How smaller firms are competing with top-tiers in the war for talent

Posted by & filed under Employers, Members, Recruitment.

Those firms that can’t compete on salary are using other methods instead.

The current talent shortage in the accountancy sector is hitting many practices hard, particularly smaller businesses that often struggle to compete with mid and top-tier accountancy firms.

There have been repeated warnings from industry experts and independent bodies that the UK is facing a growing crisis. At one end of the scale, there’s been a decline in individuals training to become accountants, while at the other, growing numbers of senior accountants are reaching retirement age.

Last year, accounting solutions provider Bright said there were just two applicants for every accounting role. And back in May, a new global study by accountancy outsourcing specialists AdvanceTrack found that 45 per cent of accountancy firms were struggling with skills shortages. In addition, three-quarters said the situation had got worse since the pandemic.

Although some firms can respond to the shortage by offering higher wages and a variety of attractive employee benefit packages, or look to recruit overseas, not every firm is in a position to do so.

Some firms are looking at other ways to address the skills gap by:

  • Investing more in AI and automation.
  • Relying on outsourcing providers.
  • Offering ‘returnships’ opportunities.
  • Upskilling existing staff.

We spoke to owners of small accountancy firms for their insight as well as an accountancy student to find out what they’d like to see from potential employers.

We offer more flexibility and ownership than larger firms can

Sarah Hedley MAAT, Owner, Brickbooks and Payroll

As a micro practice, I offer flexibility that larger firms simply can’t match. For example, hybrid-working arrangements that allow employees to balance their personal and professional lives. Alongside this, I provide competitive pay and ongoing training, which ensures my team stays current with industry trends.

What sets us apart is that employees get to see more of the entire process with clients, gaining comprehensive experience rather than being confined to a single area. This hands-on involvement helps them build stronger client relationships and gain a deeper understanding of client needs.

I can offer flexible working arrangements that larger firms often struggle to provide. My employees work closely with clients, getting a more personal and in-depth experience. Additionally, as a smaller practice, I actively listen to my team’s ideas and encourage them to contribute to the growth and development of the business. This sense of ownership and influence is something employees in larger firms often miss out on, where decision-making can be slower and more hierarchical.

So far, I haven’t had to actively seek out experienced individuals because I initially knew the right person for a part-time role. However, as I plan to expand and bring in someone more senior, my primary focus will be on ensuring that the salary offering is competitive. I understand that attracting senior talent will require balancing salary with other perks, such as flexibility, training and the chance to work in a role where they have more ownership of the client relationship and the accounting process.

Verdict: Smaller firms can offer accountants more responsibility, flexibility and a greater sense of ownership than what’s offered by larger firms.

Word-of-mouth is a powerful tool

Jess Middleton, Co-Founder, MPAS UK

This might be an unpopular opinion, but there’s no competition, really. Larger firms have more resources at their disposal and naturally have more reach.

However, smaller firms can offer more flexibility, more personal interest and usually specific client bases. So the reality is: it’s in the hands of the person looking for a job. If someone is looking for a high pay rate, full-time hours and larger clients, then a larger firm is likely what they would need. But if someone needs flexibility, the ability to work from home and prefers dealing with the smaller business, then a small business practice is ideal. We understand that people’s requirements and circumstances change over time.

Smaller firms are more likely to offer the personal touch. I’m not saying large firms don’t too, but it will always be a different vibe. As the owner of a small business, I conduct the interviews for new employees instead of a HR department.

In our case, we offer candidates opportunities to work from home and a generous holiday allowance which isn’t limited to 6 weeks. Does this put us out of pocket?  Never. Instead, loyalty increases and people actually take less holiday than before, despite us encouraging everyone to take time out!

Our employees also enjoy coming into our small, dog-friendly office at least once a week. Potential employees love this flexibility to the point where we have minimum of 3 people monthly on a waiting list for an interview. Again, it’s all dependent on the individual’s requirements!

We don’t advertise, but we have great connections and word of mouth is a powerful tool. People talk about the benefits we offer as an employer and prospective employees find this attractive.

Verdict: Word-of-mouth about the benefits we offer is a powerful tool – we have 3 candidates monthly on an interview waitlist.

