outsourcing helps here, as it reduces the time, money and effort involved in managing the service.
There is also overwhelming evidence that clients are turning to their accountants for auto-enrolment services. We think it is a great way to add value to your clients and generate a new revenue stream.
Similar to payroll, this can be further outsourced cost-effectively to increase your practice revenue.
3. Business consulting services that clients need
According to Source Information Services (Source), the UK consulting industry, at a market value of £6.02 billion, is the globe’s second largest business advisory market after the US. The Big 4 accountancy firms already dominate the market when it comes to large businesses, but could you be doing the same for the SME market?
For those who are keen to offer but don’t know where to start, why not consider finding a mentor, getting some tools, spending some time in developing expertise, implementing a service with a trusted client, gathering feedback from the experience, making adjustments and keeping the do-review-redo loop going. It’s about starting and practicing.
Business consulting services can separate your practice from the competition and let you provide more value to your clients. It eventually results in deeper client engagement and a source of greater revenue.
Few accounting practices go out of their way to actively market bookkeeping. There are several good reasons for it. For instance:
- It is an administrative nightmare
- It’s not cost-effective if they need to hire a bookkeeper (the costs for premises, VAT, payroll, leaves, etc.)
But the situation is changing. New tools like Receipt Bank and Xero are making it much easier to record sales and other transactions online.
Just like UHY Hacker Young, you can also offer bookkeeping services by creating a separate outsourcing brand. This will allow you to market a business with a cost base that supports a competitively priced service offering.
5. Virtual CFO services
Cloud computing and easily accessible free communication tools like Skype have made a difference to one service in particular – the ‘virtual CFO’ service. Along with giving accountants deeper insights into their clients’ financials, it provides a chance to reinvent the profession, and move focus from basic compliance services to a business advisory model.
According to Intuit UK’s ‘The Changing Role of Accountancy’ survey of 200 SMEs, 82% are expecting their accountants to be more proactive in delivering value added services. Nearly, all said they were willing to pay more for the privilege.
Many growing businesses cannot afford the salary of an in-house FD. Take advantage by offering virtual CFO services. In your role, you can:
- act as their part-time CFO
- provide financial advice on an as-needed basis
What you will find is that in working with clients who improve profitability, it will take the pressure off the fee and you will be looked as someone who made a difference to their underlying financial performance.
How to get started?
When an accountant embraces new services there can be some amount of risk. But as with any new service, you will need a strategy to market your offerings to your current client base. You will also have to determine the delivery of the service. There are two basic options in this regard:
- Train your current staff or hire new staff to deliver new services
- Outsource the delivery of the new services to a third-party like an outsourcing company
Outsourcing can be an effective way to quickly ramp up your practice without sacrificing quality or stretching your staff too thin.
To paraphrase Darwin, it is not the strongest or most intelligent that survive, but those most adaptable to change.