How accountants and bookkeepers can help prepare their clients for the recession

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As a recession sweeps across the UK, businesses up and down the country will be turning to their trusted accountants and bookkeepers for financial guidance and tailored advice.

It’s a rocky road ahead, but your accounting practice is probably more prepared than you think.

The kinds of challenges businesses deal with during a recession are not dissimilar to those faced at the height of the pandemic. And both practices and businesses will have developed the resilience it takes to withstand an unstable economy.

Many practices have embraced new technology as the Making Tax Digital rollout continues. With those tools in place, accountants and bookkeepers have been able to streamline their operations and focus on new services.

With a recession on the horizon, your clients will need you more than ever. But the kind of help they need could look quite different from what you’re used to providing.

Let’s take a look at how you can help prepare your clients for the months ahead and adapt your services to meet their needs.

Run the reports

You won’t need a crystal ball to help your clients plan for the future. Forecasting, scenario planning, and measuring profitability will do the trick.

The first thing your clients will need is a clear picture of what they’re spending and what they’re earning. Work with your clients to audit existing expenses, and identify areas where they could save money. It’s important to remember that recessions don’t last forever – so make sure you’re cutting back on things your business can function healthily without.

Your clients will also need support with forecasting and financial planning. Producing a cash flow forecast can be incredibly useful in times of trouble, and your clients will appreciate having a view of what the next few months might hold.

It’s difficult to know how a business will fare during a recession, but you can give your clients more insight by running a few different scenarios with them. Similar to cash flow planning, this will help them see how resilient their financial standpoint is.

You’ll want to help them keep an eye on profit and profit margin, too. For small businesses, it can be tempting to absorb rising costs to keep prices low. But they can only afford to do this for so long. Show clients their profit and profit margin reports, so they can make informed pricing decisions.

If your clients are already using cloud-based accounting software, make sure they’re aware of the reporting features available to them. Recessions force us to be resourceful, so it’s a good time to make the most of what you already have.

And once you’ve assessed their financial standpoint from all angles, encourage your clients to build a buffer. Cash flow forecasting and profitability reports will be useful here; you can use them to help clients figure out how much they need to save.

According to Investec, 43% of UK businesses plan to lean heavily on their savings during the first half of 2023. The sooner your clients get started on their financial planning, the more likely they’ll be able to withstand the storms. 

Streamline and save with the right tools

Investing in new technology might be the furthest thing from your – and your client’s – mind. But it could save you a small fortune in the long run.

With a fast-changing economic environment, your clients must have a live view of their finances. It’s also important to remember that compliance obligations remain – even if everything else feels like it’s changing.

Cloud-based accounting software makes it simple to see the financial health of a business at a glance. Some software packages offer integrations, too, so you can help clients gain deeper insight into their finances with inventory, reporting, and analytics applications.

Xero data shows that invoices aren’t paid as quickly during a recession. If your clients are invoicing with cloud-based software, advise them to activate online payments so their clients can pay at the touch of a button. Suggest automating late payment follow-ups, too, so clients can stay on top of who owes what.

Software can also help clients limit spending and save on resources in other areas. For instance, project management tools and payroll functions can make vital business operations less human resource dependent.

Provide a fresh perspective

Your clients will need your expertise on side for the challenges up ahead. They’ll likely be looking for more advisory support than day-to-day admin, and you could be having lots of different conversations with your client base.

That’s why it’s essential practices provide a variety of ways to access support. For example, running a few evening sessions on financial resilience or hosting a monthly drop-in where clients can stop by to get their questions answered individually.

Some clients might feel uncomfortable about sharing their financial struggles. In these cases, one-to-one conversations where they can provide a listening ear, an empathetic approach, and proactive advisory will help your clients feel more confident about weathering the storm.

If you’re not yet a Xero partner, visit our Xero partner programme where you can find out more about becoming a partner and join over 200,000 accountants and bookkeepers using Xero in their practice. Get the tools and resources you need to succeed.

This content is brought to you by Xero.

Xero offers a cloud-based accounting software platform for small and medium-sized businesses..

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