What are the biggest challenges facing the accountancy industry today?

As 2020 came to an end, many of us hoped the madness of the pandemic would be over. However, as we all know, 2021 has so far been equally confusing, with businesses and individuals struggling to keep up with constant policy and restriction updates. 

As accountants, perhaps the biggest struggle has been to help clients navigate these unchartered waters, often while trying to understand what’s going on themselves. 

This guide will cover the biggest challenges for the accounting profession in 2021 and how to overcome them. These are:

• Managing clients’ cash flow concerns
• Staying on top of policy changes
• Replacing clients that have left
• Needing a whole new skillset

January alone held many challenges for accountants. With constant changes and businesses struggling under lockdown restrictions, accountants have been a vital source of information and support. 

Below, we go through the four aforementioned issues accountants have likely had to deal with this year and offer solutions.

According to a recent survey by Senta, client cash flow struggles were the top concern for accountants. This challenge came before all other issues, including meeting tax payments and keeping up with Government policy.

Another research report showed that 43% of small businesses said their cash flow was “extremely” or “very” challenging. In fact, these surveyed businesses named cash flow as more challenging than any other issue they faced.

Clients struggling financially has put pressure on accountants to help them balance the numbers and find a way out of their situation. Usually, you’ll be able to share concrete advice that clients can implement to help them be more profitable. However, during the pandemic, lockdown restrictions and a struggling economy have had even the most experienced accountants scratching their heads trying to find a solution.

The best thing accountants can do this year is to provide continued support wherever they can to help clients weather these financial storms. Monitor their cash flow regularly and advise your clients on how they can make changes to become more resilient to any future curveballs.

Accounting firms can also publish content on their websites to share their expertise and advice. Send newsletters to clients with updates about new content so they can have a look and indulge in your recommendations. Share tips on how to improve cash flow, and pitfalls to look out for, and recommend accounting software that helps them stay informed.

Over the past few months, HMRC has introduced various relaxations to tax policies in response to the pandemic. Covid-19 became a “reasonable excuse” for tax deferrals and penalty appeals. Late-filing penalties were also waived for Self Assessment tax returns if they were filed before 28 February this year.

There’s also the VAT reverse charge for construction services and the extension of IR35 to the private sector. These changes have impacted roughly 60,000 businesses, 20,000 agencies and 500,000 contractors across the UK. Additionally, the new tax year came with variations to Income Tax and National Insurance thresholds.

All these changes almost at once certainly make the accounting profession more complicated. Especially when clients ask questions about government schemes and policies that accountants are trying to get familiar with themselves.

Regularly check the government website for changes to policies and schemes that may affect your clients. As long as Covid-19 continues to torment the business world, you can expect the government to make frequent alterations to schemes, grants and restrictions.

It’s also a good idea to have a clear plan in place for how you’ll get new information out to clients as quickly as possible. The key is to be proactive and inform your clients about any changes before they ask. 

Staying on the ball will help establish trust with clients, as they know they’ll hear from you if anything changes. It also saves you the hassle of answering constant emails and phone calls from clients asking the same questions.

Unfortunately, not every business will make it through the pandemic. The Federation of Small Businesses expects 250,000 small businesses to fold in the next year without extra government support. Others will probably look to cut back on costs, meaning they might have to stop paying for your services.

Additionally, if clients don’t feel like they are getting the support they need during the crisis, they might take their business elsewhere.  

Whatever the reason, many accounting firms have lost clients and faced the challenge of trying to replace them. Accountants have to look for ways to fill the client gaps, which is easier said than done.

Leverage your social media channels to connect with new potential clients. Whether it’s email outreach, LinkedIn posts or live webinars, the best way to find new clients is to be active in the same areas they are. If you don’t know where your clients and prospects spend time online, ask them.

You can also ask your existing clients to refer you to people they know. Research shows that 92% of consumers trust referrals from people they know, and B2B companies experience a 70% higher conversion rate with client referrals.

Learn more about how to find new clients for your accounting firm. 

With technology advancing so rapidly, accountants are under pressure to develop a new skill set that includes sufficient knowledge of various technologies. According to Salesforce, 88% of customers expect companies to fast-track their digital transformation because of the pandemic.

Additionally, 82% of accounting clients expect their accountants to offer advisory services on relevant accounting and finance technologies. In the modern business climate, accountants need sufficient technical knowledge to succeed. For those that don’t already possess the required tech-savviness, learning these skills can be a challenge.

Commit time to regularly researching new developments and trends in accounting technology. You can also invest in training courses. If you have control over hiring decisions, look for talent that already has sufficient technical knowledge. Ideally, they should know how to use the tech stack you already have in place. 

As accountants, you’re expected to evolve and keep pace with the changes by keeping your accounting software up-to-date. For example, Countingup allows you to store data securely and manage your clients’ finances easily if they have a Countingup business current account. 

You can work smarter and start saving your practice time on manual admin by helping your clients keep organised records with Countingup’s free accounting software, built specifically to help you manage your self-employed and sole trader clients.

The business current account and accounting app automates time consuming bookkeeping admin for your clients so they can focus on running their business – and send you accurate, structured data to work from. With instant invoicing, automatic expense categorisation and cash flow insights, your clients will be able to confidently keep accurate bookkeeping records everyday.

Countingup’s accounting software is MTD-compatible and full of features for you to review and manage client accounts efficiently, with direct access to their real-time organised data. Find out more here.