Like the rest of the industries in the country, the UK’s finance and accounting industry finds itself in a precarious spot. While most British businesses are in dire need of accounting and advisory services, small-scale accounting firms of the UK are being unable to meet these demands as they’re still recovering from the unannounced arrival of the COVID-19 outbreak. During this period, these small-scale firms have had to –
- Restructure their Plans – As obtaining financing becomes more difficult than ever for the country’s small-scale accounting firms, business leaders are having to firms losing clients as there’s simply not enough manpower to meet these demands.
- Payment Delays – Even though the UK government has announced the launch of aid schemes for smaller businesses, the impacts of the pandemic are already too deep to be healed by these substandard efforts. Small-sized accounting firms are failing to meet their payment requirements. A slew of contract terminations and shutdowns is set to follow unless these firms are able to reorganise their commercial structures.
- Digitisation of Tax – The rising need to switch to cloud accounting software and abandon traditional practices isn’t treating small-scale accountancy firms in the UK properly. They’re failing to adapt to these new tax digitisation requirements as the pandemic has made it even more challenging to make the switch to expensive technologies like cloud accounting.
- Remote Working – Large-scale accounting firms in the UK have plenty of experience in remote working. That’s because these firms have been engaging in outsourcing for decades. Industry leaders like KPMG, Deloitte, and Ernst & Young are using the experiences they gained, working with offshore accounting experts to facilitate remote work cultures at their firms. Unfortunately, small-scale accounting firms with little or no experience in managing remote workforces or using cloud-accounting software are finding it extremely difficult to make their employees work remotely and still maintain high productivity levels.
So, what separates the ‘big boys’ like KPMG, Deloitte, Ernst & Young or Price Waterhouse Coopers LLC from the small-scale firms? The qualities that separate them include – communication, outreach, and outsourcing. Larger firms have used their communication skills to integrate offshore accountants into their workforces. They have dedicated teams of experienced accountants across the world, helping them overcome the current crisis. Decades of outsourcing and cutting costs have enabled these large-scale accounting firms to amass skilled resources and capital. That’s why –
- These firms don’t need to restructure their organisational plans too much.
- The money they save by outsourcing helps them deal with payments in a timely manner.
- Offshore accountants use the latest accounting software and cloud computing tools, making it easier for their UK partners to adapt the ever-evolving accounting industry’s new technological demands.
- Managing remote workers isn’t a problem for them as they’ve been efficiently dealing with offshore accounting teams for many years.
Can Small-Scale Accounting Firms Replicate this Model?
Cloud accounting services, Open Banking, advanced accounting software, etc., all create immense opportunities for both small and large-scale accounting firms in the UK. The modern-day bookkeeper can use these opportunities to outsource and drastically reduce their operational expenses. Offshore accounting experts can oversee various resource and time-intensive functions such as –
- Producing annual accounts Production.
- Variance analysis while preparing year-end accounts.
- Managing specific clients’ accounts.
- Creating regular reports to monitor cash flow.
- Spotting trends to inform firms when they need additional capital injections.
- Day to day bookkeeping work.
- Calculating VAT returns.
- Preparation of corporate tax returns.
- Preparing final accounts from incomplete records.
- Payroll management.
There are countless other accounting duties that small-scale firms in the UK can ship to their offshore partners. Large-scale accountancy firms are constantly looking for accounting outsource services. They prefer teaming up with offshore accounting teams that use the latest accounting software such as XERO, SAGE, IRIS, CCH, etc. So, smaller firms need to hurry and take the outsourcing route. By doing so, these firms will be able to –
- Address the skills shortage in the UK’s accounting industry. Most finance and accounting professionals claim that the shortage of professional skills will be their firms’ biggest challenge in the next twenty years. These shortages increase the risk of ‘bad hires.’ On average, a single bad hire (of an employee who earns £42,000 – the average salary of accountants in the UK) can cost accounting firms up to £132,015.
- Cut down hiring costs in general. Scouting and hiring the best finance and accounting professionals is an intensive process that costs firms £3,000 and 27 days per hire. The process of recruiting offshore accountants is ten times cheaper.
- Since most offshore accountants applying for jobs at British firms are experienced accountants, training or knowledge transfer becomes much easier.
- The best offshore accounting experts use the most-advanced F&A accounting software. They can introduce this technology to the UK’s small-scale firms and make them more efficient.
Still, think outsourcing is ‘wrong’ or ‘inefficient’? That’s what the big players want small-scale accountancy firms to think. They can then work with the best accountants from across the world and keep consolidating their influence on the UK’s finance and accounting industry!