Promote what you can offer candidates and celebrate existing employees

Rumyana Miteva, AAT student and Accounting Trainee Assistant, E Johnson & Associates

For AAT students like me who are looking for their next challenge, employers need to be willing to support them as they study towards their accountancy qualification. I’ve previously reached out to over 30 accountancy firms to offer my services – I was even willing to volunteer to gain experience – but there was a lack of interest at first.

Firms who support employees and provide entry-level jobs will be rewarded with loyalty and dedication.

This is what I believe firms need to do to attract more talent and address skills gap:

  • Be willing to hire candidates without experience but who are willing to learn and grow. They should also be willing to pay for their study as it will ultimately benefit the company.
  • Provide opportunities to shadow experienced staff from different departments and with a wide range of experience and knowledge as well as provide mentoring opportunities.
  • Offer a bonus or celebrate particular qualification milestones to acknowledge the work and dedication that has gone into the study.
  • Promote these benefits on social media too. Doing so shows your firm fosters a positive work environment, and it might encourage other people to study and train as accountants too.

With these steps, I think small practices would be successful in finding suitable applicants with the right approach, knowledge, ethics and loyalty.

Verdict: Smaller firms should do more to actively promote what they can offer candidates – including celebrating the achievements of their existing employees.

Don’t just attract clients – attract the right clients

Posted by & filed under Client relations, In practice, Members.

When setting up practice, attracting new clients is essential. So how picky should you be?

There’s a lot to think about when setting up in practice: getting licensed, having the right insurance, formulating business policies, installing and setting up software packages – the list goes on. But when it comes to business growth, attracting new clients is one of the most crucial elements of business success.

General advice on finding the first paying clients includes:

  • Utilise social media platforms such as LinkedIn: Update your profile, post regular updates and thoughts which demonstrate your expertise and become active on relevant business groups and forums.
  • Message contacts directly with your availability and what you can offer.
  • Network in person or online.
  • Network/get involved in your local AAT branch.
  • Consider speaking at local business events for free.

But for many newly established accountancy practices, it’s not just a case of attracting clients, it’s a case of attracting the right clients. Do you say ‘yes’ to every client who approaches you or do you only say ‘yes’ to the ‘right’ clients?

And how do you know who those ‘right’ clients are? The ones who are in your desired niche or those who are Higher Valued Customers (HVCs) – those who generate higher value work and therefore more revenue and profit for your business?

Some practice owners say ‘yes’ to every client initially and then, once established, become more selective – but it’s not a straightforward process and will look different for every business.

We asked accountants to reflect on their journey to attract the right kind of clients. Here’s what they said.

Know when to say ‘no’

Ria-Jaine Lincoln MAAT, Director, The Beauty Accountant

Working with people with shared values creates a synergy that helps with open and honest communication. This is important as there’s often an extra layer of stress when working with tax and money.

I look for the following in my clients:

  • respect
  • positive work ethic
  • accountability
  • open-mindedness
  • honesty and transparency
  • dedication to being the best version of themselves.

Most hair and beauty business owners are extremely hard working with a positive work ethic and an incredible drive and creativity so I really love to partner with them. It helps that I’m a former beauty therapist myself, so I speak their language!

Accountability is a big value for me, so I run regular accountability sessions at no extra charge for our existing client base. These sessions help to build connections with clients and encourage regular touch-points.

When starting out, saying ‘yes’ to every client isn’t necessarily a bad thing if there are robust processes in place. Client onboarding is a great way to see how things will go. If there are issues at onboarding level or when setting up software we take action as appropriate.

I have a three-strike policy on everything now. I wish I applied this more in the early days!

For me I began being pickier and setting boundaries when I worked out how much money was being lost to scope creep (overservicing), taking on clients who weren’t the best fit and the associated emotional stress.

So I don’t think the issue is saying ‘yes’ too quickly but not saying ‘no’ – it’s important to set boundaries very early on.

Verdict: Set boundaries and know when to say no. I have a three-strike policy on everything now.

Specialising early on has helped attract the right clients

Stephen Gibbens, Director, Accountech Solutions

When I started my accountancy business, I knew from the start that I wanted to specialise in tech start-ups as that was where I had the experience and networks.

