Does accountancy still offer a safe career after the mayhem of Covid-19? Posted 09/14/2020 by Christian Koch & filed under Career, Coronavirus, Future of accounting. In times of crisis, the accountancy industry tends to thrive. But will the profession still be a stable career choice in the months and years to come? When the going gets tough, the clamour for jobs gets going. In August, an advert for a London trainee accountant’s job appeared on jobs website CV-Library. Usually, such an advert would only garner a handful of responses. Yet, the website was soon deluged with a staggering 3,272 applications. It’s a trend evident elsewhere within financial services. Firms that previously struggled to recruit quality candidates pre-pandemic are now being bombarded with hundreds of applications. AAT has also seen an uptick in ‘career changers’ applying to study. New research by AAT shows that the accountancy and finance sector is seen as the third most stable profession, behind health and pharmaceuticals and teaching. One in four employees aged 16-34 is currently considering a new career as the economic impact of coronavirus pandemic bites. A new career in accountancy Regardless of your age or employment history, it’s never too late to start a new career in the finance profession. Learn more Prospects over 12 months? Prospects over 2-5 years? Entry-level/junior roles Middle management and senior roles Accountancy practice prospects In-house finance teams Public sector finance Charities and ethical business Self-employed Consultancy opportunities Audit opportunities Mid-level/senior pay Entry-level/junior pay On the one hand, the rise in applications is partly down to the growing numbers of professional workers who have been made redundant (this summer UK companies were planning more than 300,000 redundancies) or were furloughed. But it also hints at a wider truth: during times of crisis, accountancy is seen as a stable, desirable profession. As with the aftermath of the 2008 recession, accountants will be in demand to help companies restructure, identify unnecessary expenditures and navigate complex – and possibly advantageous – tax laws. The Bank of England recently warned that unemployment would rise to 2.5m people in the UK, yet accountancy looks set to ride out the Covid-19 recession relatively unscathed. Those already in the industry can also expect their workload to increase thanks to assisting companies with the end of the Brexit transition period, plus rapidly-changing tax and audit regulation. But what are your chances of bagging an accountancy job this year? Are there any sectors of the profession that will grow? And is it a good idea to move jobs within accountancy if you’re working in the industry already? Here accounting and recruitment experts give us their predictions for the profession. What are accountancy job prospects like for… Prospects over 12 months? “Finance is recession-proof,” says Karen Chilton, regional manager for financial recruitment specialist, Marks Sattin. “Accountancy isn’t a luxury for business: it’s important.” In the immediate future, accountants will be busy, as companies dealing with the financial havoc caused by the coronavirus (Covid-19) will be calling upon their help. Chilton has noted that Marks Sattin has seen an “increase in vacancies for insolvency practitioners; something that’ll become increasingly important over the next few years.” The surge in insolvency/restructuring experts is perhaps no surprise given that the finances/revenue streams of many firms have been decimated by coronavirus, meaning they’ll be looking to cut costs and consolidate resources. With many SMEs prioritising cash flow and looking to strip any needless spending from their P&L statement, any accountants skilled in cost-cutting will also be busy. Likewise, there could be opportunities for tax experts who can deal with the tax issues triggered by government loans, as well as advisers with high EQ who can reassure anxious clients about their businesses. During lockdown, the way in which employees adapted to working from home has triggered a cultural shift for many firms, who are now reviewing their flexible working practices. Lorna Renton, accountancy services manager at Warrington-based accountancy firm Brookson One, believes it “has widened our geographical reach in terms of recruitment; we can look for talent nationally instead of within a commutable distance… Homeworking also opens up the opportunity for accessing pools of talent in populations such as working parents or students who previously may not have been attracted to life at a professional practice.” Prospects over 2-5 years? When the financial crisis triggered by Covid-19 eventually fades (it’s predicted that the UK economy won’t recover until the end of 2022), some of the other issues seen as ‘threats’ to accountancy prior to the pandemic will come to the fore again: automation/technological disruption, cryptocurrencies and the rise of data-driven jobs. This doesn’t mean that accountancy jobs will disappear. While automation looks set to relieve accountants of mundane admin tasks, it’ll leave them with more time to focus on parts of their job that machines can’t do: advising clients, problem-solving and deciphering data so the company can make strategic decisions. Still, accountants will need to future-proof themselves with transferable skills, says Chilton: “With the rise of automation, companies will be seeking advice and reassurance. Therefore, ‘communicator’ accountants who sit in a boardroom and help make calculated decisions will do well.” Today, businesses are increasingly relying upon data to help forecast sales, strengthen internal audit and target consumers. For accountants, a crash-course in data isn’t a bad idea. “Data analysis and science will blend with the world of finance in the coming years,” says Lee Owen, director at recruitment firm Hays. “Those accountants with good IT skills who can interpret data to highlight where opportunities might be within a business, or new markets they can access, or even make the business leaner – will be in demand.” The first half of the 2020s will also see many organisations embarking upon digital transformations to make themselves more efficient: good news for tech-savvy accountants. The rise of blockchain and digital currencies combined with new regulation/taxes being drafted for new tech such as drones and driverless vehicles, could see new accountancy roles created too. Experience: what are accountancy job prospects like for… Entry-level/junior roles There’s been plenty of grim employment news generated by Covid-19, not least stories that young people look set to be hit the hardest. A recent report by the Resolution Foundation thinktank predicted a bleak future for the “corona class of 2020”, expressing fears dole queues could swell. Meanwhile, entry-level jobs have been cut by almost a quarter this year due to coronavirus, according to an Institute of Student Employers survey. Getting a foot in the door has certainly been challenging for young job-seekers this year. Many large organisations, such as Lloyds and Santander, have scrapped summer internships, while remote working restrictions has made training/onboarding new recruits difficult. So far, accountancy seems to have been spared this plight (although BDO, the UK’s fifth-largest accounting firm, also furloughed first-year trainees and cancelled summer internships). “Students are facing a challenging jobs market this year but there are still opportunities available in accountancy for young talent,” says Matthew Jeffery, UK and Ireland recruitment director at EY (Ernst & Young) which has continued its graduate, apprenticeship and internship programmes despite the complications caused by Covid-19. One assured route into accountancy is apprenticeships: this year EY welcomed 200 school-leavers onto its apprenticeship programmes (its second-largest leaver intake), while the government’s Kickstart scheme aims to fund work placements for 16-24-year-olds, and pay businesses that hire apprenticeships. “I don’t think accountancy firms will want to reduce graduates and apprentice intake,” says Chilton. “Around seven years ago we struggled to recruit for young people in areas such as audit. But now firms need skilled employees because they took on less young people years ago and have since suffered. They won’t want to do that again.” “For young people considering a career in accountancy, my advice would be to think carefully about your options and whether a graduate or apprenticeship route could be the right thing for you,” says Jeffery. “Also plan ahead: EY’s applications for graduate, apprenticeship and internship schemes for September 2021 are already open. And don’t forget many companies are hosting virtual sessions such as online quizzes to help them understand if they’d be a good match for their business.” Could an apprenticship be right for you? An