How accountants can help SMEs on the road to financial recovery

How accountants can help SMEs on the road to financial recovery

By Tom Kelly, account director and strategic lead for accountancy, Modulr

There’s never been a more urgent need for the digital transformation of accounting, as businesses across the UK embark on the long road to recovery from the pandemic.

The economic impact of the pandemic has been far-reaching, impacting businesses of all sizes across multiple sectors. In the midst of this ongoing economic uncertainty, SMEs are particularly vulnerable. They’re under immense pressure to cut costs and proactively manage cashflow as they navigate the turbulent environment ahead.

To support clients in this uphill battle, many accountants have adopted a ‘rapid response’ approach. They’ve adapted their services to meet clients’ immediate, short-term challenges. At first, this involved guiding clients through immediate tasks like business loans, furloughs and tax deferrals, and helping with new logistical hurdles, such as the reporting or disclosure of pandemic impacts.

With some of the immediate challenges of the pandemic now dealt with, and some workplaces beginning the transition back to a ‘new normal’, it’s a salient time for accountants to look inward, reassess and future-proof their own business models – as well as seeking new ways to add value to clients.

Reassessing the accounting business model

The pandemic created an unprecedented mandate for accountants to change their internal processes. Remote working suddenly became necessity for most practices. Some were in a more resilient position than others – their data was already stored in secure, centralised environments that could be accessed by employees from anywhere. By contrast, practices that were still heavily reliant on manual data entry and reporting struggled with the transition.

This has reinforced the fact that digitalisation is no longer a ‘nice to have’ in the accounting sector – it’s mission critical for practices to achieve core objectives. Accountants need to rapidly gear-up their use of technology and automation within their businesses, both to maintain continuity themselves and effectively support their clients.

As UK businesses prepare to embark on the next stage of recovery and future-planning, accountants will also need to provide greater long-term cashflow visibility and forecasting to the SME clients they serve and transition to more advisory roles.

There’s long been talk of a transition of ‘accountancy to consultancy’. Before the current crisis, Sage reported that almost half (49 percent) of accountants had formally examined their business practices in the past year: “This year’s data indicates accountants have accepted, on an emotional and pragmatic level, the changes that are required. More than ever they’re ready to be an adviser to their clients, offering marketing, strategy, growth modelling, cashflow advice, and more.”1

It’s too early to speculate whether these figures will go up in the wake of the pandemic. But for those accountants committed to making a change, delivering these strategic, value-added services will require investment in the right digital infrastructure.

Harnessing the power of payments automation

More than ever, accountants need a reliable payments infrastructure that can operate securely, wherever their employees are working from.

Payments automation will also be increasingly important as accountants seek to play a more advisory role to their clients. By automating processes such as payroll and supplier payments and reducing time spent on manual tasks, accountants can save vital time and eliminate errors. This will free them up to offer strategic services like cashflow analysis, predictions and scenario modelling. And it can provide access to richer, decision-ready data that can be used to support consulting.

According to Daniel Overton at Aston Shaw: “Digital is not just compliance. We want to focus on offering more value-added services. Automation helps free up our time from manual process to do more interesting advisory roles.”

Payments automation could even help clients to develop new business models, which will be increasingly important as businesses strive to recoup some of their recent losses. Accountants can act as advisors in this area, driving the uptake of technology and sharing their own learnings to provide reassurance.

As Kayleigh Williams at Duncan & Toplis says: “When you start advising clients on which software they should use and products that can potentially make their life easier, you’re slowly transitioning into that more advisory role and you are beginning to take on that trusted partnership. You’re having to get more involved with their processes and the way that they work to be able to make those recommendations.”

In this way, digital payments technology will be critical in helping accountants add value and cement lasting relationships, especially as they strive to help their clients bounce back in the coming months.

For more insights read our new ebook ‘Automating Accountancy: Winning with consultancy.’

1 “The Practice of Now 2019 Insight and practical advice for today’s accountants based on the latest independent research”. The Practice of Now 2019 includes the findings of independent research commissioned by Sage and conducted by Viga, surveying 3000 accountants from across the globe.

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