Not specialising would mean you’re just another general practice and only really compete on price.

To start with you have to say ‘yes’ to almost everything to build up a reputation. Ultimately, you want to get to a point where you can say ‘no’ to almost everything except your dream clients.

Over the past 22 years, our client base has evolved from initially being a mix of tech start-ups and other larger non-tech clients to exclusive tech companies – from start-ups to Series A. These tech companies are in the areas we’re most interested in and where the greatest opportunities lie: life sciences/medical devices and climate tech.

Specialising early on has definitely made a difference – as a qualified accountant, you can do anything but you can’t do everything.

Setting your company values early on and finding clients that align with them is also very important.

Ours are to work with clients that do good, to act as a member of our clients’ teams and to treat every client as if they were our only client.

We now specialise in impact-driven clients in these sectors, who treat us as members of their team, keep us informed of what the business is doing and value being part of an exclusive group. We limit the number of clients that we have which gives them easy access to experienced staff with the relevant background they need.

Verdict: Specialising early on has made a difference in attracting the right clients.

Accountancy-client relationships require mutual respect

Clare Bowen, Partner, Monahans

If our clients’ values don’t align with our own, then fundamentally, the client/accountant relationship won’t be as effective and productive as it could be. We want to work with clients who have the goal of improving their business finances and who want to take advice from valued professionals. In addition, we want to be part of our clients’ journey towards solid environmental, social and governance values.

Our clients must treat their customers, employees and suppliers with respect and integrity. Additionally, an accountancy-client relationship has to be two-way for it to be successful and that level of respect needs to be clear from the beginning.

When you are just starting out, you may not be considering the values of clients quite so much because you want to gain a broad amount of experience across a range of industries to build your portfolio. In some cases, accountancy firms have no choice but to take on clients even if they don’t feel their values align, but this can be detrimental to the industry as a whole. There needs to be trust between the business and accountant for the partnership to work effectively.

Verdict: Accountancy-client relationships require mutual respect that’s clear from the start.

I choose clients who are a good fit and share my values

Batool Haider, Director, Account Inc

Although my practice is still in its infancy (it’s been operating for a year and a half) my approach in finding clients has been the same from the start.

I’ve always been careful with the clients I take on – I choose clients that I feel would be a good fit instead of just chasing fees. A client that is not the right fit for the practice (or vice versa, as this is a two-way street) won’t last very long.

All prospects are encouraged to book a no-obligation chat with me, where we talk about their business, what they are looking for from their accountant and how I can help them. This is to figure out whether we can work together and if our values align on both sides.

My values are transparency, mutual respect, kindness and trust. I also look for family values and commitments in my prospective clients. Business owners with families have their hands full. I should know – I’m a business owner with a family!

These clients are my favourite people to work with because I understand the sense of overwhelm and also, helping them sort their business affairs means I’ve made a tangible difference in their stress levels.

Ultimately, it’s about building sustainable, long-term relationships that are mutually beneficial. The client needs to feel able to reach out to us and we need to be able to give advice that’s in their best interest.

Verdict: I’m careful to choose clients who are a good fit – but it has to work both ways.

Why eInvoicing is the future for your clients

Posted by & filed under Members.

This content is brought to you by Xero.

Anyone who spends time invoicing knows it’s a fiddly business. Manually typing in details and double-checking the amounts. Sending a document via email or post and possibly following up to see if it’s been received. Do several of these in one go and it’s easy to feel glued to your office chair.

eInvoicing simplifies this process. Accounting systems ‘talk’ to one another so that eInvoices appear directly in the buyer’s software. The upshot? All the right information automatically travels to the right place without anyone handling emails and documents.

Let’s see how it works.

What is eInvoicing?

Short for electronic invoicing, eInvoicing replaces traditional formats with digital ones. All the same information is included but the delivery is different – a secure invoicing network sends data which is automatically captured by a buyer’s software.

Your clients don’t need to use the same accounting software as their buyers, just the same eInvoicing network.

Peppol is the standard network used throughout Europe, Australia, New Zealand, and Singapore. Businesses and governments trust it as a way to send and receive invoices.

