Cutting costs by reducing headcount could see a reduction in clients so accountancy firms must be careful as they look to bounce back following a tumultuous 2020, according to Louise Wilson, head of finance sector at Moneypenny.
Just under a third of accountancy firms said cutting costs was their priority for 2021, according to a report by Moneypenny. Of those who planned to make cuts, mid-sized firms were the most likely to be affected and 39 percent said that would include making redundancies.
“The desire among firms to reduce head count is surprising – particularly when 66 percent of accountancy practices told us they intend to improve client service and a quarter are keen to pursue growth through new client revenues,” Wilson said.
The report added that firms were also looking to cut spending by reducing investment (37 percent), introducing operational cost-saving measures (35 percent), and introducing outsourcing (34 percent).
“Encouragingly, there is recognition that firms will need more outsourced support to do this, particularly for business support services, and this will be vital if they are to keep clients close and ensure that cost reductions don’t lead to client reductions too,” Wilson added.
However, data from the Office of National Statistics suggests the accountancy sector is returning to some sort of normality, with turnover for February 2021 up 12.4 percent at £3bn from £2.67bn in February 2020. According to Julie Matheson, regulatory partner at Kingsley Napley, this shows that the industry is returning back to its “traditional cyclical trends”.
Similarly, MHA Macintyre Hudson revealed that while there had been some redundancies at the firm earlier in the pandemic, they were now looking to expand once again in 2021, while some firms like Moore Kingston Smith found the pandemic increased their workload and didn’t need to make cuts.
Maureen Penfold, managing partner at Moore Kingston Smith said in an email that as different sectors were hit by the coronavirus pandemic in different ways, naturally the impact on accountancy firms would vary too.
Rakesh Shaunak, managing partner and group chairman at MHA Macintyre Hudson said in an email that while there had been obvious challenges in the pandemic, particularly in audit, the key was to focus on ensuring customer care remained strong.
“Staff continue to keep in touch with their clients regularly through video and phone calls as well as in person when able. Clients are also regularly sent updates, explanations and guidance on government changes and decisions which affect them personally and their businesses as well as invite to regular webinars of relevance which the firm continues to host,” he said.
Penfold agreed, adding that listening to clients was a “crucial” step in making sure that customer care was good, regardless of whether staff are in the office or working remotely.
Investment in tech no longer a nice-to-have
Both Penfold and Shaunak said they had invested heavily in technology in the past year which had allowed their clients to be largely unaffected in the quality of service they received.
“Digital adoption has taken a quantum leap because of the pandemic, with digital signatures, video conferencing all now part of the norm and full cloud computing is now on the agenda for most businesses,” said Penfold.
She added that being a digitally savvy accountancy practice was more important than ever as clients will now need much more advice in how automate business processes.
Penfold added that technology needs to be at the forefront of firms’ minds, particularly as the world is still very uncertain.
“While none of us want to contemplate having to deal with the challenges presented by coronavirus on a more frequent basis it would be remiss of us to not focus on building business resilience for the future,” she said.