London - 18 August, 2021 -The strength of the UK’s accountant and bookkeeping sector is continuing to play a critical role in rebuilding the economy. That’s according to a new study from Xero, the global small business platform, which shows that 51% of firms are growing their customer base at a faster, or a similar pace to pre-pandemic levels.
The Accounting and Bookkeeping Industry Performance Report investigates the performance of the industry against a challenging backdrop. It coincides with the launch of a new benchmarking tool that enables practices in the UK to compare performance with similar businesses over the past year.
Many businesses have faced huge uncertainties over the past 18 months and the role of accountants and bookkeepers as trusted advisors has never been so important. The research found that on average firms added 10 business clients and six other clients in the past year - with growth being seen among 1 all sizes of practice.
Other areas the report looked at include:
Supporting small business: Accounting and bookkeeping firms have provided a vital lifeline for small businesses during the pandemic. When asked about key challenges in the coming years, 54% said that supporting their clients as they rebuild post covid is a main focus. Looking forward, harnessing the power of technology (37%), and providing continued support for clients as they get ready for the next phases of Making Tax Digital (43%), are seen as the biggest opportunities in the next five years.
Job growth: To continue supporting businesses as they recover and rebuild, 30% of firms stated that they are looking to hire more full-time staff in the year ahead. Just 4% of firms claim their client base is declining, since the start of the pandemic.
The role of digital tools: Throughout the pandemic, technology has played a vital role in supporting small business survival. This has had a huge impact on the sector. Firms with 75% or more business clients using online accounting software have had the greatest average revenue per client. What’s more, practices growing faster than they did prior to the pandemic are most likely to have 100% of their clients using online accounting software (17%).
Resourcing issues: Smaller firms continue to be impacted by a lack of resourcing capabilities. Amongst the industry, sole practitioners (19%) and small practices (16%) were most likely to experience no growth or a decline in growth over the last 12 months.
Commenting on the past year, Lauren Harvey, Founding Director, Full Stop Accountants said: “When the pandemic hit, client contact increased massively - it was fight-or-flight. Our immediate response was, “we’ll do what it takes to get you through this”: BBLS applications, furlough, grant finding, cashflow... all of those things. But after a period, together with our clients we could switch to being more proactive instead of reactive.”
James Ashford, Founder, GoProposal added “What we’ve learned over the last 12 months is that firms should try to be consistently profitable across EVERY service. When the pandemic hit, we found that many clients needed help with payroll and compliance as well as advisory services. Firms that were able to offer all these services (profitably & sustainably) were better placed to help existing clients and win new ones.”
Glen Foster, Director, Accounting Partners & Small Business at Xero commented: “Behind nearly every resilient small business there’s a diligent accountant or bookkeeper. They’ve played a huge role in supporting business survival and growth. Against a challenging backdrop, many firms have adopted new ways of working and have prospered as a result. They are leading the way in economic and business recovery. “
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About the research
During April and May 2021, Xero conducted a survey of more than 500 independent respondents from accounting and bookkeeping practices across the UK. We spoke to everyone from business owners and CEOs to accountants and bookkeepers in firms of all sizes, from sole practitioners to very large practices (50+ employees). Results were weighted to be representative of the market in terms of company size.
Xero is a cloud-based accounting software platform for small businesses with over 2.7 million subscribers globally. Through Xero, small business owners and their advisors have access to real-time financial data any time, anywhere and on any device. Xero offers an ecosystem of over 1,000 third-party apps and 300 plus connections to banks and other financial partners. In 2020 and 2021, Xero was included in the Bloomberg Gender-Equality Index and in 2020, Xero was recognised by IDC MarketScape as a leader in its worldwide SaaS and cloud-enabled small business finance and accounting applications vendor assessment.
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For all media enquiries, please contact the Xero media team.
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