apprenticeship is a way to fast track your earning potential and start a finance career – whatever your age. Learn more Middle management and senior roles According to recruiters, higher-ranked accounting professionals are still much sought-after despite the travails of Covid-19. “Most of the demand we’ve had has been for jobs such as financial and management accountants,” says Chilton. “They’ve earned their stripes and experience and everybody seems to want them. Despite the crisis, people are still hiring good-quality accountants.” “The mid-level has been much in demand,” echoes Hays’ Owen. “We’ve seen CFOs struggle to recruit finance managers because there’s less of those candidates in the marketplace… It’s still very difficult to find these high-calibre candidates in middle-management on £40-50,000 salaries.” If any mid-level accountants are seeking a career change, they should also consider upskilling too. “For any senior role in the accountancy industry, financial expertise is a given,” says Renton. “But I’d expect a senior manager to also concentrate on management/leadership or other specialised training to demonstrate the balanced skill set needed to drive a business forward.” By sector: what are accountancy job prospects like… Accountancy practice prospects Owen envisions more openings at public practices and chartered accountancy firms due to clients needing increased help/advice dealing with the economic chaos unleashed by Covid-19 (not to mention post-Brexit uncertainty too): “Chartered accountancy firms have always been candidate-short and job-rich so they’ll continue recruiting. They’re an obvious choice for young job-seekers/student accountants, because ‘do-ers’ are the powerhouses of public practice firms and it’s hard to find them.” With the government’s furloughing scheme complicating payroll runs at many companies, many smaller practices have recently advertised for payroll positions, notes Chilton. The past year has also seen a rash of new businesses established by people who have either been made redundant or reevaluated their careers while working from home during lockdown. According to Renton, this could mean “client bases in smaller practices have the opportunity to grow, and consequently more entry-level students and AAT-qualified professionals will also benefit.” In-house finance teams When considering applying for industry (in-house) roles, it’s worth thinking about what sectors are likely to flourish (or not) over the next few years “Certain organisations are busier due to Covid-19, such as those in pharmaceuticals, food/beverage and FCMG/fast-moving consumer goods (confectionery, soaps/detergents, petcare etc),” says Owen. “As a result, they’ll have more opportunities for accountants… If AstraZeneca has an internal recruitment team, I’d be trying to get myself onto their radar.” Sectors predicted to suffer in the next few years include travel/transport and retail. Accountancy roles within businesses are also set to change, says Owen: “Organisations are looking to drive business forward through revenue growth… As a result, finance is moving more towards a business partnering function [accountants who work across different departments within a business, gathering financial info, data and 360° insight to help leaders make more strategic decisions]. If an accountant asks me about what their career looks like in the future, I’d urge them to develop business partnering qualities. They’ll need to understand the challenges that, say, salespeople, procurement managers and marketing directors face.” “It won’t be enough for future leaders to be skilled in their core discipline alone,” adds Renton. “I think this will create opportunities for AAT-qualified individuals who don’t necessarily want to be accountants but can demonstrate a clear understanding of accounts, compliance and strategy.” Public sector finance Accountants working within the public sector have been at the epicenter of the Covid-19 crisis, helping channel the mind-boggling sums of cash currently flowing through the NHS, education and local authorities. The busy workload looks set to continue. The government spending on coronavirus measures has seen public sector debt soar to £2 trillion, meaning cost-cutting is inevitable. “The public sector will be active in finance recruitment,” says Renton. “In particular, they’ll be looking for those with commercial backgrounds and mindsets. Not only do they have an obligation to protect the public purse, but they’ll also need to work under more significant business constraints.” Local authorities will also need financial staff, says Owen: “The job retention scheme means they should have additional work. And if we enter a recession, there could be demand for social housing.” Charities and ethical business The funding shortfall caused by Covid-19 has left one in ten British charities facing bankruptcy, according to Pro Bono Economics. Conversely, this shortfall could see the sector reaching out to accountants who can help them “restructure as a commercial organisation would,” says Owen. As the corporate world develops a growing ethical consciousness (see multinationals from Nestlé to Nokia making carbon-neutral pledges), the government has mooted that ‘green collar jobs’ could swell to 2m by 2030. With the Financial Reporting Council recently launching a review into whether auditors should reflect the financial risks of climate crisis such as carbon emissions in their accounts, this could create new accountancy roles too. “A business that puts ‘purpose’ for performance outside of EBITDA will also attract good people and promote a superior brand image,” says Renton. “Data and KPIs lend themselves just as well to bank balances and sales targets, as they do to monitoring waste reduction and emissions.” Self-employed “In the future, nearly every organisation will experience some degree of transformation,” says Owen. “Many companies will have skills to deal with this transformation internally, but many won’t, which could result in more opportunities for the self-employed.” “Also, if a company has made cuts that are too deep and too early, there will be more pressure on the business. If they’ve made a redundancy, they can’t go out and hire in the same role. But they may need to go down the freelance route to solve that problem.” It is also possible that start-ups and small businesses will be more inclined to seek professional help with bookkeeping and accounts to make them more resilient. Consultancy opportunities “Many organisations will be nervous about the next few years and will want to inject some expertise into the business,” predicts Owen. “We might see more clients wanting to hire interim accountants to solve the problem. Once things settle down, these interims could be taken on permanently.” Accountants specialising in change consultancy will also be needed, says Chilton: “When Covid-19 hit, many companies didn’t have technology set up for their people working remotely or pivoting from physical to digital-only. These firms will be putting in new systems, which could see more work for those accountants working in business change and systems implementation.” Audit opportunities Owen has noticed that changes to audit regulations have resulted in “second-tier firms getting many audit assignments pushed out to them [rather than the big four], so there could be opportunities with these firms. These second-tier firms are good places for accountants to find work, because they’re getting busier, yet traditionally struggle to find quality people.” Among the reccomendations in last year’s Brydon Report – which was aimed at fixing the scandal-hit auditing sector – was the creation of a standalone audit profession (separate from accountancy) which could also result in new roles being created for those who want to bring new levels of trust and integrity to the occupation. And finally: what about the £££? Accounting salaries remain competitive: Mid-level/senior pay Chief financial officer: £123,000-£260,000Qualified management/financial accountant: £39,750-£65,000Finance systems manager: £55,000-£92,750Director of audit & risk: £80,000-£120,000 Entry-level/junior pay Accounts assistant: £18,500+Assistant management/financial accountant: £22,000+Credit controller: £18,500+Company accountant: £31,000+Risk/compliance associate: £31,000+Internal auditor: £33,000+ Source: Robert Half Salary Guide, 2020 Which AAT qualification is right for you? Whether it’s broad ranging business skills or specialist tax skills you’re after, we’ve got something to boost your career. Find out more with our qualification navigator. Find out more
