This week a survey by finance experts LDF showed that the number of accountancy firms is falling and figures from the CBI showed that the pace of growth and profits in the service sector has slowed. But, as accountants begin to play a more diverse role across business, there is still room for optimism
The headline statistic from this week’s CBI results was that the pace of growth and profits in the service sector has slowed. The study found that in the three months to August, business growth in the sector eased compared with recent quarters, and profitability rose at a slower pace. On the face of it, this makes grim reading for service sector industry players, but a deeper look at the numbers gives accountants cause for optimism.
The professional services companies’ surveyed - including accountancy, legal and marketing firms - presented a different outlook; business levels this quarter were as expected, with numbers likely to be more robust next quarter. Added to that, optimism about growth across the industry is rising and more accounting professionals are being hired since the financial crisis.
What good is a lucrative client base if the business doesn't have the manpower to meet demand?
This optimism is unsurprising. The reality is there is more demand for accountants than ever as the profession moves away from the number-crunching stereotype and rapidly plays a broader role within businesses. Small and medium business (SMB) clients in particular are expecting more value-added services such as strategic financial advice from their accountants.
According to recent Intuit research, 69% of clients now expect their accountants to be financial advisors - a notable increase of 25% from five years ago and nearly two-thirds also look to them for business advice. Significantly the research also found that SMBs would be willing to pay their accountants for these richer services meaning that there is a major revenue and relationship opportunity for accountancy firms that manage to transform and expand their services.
Currently only 33% of accountants see themselves as advisors, however if this trend continues, accountants will begin to become gatekeepers to overall business growth, playing an even more vital role in business and overall economic growth.
However, what good is a more lucrative client base if the business doesn’t have the manpower to meet the growing demand? The good news is that accountancy, alongside legal and marketing firms are hiring more now since pre-recession times in 2007. The bad is that the CBI report reveals there is still a concern that a lack of professional and clerical talent will inhibit growth for professional services over the next year.
Therefore, this year accounting firms need not only to focus on making their offering more strategic, but also to ensure they are continuing to invest in recruitment, both hiring and developing strong talent. Now might be a good time for accounting firms to revisit apprenticeship and graduate scheme programmes, for example, to assess if they are producing the right people to help the business grow.
As accounting firms look ahead to the next quarter and begin to set their sights on growth in 2015, they have every right to be optimistic, despite the service industry headlines. The idea of what is required of an accountant for a business is evolving and moreover, clients are willing to part with their cash for these value-added services. Add in a sensible recruitment strategy and accountancy firms will be an example to the rest of services industry of how to drive growth.
Rich Preece is vice president and UK country manager of Intuit
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