Why switch to eInvoicing?

Here are a few of the key benefits of eInvoicing.

1. Less invoicing admin

Whether we’re talking about sending or receiving them, eInvoices will save your clients time and manual data entry. Each eInvoice appears as a bill to be paid in the buyer’s accounting system. Then it’s just a few clicks to make the payment and – voilà – it’s done.

2. Trade opportunities with Europe and the world

The digital economy makes doing business with Europe that bit smoother. Global trade is also simplified thanks to the ease with which payments can be requested and made. While eInvoicing is in its early days in the UK, there’s little doubt it will play a key role in the digitalisation of business across all industries.

3. Increased security and legitimacy

Your clients will enjoy better protection from fraud due to the high level of transparency of eInvoicing. Simply put, it’s harder to imitate an invoice when it’s sent on an eInvoice network. 

4. Improved cash flow visibility

With so many small businesses suffering late payments, accountants and bookkeepers must find ways to help keep cash moving. eInvoices are sent to the buyer’s software in a matter of seconds. The client can quickly see what’s due to be paid and generally manage their cash flow.

How Xero can help future proof your clients

Xero is the first major small business accounting software company to launch eInvoicing in the UK. As such, it can play a huge role in helping your clients digitise their financial admin and, in doing so, save huge amounts of time and stress (not to mention money). 

You can find more information in our complete guide to eInvoicing.

And if you’d like to start using eInvoicing for you and your clients, join the partner programme today. Alternatively, you can learn more about the software by booking a call with one of our experts.

This content is brought to you by Xero.

And the winners are

Posted by & filed under AAT news, Community, Members.

We’re proud that our members’ hard work is being recognised. Here’s what happened at the Accounting Excellence Awards 2024.

This year’s Accounting Excellence Awards took place on Tuesday 8 October at Camden Roundhouse.

The Awards celebrated the most ambitious individuals, teams and firms in accounting and finance. There were a myriad of finance professionals to recognise, and we’re delighted that so many of our members were shortlisted, let alone won.

The strong representation of AAT members across such a diverse range of categories in this year’s shortlist is truly remarkable.  Although should come as no surprise, given our community! From client transformation to payroll innovation, our members are excelling in every facet of the accounting profession.

The sheer breadth of recognition in this year’s Accounting Excellence Awards showcases the exceptional talent within AAT – but it also reflects our inclusive professional community. We’re incredibly proud of all finalists and the positive impact they’re making across the industry every day.

Sarah Beale, AAT CEO

And the category is…

Congratulations to the AAT members who won their categories:

Bookkeeping Team of the Year

Michael Clifton, Ookkee Ltd

Progressive Payroll Team of the Year

Sam Nicholson, Nicholson & Co Accountancy

Small Firm of the Year (London and South of England)

Max McHugh, Ocelot Accounting

Get with the programme: Here’s what you can expect at AAT Connect

Posted by & filed under Events, Members.

Why one speaker anticipates the event will be ”a valuable place to swap ideas, enjoy some blue sky thinking, and catch up with friends.”

Next month (November) sees AAT’s biggest member event of the year, a day of inspiration, learning, networking and a real celebration of the AAT community and what makes it special.

Located at The Brewery, a vibrant and modern venue in the heart of London, AAT Connect will bring members expert advice on today’s most pertinent topics including career progression, personal branding, sustainability and AI.

Experts will be on hand at specialist clinics to provide advice and guidance on tax, practice management, AML, CVs and interviews and on how to make the most of your AAT membership.

Connect with your community

Enjoy inspirational talks from leading experts on the subjects that matter most to you, ask your questions in our one to one clinics and connect with your fellow community at the AAT Impact Awards.

Book now

Panel sessions will tackle some of the key conversations shaping the industry and cover topics which AAT members have said are the key issues in their careers and professional development today.

While it will be a day of expert advice, networking and inspiration, there is also the opportunity to have fun and make new connections. AAT Connect will also celebrate the diversity and excellence of the AAT member community with nine AAT Impact Awards and the Past President Award. The AAT President will be giving a keynote address, and members will enjoy a three-course sit-down lunch.