All you need to know about… Future-proofing your business Posted 09/14/2020 by The content team & filed under Members. Scenario planning and forecasting can help ensure your business is better prepared to respond and adapt to future challenges. Here’s what you need to know. Truly predicting the future and the challenges we will face is impossible – coronavirus (Covid-19) has made that more apparent than ever before. However, businesses that have planned for future scenarios will be better prepared to respond and adapt in a fast-changing environment. Scenario planning and forecasting are techniques that business leaders and decision-makers can use to plan and prepare for mitigating downsides and exploiting upsides in an uncertain future. Developed by military strategist Herman Kahn in the 1950s, scenario planning was adopted by businesses in later years – including by global oil company Royal Dutch Shell. Future gazing In the Harvard Business Review article “Living in the futures”, authors Angela Wilkinson and Roland Kupers note that the style of scenario planning adopted by Shell was not about predicting the future: “Its value lies in how scenarios are embedded in – and provide vital links between – organisational processes such as strategy making, innovation, risk management, public affairs, and leadership development. It has helped break the habit, ingrained in most corporate planning, of assuming that the future will look much like the present. As unthreatening stories, scenarios enable Shell executives to open their minds to previously inconceivable or imperceptible developments.” Expert panel: future proofing your practice This webinar sees industry experts discuss the impact of Covid-19 on accounting practices, and analyse the opportunities that exist for practices in a digital future. Watch webinar Rehearsing and imagining “A scenario is a potential future that can be imagined or rehearsed today,” says Andy Booth, chartered accountant and trainer at iCount. “For example, if we consider the current Covid-19 pandemic, we can think about what the world might look like in November this year. There are many different scenarios we can see in the future.” Scenario planning is a risk management tool that can help to ensure businesses are not caught off-guard. It involves looking at the big picture and imagining what our different futures might be. Scenario planning enables the visualisation of multiple potential futures instead of just one possible future. An organisation is then able to develop practical business strategies for these future scenarios. “When the actual future materialises, we’re not surprised by it because we’ve rehearsed it – we imagined it,” Booth explains. “With scenario planning we look at what the overall future might look like. So, for example, there might be a positive future in which everyone comes out of lockdown desperate to spend money – that would be one scenario that the future might hold. Or there might be an alternative scenario where the temptation for people to spend money is massively reduced – so another future might be despite the fact that Covid-19 has subsided, the economy doesn’t pick up as well as people hope for.” Scenario forecasting sits within scenario planning. Scenario forecasting is thinking about how those futures will affect us financially – how we can mitigate downsides and exploit upsides in an uncertain future. Rehearse for potential situations “Don’t wait to be taken by surprise,” says Booth. “Rehearse the things that might happen. Financial planning is crucial.” Booth notes that how far ahead you should plan and forecast depends on your organisation. Jo Wilkinson MAAT uses scenario forecasting in her role as finance director at North Brewing Group. “Look at how much revenue you think a certain set of assumptions will generate and then what margins you can apply to that revenue,” she explains. With North Brewing Group operating in the retail sector, Wilkinson notes that one of the main costs is wages. So when forecasting, she makes sure to cost out different rotas and what size team might be needed, and what that looks like financially. Scenario planning Booth outlines four steps for scenario planning: Identify the driving force of uncertainty, for example Covid-19 or Brexit. Identify two critical uncertainty pairs affected by the driving force. For example, if your driving force is Covid-19, two uncertainty factors could be customer demand and recovery time frame. Customer demand after the lockdown could be high or low, and the recovery time frame could be fast or slow. Draw a 2×2 matrix with four scenarios based on your uncertainty factors. Define the implications for your business based on all four scenarios. In this example, a “cloudy day” imagines a future where there is quick recovery from Covid-19 and businesses are able to reopen promptly, but there is weak demand for what you are selling, because people do not want to spend money. The “jungle survival” scenario imagines slow recovery from Covid-19 and weak demand – this is the worst-case scenario. The “rushing bulls” scenario imagines quick recovery from Covid-19 and strong demand. The “conquest” scenario imagines slow recovery from Covid-19, but strong demand for what you are selling. In summary There are many benefits to scenario planning and forecasting, but like any management technique there are no guarantees. “Critics of scenario planning will say, ‘you spend all this time rehearsing multiple futures, when only one of those futures will be the actual one – what a waste of time’. And time is money, so there is a cost to that,” Booth notes. There are many different uncertainty pairs that could make up your scenarios. Consequently, with the seemingly limitless scenarios that are possible, it would be difficult to rehearse every future.
The future of accounting will have digital at its core Posted 09/09/2020 by Xero & filed under Career. This content is brought to you by Xero. A lot has changed over the last few months. Accounting and bookkeeping firms have stepped up to guide their clients through challenges – helping them to survive and now plan for the road to recovery. What this situation has shown is a resilient industry ready to adapt in order to thrive. We’ve seen many firms making changes through digitisation – from embracing remote working and new digital client engagement tools, to adopting the cloud. Businesses that have been traditional at the core are now discovering that digital processes offer far greater scalability and resilience, and as a result of Covid-19 I believe we’ll see a rapid shift. New ways of working Accountants have had to close their offices during the lockdown. What many may have seen as a negative for operations and a short-term change, could now become a more permanent ‘new norm’ for some. Traditional expectations like having a permanent office and being in it 9-5 will become less important post Covid. Businesses using digital tools – like video conferencing and working from the cloud – have seen how this can actually boost collaboration and speed-up processes, whilst decreasing overheads. It can also help with attracting talent from further afield – something we know many firms struggle with. Scottish based cloud firm, Empowered by Cloud, are a good example of this shift. They’ve decided they won’t go back to their previous set-up. It’s given them the freedom to work with clients in real-time, rather than waiting for face-to-face meetings to connect, and they’ve seen their customer base grow as a result. Boosting productivity This pandemic has demonstrated how essential accountants are to our economic recovery. However, to step into the role of a true business advisor they need time which means streamlining processes. Practices will struggle to thrive in the long-term if they continue using traditional resource intensive methods like excel sheet data entry and piles of paper receipts. At Xero, we’re continuing to simplify manual processes such as tax filing to support accountants and bookkeepers. We launched Xero Tax this year, a cloud-based accounts production and tax filing solution, designed to save time, reduce errors and cut costs. This means practices can spend less time on painful tasks like tax, and focus on being key advisors. Managing cash flow While there are a lot of unknowns in this pandemic, accountants have been focusing on an area that’s key to small business survival – cash flow management. Practices are leaning on technology and tools that help to give clients a robust view of their position. It’s these kinds of fast insights businesses need to help make important decisions about their future. For example, Glasgow firm Russell & Russell have been encouraging clients to try out cash flow visualisation app Float to give them a real-time view of their past, current, and future cash flow. And Raedan has been using Fluidly to help clients accurately forecast, along with specific webinars on these tools. Accountants continue to have a crucial role to play in the future of our small business economy. This is just the beginning of the industry’s transformation, and this period is accelerating a new approach to running practices. This content is brought to you by Xero.
