The pound sterling has dropped fifteen cents to the US dollar in a month, the lowest our currency has been since the 1980s. “The fall came despite chancellor Rishi Sunak yesterday unveiling a £350bn package of measures to support the UK economy,” reports City A.M. On Friday, 20 March, cafes and restaurants were told to close and not open tomorrow. The government plans to pay up to 80% of salaries of employees unable to work.
Big news. And yet we don’t need the news. Many of us are working from home, many of our colleagues have had to close up shop. The streets are empty, schools are closed. The UK economy, to put it mildly, is in dire straits.
COVID-19’s effects on the accounting industry specifically
We have spoken to colleagues and to clients to try and understand the particulars of COVID-19’s effect on an accounting practice. This is what they told us:
An accountancy practice’s clientele is composed mainly of businesses, trusts, etc. The current economic “uncertainty” — as the media likes to euphemistically describe it — is already leading to an immediate decrease in new business ventures being launched, with the ultimate effect of a delay of growth in established businesses. This is currently being seen by a decline in overall leads for practice owners. The problem of no leads is exacerbated further by a drastic reduction in walk-in customers — people simply aren’t on the streets, and we don’t know when they will be again.
All businesses are going to be hit by this event, regardless of size, and an overall reduction in cashflow for businesses means that accountancy firms might receive an increased number of requests for fee reductions. Smaller businesses, especially, simply will not be able to pay the accountancy firm’s usual fee, and will likely terminate their contracts with accountants in order to cut costs.
As more and more companies flock to doing work online and try and find new leads through the internet, PPC (Pay Per Click) costs might increase due to a surge in online competition.
Some companies will benefit from the sudden surge of people at home
Employees are suddenly working from home. Big online businesses which already operate in the areas of “remote work” are capitalising on this fact. Dropbox is currently offering a three month free trial of its Business Plan (as opposed to its usual one month) for NGOs and non-profits fighting coronavirus. Many of these organisations will undoubtedly stay on as clients for Dropbox after the trial is over. Smashwords is running an enormous sale of eBooks. It will donate the proceeds to families affected by the virus. No doubt it will garner many new customers from these sales.
Even our local UKPostBox.com is joining in on the “Work Remotely” bandwagon. It offers no specials, but has a special message regarding the coronavirus on its website, telling potential buyers about working from home during the virus, and urging visitors to sign up for their service — a virtual UK postbox.
Many companies will reap the benefits from this virus. They are neither wrong nor bad for doing this. They simply happen to offer the services people need during this unique period of history.
Accountancy practices, unfortunately, are not such a business.
Working from home: Complexities for accountancy firms
Practices which already have systems and procedures in place for working from home will be the least affected. But in our experience this number is in the extreme minority in the accountancy industry. (This is the very reason we began We Run Your Practice in the first place.)
For firms which must suddenly and immediately transition into a “Working from Home” model, the costs and difficulties can include:
- If everyone suddenly works from home, then costs for the premises are simply wasted.
- Inability to monitor employees who are unaccustomed to the sudden “freedom” of working from home.
- If your accountancy practice uses in-house computer servers with no external access, a sudden transition is all but impossible. Those servers are usually designed to be “locked down,” and accessible only from within the office. (Companies using some sort of online storage will have an easier transition.)
- Employees tend to be more “on the ball” when inside an office with their superiors.
- Inability to meet clients face-to-face.
- Difficulty in obtaining physical client records from clients.
There are several solutions to each of the above problems. The catch is that there are simply so many services available that choosing one gets complicated quickly, and that choice might then lead to conflicts with other online services you are already using. The transition from Office Work to Remote Work is one best done with patience and time, considering all factors.
Unfortunately, COVID-19 has taken all that time and patience away from us. Companies that are not set-up to work remotely might simply haemorrhage income for two weeks and hope to get back on their feet when this is all over.
But “hoping” is never a good way to do business.
Possible solutions for accountancy firms hit by the coronavirus pandemic
- Outsourcing. We have written about outsourcing accountancy services here. There can be severe pitfalls involved, and these must be understood clearly before committing to any outsourcing company.
- Selling your practice. This would be a last-resort “solution.” But what of all the work you put into building your practice? And, really, what kind of cash would you get for businesses that, according to you, might be headed for troubled waters?
- Take on an additional partner? Merge with another company? Wait it out?
We started We Run Your Practice long before the coronavirus outbreak. Never in our wildest dreams had we imagined that something like this might happen. And yet here we are.
At We Run Your Practice we take your accountancy practice off your hands, market it, brand it, take care of your clients, and let you reap the dividends. We designed our service with Remote Work in mind.
We are not an outsourcing company, we are something entirely new — a full-service company which takes care of all aspects of your accountancy firm while still keeping you involved and informed to whatever degree you want to be. It’s your business, but we take the load off.
Whatever you choose to do, there are a few unavoidable facts that must be addressed for your accountancy firm to survive the imminent fallout of the current government “lockdown”:
- The economy is going to suffer, no question about it.
- As a result, people and businesses will have less money to pay you with.
- Somehow, you still need to turn a profit — that means reducing costs.
- You’ll need to put elements in place now that will allow you (and your staff) to work remotely if they ever need to do so again.
That’s a lot of things to work out, a lot of new areas to research and make decisions about. You could research and address each one of those items yourself and hope you come up with the best possible solution, or you could turn over the whole problem to us and let us solve it for you.
Because we have solved it already. We solved it long before the coronavirus came along.