Turbo-charge your career and your professional development

The lively panel sessions hosted by AAT expert members cover the key topics which feedback has shown are the most pressing in our industry, including:

  • Career development. Driving, striving and thriving – taking ownership of your career!

With a focus on career development the session will specifically delve into strategies, to help accountants add value in their role.

  • Personal branding. Don’t just know your value – show your value: building your personal brand with confidence.

The session will aim to inspire you to think about your own personal brand and excel as an AAT member.

  • Sustainability. We can be heroes: The role AAT members can play in promoting sustainability.

Accountants can play a leading role in the promotion of sustainability measures, and we will discuss practical steps for integrating sustainability practices.

  • Understanding AI. Let’s reboot – Where are we with AI?

The discussion will focus on the opportunities to maximise the benefits for utilising AI effectively, but also address the challenges facing finance professionals and worries some may have on the impact of AI on finance.

Meet old friends, and make new connections

There is also the opportunity to network with old friends and colleagues and to make new connections at the Members Lounge. It’s the ideal place to grab a coffee, soak in the atmosphere and chat to AAT members, staff and Council.

In addition, the Exhibition area enables you to interact with our partners and understand ways they can help you be successful. The AAT awards, hosted by Jess Robinson, an award-winning impressionist, actor, voice artist and classically-trained singer, are a wonderful celebration of the many and diverse achievements within the AAT community.

How to drive forward your career and think like a leader

Becky Glover, a passionate and driven finance and business leader, is the host of ourpresentation on career development. She was recently listed as one of ACCA’s inspirational females and was nominated for “Rising Hero in Finance” at the Digital Finance Function awards 2022. In addition to her work as Finance Director, she enjoys speaking about finance leadership.

She started in accountancy with an AAT apprenticeship at 17 and progressed rapidly in her career without a university degree. She has built up leadership knowledge from a variety of finance roles and is also the founder of a wine business, which she ran alongside her full-time job. She will be talking about the value of automation and technology in maximising your efficiency, and offering tips on time management, delegation and setting boundaries for personal well-being.

“I am really excited to be coming to AAT Connect at the Brewery,” she says. “The venue is amazing, and I am looking forward to meeting other AAT members. There will be a lot of learning on the day, with some great insights, but I am also looking forward to being part of the amazing AAT community.

“Sometimes when you are in a senior role it can sometimes feel a bit lonely, so events like this are a valuable place to swap ideas, enjoy some blue sky thinking with other people, and catch up with friends.”

Becky’s presentation will cover how to delegate, how to automate tasks and create workflows, and how to communicate effectively.

“If you are running a business or in a senior leadership position, then you need to decide what the priorities are, lead the team, and be clear on boundaries,” she says. “I am a passionate leader. I really want the best for the business, and that also means looking after the people in that business, working in the same direction towards a bigger goal.”

Be part of the vibrant AAT Community

A key aim of AAT Connect, alongside professional and personal development, is to celebrate the diverse skills and talents of the people who make up the AAT community.

“It is about enabling those valuable connections, building that sense of belonging, and celebrating members,” says Jonathan Stocks, Product Manager at AAT.

“All the sessions in the morning have been carefully crafted to focus on the most relevant topics happening right now in careers, personal branding, sustainability and digital and AI,” he says. “All the panel sessions are chaired by council members who bring a wealth of experience.

“It is a day to learn, but also to have a cup of coffee, chat to council members, browse the exhibition and enjoy a great meal while celebrating the AAT Impact Awards. We want to recognise and celebrate our members, because they come from such a diverse background and work across practice, industry, public sector, or their own practice.”

Becky adds: “It’s such a valuable way to learn, connect, make some great friends and share ideas.”

Connect with your community at AAT Connect

Here’s what you need to know about AI and accountancy

Posted by & filed under Artificial intelligence, Members, Practice management.

How to use human and artificial intelligence to raise practice efficiency.

Artificial intelligence has made quite the splash in the accounting industry. It’s easy to see why – from automating bookkeeping to generating reports and forecasts, AI can ease the administrative burden and equip you with reliable data and insights. It’s no wonder the accounting industry has one of the highest AI adoption rates in the UK.