The unexpected services accountants find themselves offering during the pandemic Posted 09/08/2020 by Mark Rowland & filed under Coronavirus, Members. We’re almost six months into the COVID-19 pandemic. How has it changed client services? There’s no denying that the client-accountant relationship has changed during the pandemic. The lockdown has brought with it a number of new measures and reliefs for accountants to get their heads around, such as: CJRS and furloughSEISSDeferred taxes, such as VATReduced rates of VAT for certain sectorsCBILS and BBLS loans Beyond that, clients have looked for more ongoing support. Accountants give their verdict on the most unexpected services they’ve found themselves providing over the past six months. Webinar: The new shape of the finance function Industry experts give their take on the new shape of the future finance function in the digital age. Watch Mental health and wellbeing Rachel Martin, director, Accountant_She COVID has brought with it an endless series of challenges, symptoms, and side effects. One positive side effect has been that the deeper relationship between client and accountant. At Accountant_She we have been dedicated to ensuring that each client is prioritising their physical and mental wellbeing throughout the pandemic to enable them to fully embrace the changes required to successfully navigate their business through this storm. Alongside the wellbeing check-ins, we have been providing proactive grant and government financial support updates as and when the information comes to us from HMRC. We have done this to enable clients to focus on their business and to rely on us to feed accurate and understandable information directly to them. Next steps: I’ve seen a huge increase in clients who are using us as business advisors rather than accountants, which is fantastic and really helps us to build a supportive community around our clients. Verdict: Clients have sought a lot more emotional support during and after lockdown. Scenario planning and modelling Alastair Barlow, CEO, Flinder As a practice, we already talk about cash management, we talk about burn rate, talk in-depth about the numbers and sit in on board meetings, so from that point of view, the pandemic was almost business as usual. We were getting a lot more questions from our clients, but it was still business partnering and CFO advice. Where we did see a change was a change in priorities. We were helping our clients become more focused on governance and risk management, identifying the risks within the business, how likely they are to happen, and the impacts on the business. We’re doing a lot more scenario modelling with clients more frequently and with varying scenarios. You might have a base case, a low case and a high case, but the difference between the low case and high case was much more extreme. There’s a lot more sensitivity going on in business. Next steps: We’ve been able to take a bit more reflection time and develop some new propositions ourselves such as benchmarking solutions for clients that will lead to consulting and advisory work. Verdict: The focus is on scenario planning at the moment, alongside governance and risk management. The various government measures/better planning and forecasting Sherad Dewedi, managing partner, Shenward Chartered Accountants and Business Advisors There has been a lot of unexpected services over the past few months, in the form of processing furlough claims and CBILS and BBLS loans. We’ve supported a number of clients in accessing those, and as a result, we’ve done a lot of work on cashflow forecasts so the businesses can sustain themselves. There are also a number of compliance pieces that have come up as a result of COVID, such as the reduction of VAT in the hospitality sector. We’ve been supporting clients to ensure that their management reporting function is identifying the revenue streams that are eligible for the reduced rate of VAT. There is a nuance in the rules that the reduced rate of VAT is for sales excluding alcohol. If this crisis has taught us anything, it’s the importance of planning ahead and making disaster recovery plans. For example, if there’s a second wave, we’ll see more businesses looking to plan to ensure they can sustain themselves. Next steps: Planning and cashflow planning will be a bigger talking point in the long term. Verdict: A lot of services have been unexpected, but the legacy is around cashflow, forecasting and planning. Webinar: The Finance Team’s role in the recovery As part of AAT Future Finance 2020, you can watch this free webinar showing how finance professionals can help shape the recovery. Register now Further reading: Cash flow planning for a second wave of coronavirusMeasure for measure – what are the best KPIs for analysing business?Watch: How accountants can create a business continuity plan (log in required)
HMRC reduces tax gap to lowest recorded rate Posted 09/08/2020 by Phil Hall & filed under HMRC updates, Members. According to a National Audit Office (NAO) report, HMRC reported record tax revenue of £627.9 billion in 2018-19, an increase of £22.1 billion (3.6%) on 2017-18, as it continues to close the tax gap. More than 95% of the tax due was paid in the 2018 to 2019 tax year. The NAO notes that tax administrations rely heavily on taxpayers reporting and paying their taxes in line with the rules; and in 2018-19 HMRC received 90% of total tax owed this way. Webinar: Embracing change in uncertain times This free webinar is designed to inspire the business professional facing unprecedented change to respond more effectively to the challenges it brings. Register HMRC’s most recent estimate of the difference between the amount of tax theoretically owed and the amount collected was £31 billion in 2018-19, the equivalent to 4.7% of the total tax owed. The NAO concludes that HMRC’s work to tackle non-compliance offers good value for money, with rates of return ranging from 7:1 to 44:1. It found that HMRC has been successful in targeting mass-marketed tax avoidance schemes, but lessons from these successes have not been applied more broadly, such as where taxpayers bend the rules or do not take reasonable care. HMRC’s strategy to tackle non-compliance is based squarely on preventing it happening in the first place, by: promoting compliance – designing it into systems and processes, enabling taxpayers to get things right from the outset;preventing non-compliance – by using data to spot mistakes, prevent fraudulent claims, personalise online services and automate tax calculations; andtackling non-compliance – by identifying and targeting the areas of greatest risk, and tackle those who deliberately cheat. However, the NAO continues to seek complementary improvements: Balancing prevention and enforcement – pre-emptive measures to promote tax compliance should be balanced against those to tackle non-compliance. HMRC should get better understanding of the link between risks to revenue, the resources used, and the cost and return of different compliance activities.Customer experience – customers experiencing excellent service are more likley to believe tax evasion is unacceptable.Target setting – the NAO wants HMRC to agree to targets for reducing the tax gap. HMRC has resisted this as an annual performance indicator because it believes that reducing the tax gap is affected by factors outside its control. Webinar: Prepare for the VAT Reverse Charge Learn about the changes from the Domestic Reverse Charge and their impact in this members’ webinar. Register
10 accounting legacies after the public sector’s ‘finest hour’ Posted 09/08/2020 by David Nunn & filed under Coronavirus, Members. From an increased workload to colossal cost-cutting measures, coronavirus has thrown up tough challenges for public sector accountants. The British public sector has been put through the ultimate stress test over the past six months. Its accountants have been at the very heart of this crisis since it started. When a national emergency hits – or in the case of coronavirus (Covid-19) case, international emergency – it’s the public sector that takes charge: providing hospital treatment, emblazoning ‘stay alert’ messaging on posters and billboards, and keeping citizens safe. Webinar: The new shape of the finance function Industry experts give their take on the new shape of the future finance function in the digital age. Watch “In the past few months, we’ve seen the very best of public finance professionals, who have extended large sums of money from central government to those local bodies that need it, while still maintaining internal controls,” says Don Peebles, head of UK policy and technical at the Chartered Institute of Public Finance and Accountancy (CIPFA), the only accountancy body in the UK dedicated to the public services. “Throughout this crisis, they’ve had to make decisions on complex issues very quickly… it’s demonstrated they really can operate at speed.” However, with public sector debt recently reaching £2 trillion due to spending on coronavirus measures, the headaches for accountants are far from over yet, as we explain below. 