Cloud-based software is making AI more accessible, which means you don’t need to be a tech expert to use it. Let’s explore how you can combine human and artificial intelligence to get the best out of these tools. 

Find out more about the future of AI

Reasons to use AI in your practice

AI is here to stay. And there’s so much it can do to raise practice efficiency.

Starting with automation – for data entry, bank reconciliation, and invoicing. AI features in cloud-based accounting software will automatically match and code your transactions, or chase up overdue invoices. And when you’re spending less time on admin you can put those hours to better use, providing high-value advisory or expanding your client base.

AI can analyse data quickly. It’s great for spotting patterns and anomalies in data that would otherwise go undetected. It’s no surprise many fraud-detection tools are incorporating the technology. And using AI means you won’t need to rely on outdated figures or patchy data for advisory – many tools offer real-time insights into your clients’ financial performances.

While it’s true that AI can support many of the daily tasks practices perform, the human touch isn’t going anywhere any time soon. After all, the valuable data insights provided by AI still need translating and contextualising for clients. Business owners will seek trusted advisors who can make sense of the metrics and advise them on strategy.

How to make AI work for your practice

The good news is: you probably already have access to AI tools. If you’re using modern cloud-based software for accountants and bookkeepers, existing features likely include AI to automate tasks, improve accuracy, and generate reports.

Xero has an entire suite of AI product features. Take Analytics Plus, which can give you deep data insights to support clients with financial decision-making. Inbuilt functionality (like bank reconciliation predictions) uses machine learning to code transactions that don’t match up with invoices or bank rules.

One of the best things about using the AI tools in your existing software subscription is that you don’t need to pay for extra tools or products. You’ve got AI that’s tailored to your practice requirements, right at your fingertips. 

But when it comes to integrating AI into your practice workflows, there are a few things to bear in mind. Firstly, with AI taking care of more data admin, you can focus on high-value advisory services and building skills that enhance these services – like critical thinking, problem-solving, and communication.

With access to reliable live data, you can also expand your services. Think: strategic advice, financial planning, and risk management. Here, reliable data from your AI tools and the learned experience you bring to the table go hand-in-hand.

And lastly, treat AI like a coworker, not a replacement. Call on AI for accuracy and data, then pair it with your own experience and judgment. If an AI tool provides the cash flow projection, use your experience and advisory skills to develop a cash flow management strategy for your clients. You’ll get better at AI by experimenting with it – so don’t be afraid to test new features and techniques.

The power of AI for your practice

We’ve only scratched the surface of what AI is capable of in accounting. There’s accounts fraud detection, where AI tools can analyse financial data and spot fraudulent activity. And predictive analytics, which uses past data to predict the future using AI. Then there are data visualisations, constructed by AI, that help your clients understand their finances better. We cover all this and more in our comprehensive guide to AI for accountants and bookkeepers.

Find out more about the future of AI

Here’s how to protect your business from cybersecurity breaches

Posted by & filed under Cyber security, Members.

One of the most significant emerging risks for accountants is the rise in cyberattacks, from hacking to phishing scams. This is how accountants and IT support specialists are taking precautions.

There are many types of cybersecurity risks. Unfortunately, phishing scams in particular are growing more sophisticated.

These are attempts to extract financial or personal information and credentials or to hack into systems and networks. Phishing uses a form of social engineering, a psychological manipulation technique, to trick their targets into divulging sensitive information or installing viruses and malware.

In the past, it was relatively easy to spot phishing communications due to incorrect spellings and far-fetched stories. But these days, social engineering has become far more sophisticated, often cloning reputable websites and, even more sinister, using deepfake AI technology. Deepfake technology uses AI-generated images, videos or audio to convincingly mimic a real person, either famous or known to the individual.

There are well-known examples where businesses have fallen for these scams. One was British engineering firm Arup, where a finance employee was tricked into sending over £20m during a video call which used deep fake technology to pose as the company’s senior management.