1. Untangling grant trails and year-end accounts The word “unprecedented” has been bandied about a lot since the pandemic hit, with the government throwing record amounts of cash at public bodies: over £4.3bn to the NHS, over £3bn to local authorities and £1bn to schools. Given such vertigo-inducing figures, year-end accounts are set to look very different, presenting problems for those accountants tasked with looking after them. “Institutions like the NHS have had a whole bunch of money thrown at them to deal with Covid-19; the challenge for accountants will be unravelling these huge sums,” says Duncan Brodie, director at training provider Goals and Achievements, which regularly works with the public sector. “Before coronavirus, moving money between public sector organisations was relatively easy, with clear auditory rules. Now, there’s different trails [that need to be accounted for].” 2. Directive to cut costs Accounts in the private sector have been busy helping clients’ businesses stay afloat by poring over cash flow plans and looking at how to cut costs. Similar challenges await accountants in the public sector. With the public purse potentially facing a £391bn bill, according to the Office for Budget Responsibility, chancellor Rishi Sunak recently ordered government departments to find cost savings. As a result, public sector restructuring could become more commonplace, such as Public Health England recently being replaced by the National Institute for Health Protection. “We know there is the likelihood of this happening in local government further down the line,” says Peebles. “When this has previously happened, it’s had implications for public sector accountants who’ve had to identify what the consequences and costs are, and crucially what the savings will be.” “It’s likely that plans for transformations for efficiency savings will be part of public bodies’ budgets for this year… It’s almost certain that these plans can not be delivered, which means the budget savings these organisations were looking for can’t be achieved, and they may have to generate further income or access funding from central government.” 3. Things are about to get hectic… and there could be pay freezes too If Covid-19 has a silver lining for public sector accountants, it’s that they’ll be in heavy demand as public bodies need them to deal with the economic shock. However, as Brodie points out: “The public sector hasn’t always got a huge level of resources. As a result, its employees tend to have fairly demanding jobs.” There’s another potential drawback. In July, when Sunak announced a spending review to strengthen UK plc’s coffers (set to be published this autumn), he also hinted many public sector workers could face a pay squeeze. “The work of public sector accountants has always been a challenge,” says Peebles. “But I’d like to think they’re not in the profession purely for financial reward. Many are there because they’re passionate about making a difference.” 4. 2020/21 balance sheets are set to look very different “There could be some restructuring of balance sheets,” predicts Brodie. “The NHS Trust has ‘public dividend capital’ [a type of equity finance] which is the equivalent of ‘safe capital’ in the private sector. If a public sector department has loans, they may need to be converted into ‘public dividend capital’ because there might not be any possibility of paying these back.” There is some good news, says Brodie: “If you work in the public sector, you don’t need to worry about your department going bust as you can always get your hands on [government] cash, unlike the private sector, where cashflow is a problem.” 5. Investments being put on pause could be another pain-in-the-neck “Anything investment-related, such as a new hospital ward or a new campus lecture hall, may be put on hold due to Covid-19,” says Brodie. “Because there are ongoing running costs associated with these and no income coming in, accountants will be tasked with handling it. It could open up new accountancy roles, such as ensuring any business case/investment is scrutinised and put under the microscope.” “The core skills of accountants will come to the fore [in helping] wind down investments and find new sources of income or savings,” adds Peebles. 6. Finance teams asked to problem-solve The uncertainty of Covid-19 has meant last year’s financial forecasts are now irrelevant, but Peebles believes public sector accountants are well-equipped to cope: “In the past few months we’ve seen the very best of the public sector; who would’ve thought that the public sector could construct a hospital in just a few days? Forecasting will be a challenge, but public service professionals have demonstrated they can navigate their way through that – they’ll always find a way…” Risk management and scenario-planning is set to become more important, with Peebles noting: “The days when accountants just had to be numerate and sit in the corner looking at spreadsheets have long gone now. He/she will have to problem-solve and think about what the issues will be for specific parts of the business.” With businesses seeking more accountants with a strategic, join-the-dots mindset, Brodie predicts the ‘finance business partner’ (a financial employee working across all departments of a business to help provide ‘real-time’ insights to support decision-making) could become an increasingly common sight on public sector organigrams. Being tech-savvy could help too. “The pandemic has pushed GP practices and universities towards online consultations and lectures,” says Brodie. “These services need financial employees who understand that.” 7. Calculation woes “The workload of public sector accountants has increased as they’ve adapted to this changing landscape,” notes Peebles. “For example, the Income Compensation Scheme [one-off government scheme which aims to help compensate local authorities for income lost due to Covid-19] has seen professional accountants provide estimates to the government on likely losses. This has been difficult because we’re still in the early days of the pandemic, and only a few months into the financial year. Therefore, it’ll take all the skills of public sector accountants to accurately estimate what these losses will be.” Webinar: Embracing change in uncertain times As part of AAT Future Finance 2020, this free on-demand webinar explains why certainty is a short-term friend, but your long-term enemy. It also shows how you can navigate change. Register now 8. Challenges in… the NHS/healthcare Uncertainty is the main bugbear facing accountants working within the NHS, reckons Brodie: “If there’s a second or third breakout of the pandemic over the next year, it’ll present a big challenge for those involved in forecasting… Commissioners, clinical commissioning groups and people buying NHS services will be pondering whether to put money in ‘business-as-usual’ stuff [i.e. operations and services for non-coronavirus patients] or holding back in case there’s another outbreak.” “Also, the NHS has Payment by Results (PbR) [a fixed tariff that reflects national average prices for hospital procedures], which means its people and organisations only gets paid for what it delivers… Because many hospitals have such a huge backlog of outpatients and surgical procedures, no income has been coming in and there’s still overheads, which accountants will need to consider.” 9. Challenges within local authorities With 39% of the workforce still working remotely in August according to the Office of National Statistics, it’s predicted that many businesses may sell their expensive office spaces and switch to working from home permanently. This isn’t great news for local authorities who derive a significant chunk of their income from charging business rates (a tax on properties used for business) and from car parking charges. “A potential reduction in business rates could have a huge impact because more businesses are questioning whether they need offices,” says Brodie. 10. Challenges within education In recent years, British universities have increasingly relied on funding from international tuition fees. However, with many foreign students cancelling their studies due to the virus, it’s been estimated that some universities have lost as much as £100m. Given many of these institutions have borrowed heavily to pay for new facilities or have empty student accommodation with significant running costs, it’s something accountants will need to consider when compiling budgets. “Many working in education will be wondering how they make ends meet in the coming years,” says Brodie. “Can they generate enough revenue to service the site? It’s about finding a business model that’s affordable.” Summary There is a great deal to straighten out, adapt to and make sense of in the aftermath of the pandemic. During the crisis, the public sector rose to meet the challenge in the nation’s time of need. Now there is a sense of health trusts, local authorities and Government departments will be unravelling the long-term implications. Accounting professionals will continue to be centre-stage as they help their employers straighten things out.