Cyber threats are real and growing. According to official government statistics, 50% of UK businesses and a third of charities have experienced some form of cyber attack in the last twelve months. Of these:

  • 84% of businesses and 83% of charities were targeted by phishing scams
  • 35% of businesses and 37% of charities were targeted by hackers impersonating organisations via email or online
  • 17% of businesses and 14% of charities were victims of virus or malware attacks.

And research by ISMS.online recently revealed that malicious deepfake technology has become the second-most common business security threat in the UK.

So how are accountants addressing this increasing threat? We spoke to AAT members and an IT support specialist to find out their best practice approach.

We use zero-trust principles to verify users, multi-factor authentication and application allowlisting

Liz Smith, Business Development Director and IT Director, Lugo

Lugo provides IT support for accountants. We’re most concerned about phishing, ransomware and data breaches. Phishing can trick users into sharing sensitive information, while ransomware locks your data until a ransom is paid. Data breaches can result in exposing confidential information.

We use zero-trust principles to verify users and devices, and ensure all unnecessary software is removed to prevent vulnerabilities. We also recommend working towards Cyber Essentials to strengthen defences.

Accountants should be aware of the risks associated with financial data, such as invoice fraud and phishing attempts that target client information. Unapproved software increases the risk of security weaknesses. Regular updates to devices and limiting access to only necessary software helps minimise these risks. We suggest making use of free tools like the NCSC’s Basic Cyber Security Check to identify gaps in your protection. Remember, you don’t need to outrun the bear, just the person next to you!

We apply multi-factor authentication and use application allowlisting to control which programs can run on our systems. All devices are regularly restarted to ensure security updates are applied, and we ensure everyone uses only one device, such as a business-grade laptop, to minimise the attack surface. User education on spotting threats, along with continuous monitoring, keeps us prepared for potential cyber attacks.

Verdict: We use zero-trust principles to verify users, multi-factor authentication and application allowlisting to control which programs can run on our systems.

I never ignore software update reminders – it’s the easiest way to prevent cyberattacks

Anita Rasheva MAAT, Founder, AD Accounting and Business Solutions

One of the biggest threats I worry about is phishing scams. Nowadays, scammers can impersonate clients, suppliers or colleagues. It’s alarmingly easy to accidentally click a link or download an attachment that appears legitimate but ends up infecting your computer with malware.

Another risk is ransomware attacks. I’ve heard several stories of businesses, even smaller ones, whose systems have been locked down by hackers demanding payment to release the data.

Accountants and bookkeepers need to carefully consider the vulnerabilities in their systems. Smaller businesses are often seen as easier targets because they might not have the same security measures as larger firms.

Measures I’ve put in for my business include:

  • Staff training: Staff need to be well-versed in the basics of cybersecurity (e.g. how to identify phishing emails, creating strong passwords).
  • Regular software updates: Outdated software often has security vulnerabilities that hackers can exploit. I never ignore update reminders – keeping everything up to date is one of the easiest ways to prevent attacks.
  • Use of strong, unique passwords for all my accounts and platforms.
  • Enabling two-factor authentication (2FA) whenever possible which adds an extra layer of security.
  • Regular data backups, both cloud-based and physical on external drives.
  • Firewalls and antivirus and anti-malware software.
  • Cybersecurity business policy. This outlines the steps for data protection and how to respond in case of an incident.

Staying proactive is key. Cybersecurity is constantly evolving, and it’s crucial to stay ahead of emerging threats. I attend workshops and seminars and subscribe to regular updates.

Cybersecurity is an area that accountants can’t afford to ignore. We’re handling some of the most sensitive information out there, and cybercriminals are always looking for opportunities to exploit any weaknesses. Any breach could have serious financial and reputational consequences for both us and our clients.

Verdict: Outdated software has security vulnerabilities so I never ignore update reminders. It’s one of the easiest ways to prevent cyber attacks.

Staff undergo cybersecurity training to identify red flags

Sarah Hedley, MAAT, Brickbooks and Payroll

Accountants must be vigilant against cyberattacks as they handle sensitive financial data, making them especially attractive targets for hackers. The main risks include data breaches, identity theft and financial fraud, which can severely impact both the business and its clients. Cybercriminals can use phishing, malware and ransomware to exploit weaknesses, so it’s crucial for accountants to stay informed about emerging threats.