Why it pays to invest in business analysis Posted 09/07/2020 by Caroline Plumb & filed under Data analytics. Fluidly chief executive Caroline Plumb outlines the business benefits of having a strong analysis capability available to your team. When you think about what it takes to run a business, a few things tend to spring to mind – leadership, a willingness to take risks, a fantastic idea (or a take on an existing idea), passion and drive. But these elements are just one side of running a company. There’s also the need for real problem solving, often on a daily (or even hourly) basis, especially in the early days. In growing companies, business and data analyst or strategy roles are commonplace. However, when you’re trying to keep lean, they can get overlooked, which can be a real mistake. From saving you money, to connecting you better to your customers – there are so many reasons why it pays to invest in business analysis, whether that’s hiring someone in this area or refining your own skill set. e-Learning: An introduction to data analytics Learn how data analytics and visualisation tools can help influence decision making and generate real business improvement.. Get started Solve problems more efficiently Analytical thinking requires being able to look at a problem and present the most effective solutions. Not only does good analysis present suitable answers, it can also help to unearth the real needs of a business at any given time. Often it’s easy to get too focused on one small part of a deemed-issue, when actually there’s another wider problem that needs evaluating first. For instance, you’re struggling with your pricing points and getting them to stick, but objective critical analysis shows it boils down to a misalignment in who your customer actually is (and therefore how much they’re willing to spend). Good analysis really helps stop wasted hours looking in the wrong direction. Lead with confidence during a crisis As if businesses aren’t dealt enough obstacles normally, clearly at the moment we’re in the midst of a bigger problem than anyone could have possibly foreseen. And in a crisis, good analytical skills are crucial. During the pandemic we’ve been bombarded with information, often conflicting, so being able to evaluate what is true and important is essential to survival. Finding a way to navigate the noise will give you the confidence to lead with a clear strategy. Plus you can get an accurate picture of where you are now, following setbacks, staff changes etc. and what that might mean for the future. Save money Never has the need to save cash felt more pressing for business owners, and you may not feel able to spend out on additional resources or software. However, the cost of investing in proper analysis can be far outweighed by the results. Good data analysis can show you both where you’re overspending and if there are areas that need more finance, which in turn can help you make effective operational and production cost cuts. This is one of those cases where investing a bit (either in resource or time) can really make a difference to your bottom line. Know your customers better Finally, there’s nothing that analysis does better than help you understand your positioning in the market – and how suitable your offering is. Whether it’s getting insights on current trends in your space, competitor analysis, or investigating buying patterns of your product or offering so far. Your business is only ever going to flourish if you give your customer what it really wants. Further reading: 5 things you need to know about data analysisflinder: data-driven accountancy in actionWhy FP&A is set to take off after coronavirus
5 things you need to know about data analysis Posted 09/07/2020 by Neil Johnson & filed under Data analytics. As businesses look to adapt their models, data, and analysis skills are increasingly prominent. Here are five areas to be aware of when analysing data. Few professions have been left untouched by the unstoppable advance of modern-day data and the subsequent scramble to make sense of it, to unlock its secrets, and accountancy is at the forefront. But it’s not just a case of plug-in and go. Why data analysis? “Big data analysis is a tremendous asset for companies, from start-ups to international organisations,” says Matt Weston, managing director at Robert Half UK. “It’s a way for teams to help CFOs prepare for economic change, develop forecasts and models, examine customer trends, and gain competitive advantage. Right now, as businesses are looking to adapt their business models, the demand for data analysis skills is rising.” e-Learning: An introduction to data analytics Learn how data analytics and visualisation tools can help influence decision making and generate real business improvement.. Get started 1. A hybrid skillset Accountants are well-suited to data analysis, Barlow believes, given their analytical mindset and training, but it won’t suit those who simply want to sit behind a computer. It involves more communication – it’s about conveying potential scenarios and trends so that a business can then make the best decisions. Financial and data analytics skills are becoming a much bigger part of the world of finance and accounting, says Weston. “Over the last few months, financial planning and analysis, financial modelling, and financial/management accountants have all seen a rise in demand where data analysis has formed a deciding factor of the job description.” Weston notes that while a key part of the role involves data retrieval, interpretation, and analysis, the perfect package of expertise includes: Functional skills such as financial analysis and planning, budgeting, forecasting, operational analysis, and cost management. Technical skills including data mining and extraction, statistical modelling and data analysis.Soft skills like communication, decision analyses, strategic thinking, and process improvement. 2. Analytical mindset Barlow foresees a time when accounting firms will compete with marketing agencies and other SME service providers all trying to analyse and explain their clients’ data. If accounting firms focus more on business partnering and business-wide data, they can then move away from simply reporting financial data to talking about “why something has happened” by bringing in operational data from across the business. For Barlow, there is a certain mindset that makes a good data analyst. It’s all well and good having the technical skills to extract and interrogate data, but if you’re not inquisitive, the technical skills will be for nothing. While business acumen is crucial, equally so is understanding a company’s business model, says Barlow. “There’s absolutely no point in doing any of the analysis if it doesn’t inform and help make better decisions.” 3. The SME factor Barlow – whose young firm proactively embraces all things digital, data, and analytical to provide clients with the super-rich and diverse business information that goes above and beyond what businesses used to expect from their accountants – suggests that the proliferation of data in SMEs is reshaping practices and finance functions. Unless you’re a Big Four-esque multinational, you’re not likely to have mathematicians and engineers heading up dedicated data analysis teams. Thanks to more data flowing from new and relatively affordable programmes spanning all operational areas – marketing, sales, finance, and HR – big data is no longer the preserve of the big hitters. This means that modern accountants, while not necessarily needing to be arch data analysts, will benefit from having a data analysis string to their bow. As an example, in the simplest terms, accountants can just dump data into Excel and manipulate it. Barlow says that if he was presented with two accounting candidates of exceptional quality, but one had experience with a database management language such as SQL or a programming language such as Python, he wouldn’t hesitate to hire the SQL/Python person. 4. Clean data or dirty visuals If attention to detail is oft-touted as an important skill for an accountant, in data analysis it’s doubly so. A huge part of data analysis is the storytelling. This is increasingly done using data visualisation programmes, such as Power BI, Tableau, Klipfolio, and Looker, that provide innovative and simplified ways to explore and ultimately “visualise” data. But for this to work effectively, you need complete and clean data because if it’s not then insights will be inaccurate and may lead to bad decisions. Yet again, this is where an accountant’s skillset is well-matched to data analysis. Accountants are rigorous with numbers – they understand that human error happens, so validity checks are bread and butter. 5. Demand for analysis skills It’s highly likely that in the future, practices and finance functions will start to develop distinct data analysis teams with appropriately trained professionals. Until then, especially at SME level, it will fall on an accountant to take on such tasks. “As the digitisation of business accelerates, and so too access to big data, the demand for big data skills will grow in step,” says Weston. “There is a range of career options available to finance and accounting professionals who want stronger big data skills. By taking the initiative to improve your expertise, you’ll increase your chances in finding your next role or advancing from your current role.” Accounting software review – Xavier Analytics A practical look at how analytics software can uncover potential problem areas, track down errors and clean up accounting data. View
What taxes should Government raise to pay for coronavirus? Posted 09/02/2020 by Mark Rowland & filed under Coronavirus, Tax reform. With public debt at £2tn, something needs to be done to raise revenues. What’s the right answer? During the August Bank Holiday weekend, it emerged that the Chancellor of the Exchequer, Rishi Sunak, was considering several tax increases aimed at businesses and the wealthy to help reduce the national debt in the wake of coronavirus and close the tax gap. Webinar: Prepare for the VAT Reverse Charge Learn about the changes from the Domestic Reverse Charge and their impact in this members’ webinar. Register The possible options before the Chancellor include: Raise the rate of Corporation Tax from 19% to 24%.Align Capital Gains Tax (CGT) with individuals’ income tax rates.Cut Pensions Tax relief – possibly a single 30% flat rate relief.Tear up the pensions triple lock, which means state pensions rise in line with wages, inflation or 2.5% – whichever is higher.Ask the self-employed to pay more tax.Raise tax on company dividends. Some MPs and business groups have raised concerns that is too soon to raise taxes so extensively. For examples, the CBI said that the focus at the moment should be on growth. “A growing economy underpinned by investment will protect livelihoods and public services. The immediate priorities are supporting business through the continuing disruption caused by Covid-19 and securing an ambitious agreement with the EU, the UK’s biggest trading partner.” We asked SMEs and accountants what they think of the measures outlined in the article and what they think needs to happen to promote the economy and raise tax revenues. The higher Corporation Tax rate will be devastating for start-ups Lowri Tan, Managing Director of Little Tummy If Corporation tax increases from 19% to 24%, this would be a 25% increase, which is a material burden for a start-up in need of every pound of cash. It could cause many startups to miss significant opportunities or could even lead to bankruptcy. This comes on top of uncertainties around Brexit and could cause investors to forsake the UK market for more stable and certain markets. Sunak is in a difficult position but at this point in time, the UK really needs to go for growth and encourage investment. I believe that increasing the Corporation Tax rate by such a significant amount, especially if there is no differentiation between the types and sizes of companies – i.e. a listed/significant company which can raise cash relatively easily vs a start-up who does not have easy access to cash – would be hugely detrimental to UK start-ups and small businesses and will hamper UK competitivity and recovery for a long while to come. The Government should: focus on measures that encourage UK start-ups to grow. Verdict: The Corporation Tax rate cannot rise for smaller businesses right now. CGT rises make sense – but blanket dividend rises could be risky Tracy Crookes, financial planner at Quilter: Tax hikes have been on the horizon since the Government had to announce its package of reforms to prop up the economy due to Covid-19. While we are still some time from a budget, the whispers of what those tax hikes might look like are already hitting the front page of national newspapers. The public reaction to these whispers should not be underestimated. Frontpage stories give the Government a useful device to gauge public uproar over changes. And with the current government struggling to maintain a solid reputation after a substantial number of u-turns, they’ll be keen to pick the policies that make them the most, with the least amount of upset. Raising CGT to align them to income tax seems like a plausible option. In 2008, the top rate of tax was 40% for CGT, so it is certainly conceivable that it could rise. Although it may create a rush of people looking to realise gains on assets now to avoid a future tax rise. CGT changes will be felt in certain corners, such as buy-to-let landlords. However, they have recently benefitted from the stamp duty relief which helped the housing market get moving again and so that pinch may feel less profound. Raising the tax on company dividends would stop some wealthy individuals shielding their income inside a company. However, the Chancellor needs to be careful here as it could end up hitting family-owned businesses who may not have benefited from any of the stimulus schemes. As the Chancellor begins to think about potential tax changes, it’s vital that he pays attention to public sentiment. Before the March Budget, figures from YouGov revealed that only about 30% were not in favour of any tax cuts and wanted spare cash at the budget to be used to increase public service funding. It also reveals that CGT, Corporation Tax, Stamp Duty, Alcohol and Tobacco tax are probably the softest targets for tax rises as few people feel they were too high in the first place. Other rises such as income tax, VAT, fuel and council tax would prove more controversial. The Government should: look at the soft targets, such as CGT and Stamp Duty. Verdict: CGT would be a sensible tax to overhaul to raise revenues. Any tax increases need to come with sensible incentives Carl Reader, director, D&T Financial Advisors If the Government really feels that getting small company directors to pay for the support that they didn’t benefit from is the way forward, then I simply have no words. I appreciate the burden has to be shared across the board. However, I think there are more targeted ways that this can be done. Growing businesses should be rewarded for rebuilding the UK. Entrepreneurs Relief has to be protected as part of this. Most business owners forsake a pension for building their business and deserve similar tax breaks to other pensions. Any abuse, however, should be stamped out. Inheritance Tax (IHT) and non-business asset CGT should be looked at, together with an across the board small increase, but with targeted incentives to encourage growth. For example, the Government could use RTI to waive Employers NI for those employing over their average employee numbers for early 2020. Not a headline grabber, but a real incentive to UK plc. Another one to think about could be a “luxury tax” on items over a certain value. It would need to be a different value per category, as a £1,000 car isn’t as luxury as a £1,000 coat! But an extra % won’t harm these sales too much, as it’s not a cost-driven purchase. Whatever the solutions, they need to think about the balance, rather than just turning the easy dials, and accept that this is a long process. These would not be headline grabbers but they will do the job. The Government should: look at wealth taxes such as CGT, IHT and tax on luxury items. Verdict: We need more targeted incentives to maintain growth – small businesses should not bear too much of the tax burden. The small companies rate of Corporation Tax could be reintroduced Luke Prout, Tax Partner at Streets Chartered Accountants It is inevitable that due to the pandemic and government borrowings to fund the economy, in the Autumn Budget the Chancellor will have to raise funds by increasing taxes across a number of areas. The Chancellor has a free mandate to increase taxes as it is widely expected he will do so, whereas previous Chancellors have had their hands politically tied, such as Mr Hammond’s U-turn to the levelling up of Class 4 NIC contributions a few years ago. The ‘triple tax lock’ means that, without significant political unrest, the Government is tied from increasing the rate of Income Tax, VAT and most National Insurance Contributions, but this does not extend to Capital Gains Tax, Corporation Tax and Dividend tax with the latter introduced to sidestep the triple tax lock policy. It is expected that Corporation Tax (which was due to go down to 17%, then reversed earlier this year) will rise to 24%. There is also talk of the reintroduction of small companies rate so that the increase does not impact smaller businesses. For more than a decade, the rates of CGT been significantly lower than income tax rates. They may well be increased to match income tax rates (20%, 40% & 45%). Entrepreneurs Relief (or Business Asset Disposal Relief as it is now called) could also be fine-tuned. Another area which could see a revision is the dividend tax rates which start at 7.5% and rise to 38.1% together with the dividend allowance. We are finding that our clients are bringing forward important decisions. With some clever advance notifications by the Chancellor (say from April 2021), taxpayers will bring forward decisions which will mean the tax take to the exchequer will increase in the short term, [This was the case] with the introduction of the dividend tax rates from April 2016. The Government should: consider introducing the small companies rate for Corporation Tax. Verdict: CGT and Corporation tax increases are likely to happen – clients are bringing forward important decisions as a result. Raising taxes in a recession could halt small business formation Mike Cherry, National Chairman, Federation of Small Business Small Businesses and the self-employed were fundamental to our recovery from the last recession. If we want them to play that critical role again, every policy decision from here on in needs to be assessed for its potential to help small firms thrive, invest and expand. Given we’re in a recession, the last thing policymakers should be doing is hiking taxes on those we need to invest, create jobs and generate growth over the crucial months ahead. It’s an approach that would send completely the wrong message to those who are out of work and thinking about starting up their own venture. We need to see the most pro-business Budget ever this autumn – one that brings down employment costs to increase hiring activity reduces the tax burden for entrepreneurs and incentivises business creation. The Government should: focus on stimulating business and recovery. Sharpen Your Tax Skills Online – a virtual masterclass in taxation Sharpen Your Tax Skills is back with another masterclass from tax expert Michael Steed. Now completely online, you’ll get more for your booking than ever before with almost seven hours of expert insight and advice, interactive training and in-depth analysis of all the latest taxation issues. Book now
flinder: data-driven accountancy in action Posted 09/01/2020 by Neil Johnson & filed under Data analytics, Digitisation, Future of accounting. We take a look at how flindr is using data analytics to win customers – and attract talent. flindr is a three-year-old start up on a mission to take modern accountancy methods mainstream. A key part of the strategy is to use data as a stepping stone towards better relationships and superior business decision-making, both inside and outside the business. Taking on the Big Four Founders Alastair Barlow FCCA and Luke Streeter FCA left PwC in 2017 to set up the company. Both had been heavily involved in PwC’s My Financepartner division – the firm’s lower-cost tilt at the SME market. Their experiences convinced them could not only compete with the Big Four in the SME space. They could outdo them. “This might be quite a bold statement, but we know exactly what goes on, how many clients, the margins, the growing pains, problems, processes, technology, we know everything about them,” says Barlow. “We know this segment is certainly up for grabs. Our ambition is to grow further than the Big 4 in terms of the SME segment.” SME reactions Barlow says when PwC started canvassing SMEs, a third of people had never heard of PwC; a third were flattered by PwC’s interest; and a third thought PwC would be way too expensive. “To have a big shiny tower in the centre of London [was] actually quite off-putting for a number of businesses. One, I can’t pay for this. Two, these might be my fees right now, but what are they going to be? Three, This isn’t how I do business, in a big shiny office, we’re lean, we’re mean and we watch the pennies.” At the same time, flindr believed it could offer a product that would be superior. e-Learning: An introduction to data analytics Learn how data analytics and visualisation tools can help influence decision making and generate real business improvement.. Get started Service offerings flinder has several feathers to its bow: it provides outsourced finance function and CFO advisory services in London and the South East. It also offers consulting and data analytics, which is global in reach – from Australia and New Zealand to North America and the UK. The endgame is to be a value-adding business partner, far removed from the traditional accounting stereotypes. “What excites us is getting really into data, systems, the whole business, bringing everything together, aggregating what’s going on in the business and delivering very rich management information (MI),” says Barlow. Building the team The first person Barlow and Streeter hired to fulfil their vision was a data engineer. “Most accountants make the mistake of thinking that data is simply about financials, so while they’re comfortable with tools like Xero or Quickbooks, they have no idea about the sources of data for all the other functions in a business,” says Barlow. Flindr takes a data-driven approach to recruiting staff Data can come from marketing, sales, logistics, HR, IT, CRM, EPOS, websites, and so on, but whatever and wherever it comes from, the idea is to blend it with the financial data to provide businesses with a broad and insightful real-time picture. It’s more of a Chief Performance Officer role, as Barlow refers to it, where flinder provides financial expertise, data analysis and broader business strategy. Performance coaching “The role of the accountant is shifting towards being a performance management advisor, of which accountants are just one part, as are data specialists and engineers,” says Barlow. “Our accountants need to be system- and process-savvy, whether that’s with finance applications or bolt-on apps, or third-party apps for CRM, for example, so the world of an accountant being only comfortable with knowing FRS 102 is long gone in my view. To support flinder’s finance professionals, the firm has a team of data engineers, who extract, extrapolate and help make the data flow as seamlessly as possible. “We’re basically trying to eliminate the spreadsheet from mashing this stuff together,’ says Barlow. ‘Our engineers will strip out the data from applications and systems, help to make sense of it alongside the accountants, as it’ll be the accountants saying what they need and the conversations they want to have.” But technology is an enabler, not an end. ‘I think too many firms are focusing on advising their clients on what technology to use, when technology is just a stepping stone on the way to the endgame, which is better conversations, better and quicker decision-making,’ says Barlow. Brand first, business second, accounting firm third The flinder brand is a key engine for the business, based on the notion that a brand has more intrinsic value, that it’s the brand that attracts and retains talent, while also differentiating oneself from the competition. “Not to take anything away from being an accounting firm, we’re very proud of that but we very much run our business as a business, not as a traditional firm, which goes to what we’re delivering and also the way in which we deliver a more robust solution to our clients,” he says. “The siloed world of partners owning clients doesn’t work for the solutions we’re delivering to our client base.” Accounting software review – Xavier Analytics A practical look at how analytics software can uncover potential problem areas, track down errors and clean up accounting data. View Staff engagement This focus on the brand is also helping to solve a problem – a bottleneck in talent acquisition and retention. “We place a huge emphasis on employee engagement and track a wide range of data to build a picture of that relationship,” says Barlow. This involves sending out five questions from a bank of 120 every Friday that measure everything from wellbeing, happiness, personal growth, ambassadorship and alignment. These are all quantified with a scoring system and the data is anonymised to encourage honesty. “If we see something worrying, be it a low score or negative comment, we’ll address it within a 24 hour working period, usually on the Friday so the person goes home feeling reassured,” he says. The annual skiing trip is a key part of team bonding. Performance improvement flinder also monitors retention, idea generation, team contributions, chargeable hours and gender diversity. “We have even tracked typing speed, as the connection between the human brain and technology is the finger tips, so if you can improve typing speed – the limiting factor – you can increase the value of that team member,” says Barlow. ‘We’re always looking for hacks and marginal gains.’ Attracting talent flinder has identified Instagram and YouTube as the most relevant channels for attracting talent. ‘We invited people to look inside and see for themselves what flinder is all about – videos of our ski trip, the imagery of our summer event etc. We even launched a video series for new employees to journal their experience with flinder.’ The initiative has helped the firm identify candidates with the right skillsets and cultural fit, while also making the firm more attractive to this audience and sped up the recruitment process. ‘Another benefit of living and breathing our brand is that so much of our marketing is generated as a by-product of our daily activity,’ says Barlow. ‘Rather than spending time artificially creating this cultural content, social media opens the door to everything we’re already doing. ‘And needless to say, we track all of the data – brand voice, number of awards, leads generated per channel, NPS score etc.’ flinder’s key data Head count 0 – 24 in 3 yearsMarketing: 1Tech & Data: 2Finance: 18Directors: 2Support: 1 Technology used As well as the usual cloud applications to run client businesses, flinder uses the following: Airtable – part spreadsheet, part database, part visual planner.Klipfolio – metrics, dashboards and automated reportingPipedrive – sales pipeline manager.Asana – team and project management software.UiPath Robotics – Robotics.In-house flinder proprietary tech under development Number of clients 55 recurring clients Client wins flinder’s funded clients took an average of £2.6 million investment last yearR&D clients claimed an average of £108,000 in credits Geographical reach Finance function work: London and South EastConsulting & data analytics: Global – from Australia and New Zealand to North America and the UK in between Further reading Why the Finance Team is heading for a long-term relationship with IT Accounting software review – Xavier Analytics