To protect our business, we undergo cybersecurity training to identify phishing attempts, suspicious links, and other red flags. We have a clear reporting procedure for any potential cyber threats, ensuring immediate action is taken. Our software systems are kept updated, and we use two-factor authentication to secure access to sensitive information.

We use cybersecurity software that includes firewalls, antivirus protection, and encryption for client data and accounting platforms. Passwords are securely stored using management tools, and regular data backups are performed to safeguard against ransomware. By staying aware of risks, we aim to minimise the potential impacts of cyberattacks on our business and clients.

Verdict: Staff undergo cybersecurity training to identify red flags.

How are finance professionals holding up in the face of MTD delays?

Posted by & filed under Making Tax Digital, Members.

We spoke to AAT members about whether they’re still preparing for Making Tax Digital given its missed deadlines.

In November last year, the Public Accounts Committee (PAC) warned that HMRC had ‘lost sight’ of customers in the planning, design and delivery of Making Tax Digital (MTD). In its report, PAC found the programme had increased the admin and financial burden on some taxpayers, failed to be transparent about ‘substantial costs’ and failed to take ‘sufficient’ account of the ‘realities’ faced by businesses, accountants and bookkeepers.

MTD, which requires businesses and taxpayers to keep digital tax records via compliant software and submit quarterly updates to HMRC, is intended to simplify filing tax returns and reduce error and fraud. But the programme has been beset with delays since it was first unveiled in 2015. Then, the entire programme was intended to last five years. Now, the current completion date is not expected until 2027.

From April 2022, MTD for VAT – first introduced in 2019 – became mandatory for every VAT-registered business.

The current timeline for the next two phases of the MTD programme is as follows:

  • MTD for Income Tax:
    • April 2026: Mandatory for self-employed, businesses and landlords with a turnover of £50,000+.April 2027: Mandatory for self-employed, businesses and landlords with a turnover of £30,000+.All new businesses incorporated on or after 6th April 2025 must incorporate MTD for Income Tax in the tax year after they commence trading (i.e. 2026/2027).
    • HMRC is currently reviewing businesses with turnover of less than £30,000.
  • MTD for Corporation Tax will not be mandatory before April 2026 at the earliest.

The accumulated delays, the widespread criticism and cynicsm and general lack of trust in the programme overall has all taken its toll, leading to a general feeling of MTD-related fatigue and complacency among many businesses, accountants and bookkeepers, despite the looming deadlines.

Indeed, since PAC’s report just under a year ago, it doesn’t look like much has been done to address the cited concerns. PAC wrote again to HMRC in April, asking it to readdress the lack of ‘governance and accountability’.

MTD expert Rebecca Benneyworth, who has been documenting her experience with HMRC’s private beta testing service for MTD for Income Tax, warned earlier in the summer that too many firms are ‘unprepared’ for the income MTD for Income Tax.

So how are AAT members preparing for the next MTD mandate?

Businesses that take a wait-and-see approach may soon be in difficulties

Karen Feltham MAAT, Owner, Aligned Accounting

The Making Tax Digital scheme has had many delays since its announcement, creating a level of uncertainty around the scheme’s importance and the level of accuracy for implementation dates. Many business owners, particularly smaller enterprises, aren’t even aware of the scheme and some are suspicious of it, too.

It’s easy to see why some accountants and bookkeepers have begun to feel complacent as well. HMRC’s lack of commitment and constant postponements have led to a lack of urgency from businesses when it comes to digital record-keeping.

MTD was intended to simplify tax compliance, bringing efficiency and transparency. However, with each delay, businesses are left wondering when – or if – the scheme will be enforced. While some larger firms have adapted early, many small businesses remain hesitant, seeing little reason to adopt a system that even HMRC appears reluctant to enforce and I believe the uncertainty surrounding this may be problematic.

While HMRC may seem lenient now, digital tax compliance is inevitable. Businesses that take a wait-and-see approach may find themselves scrambling when deadlines are finally firmed up. By then, the cost and effort to transition will be higher than if they had embraced the change earlier.

Verdict: Businesses who take a wait-and-see approach may find themselves in difficulties when MTD deadlines are confirmed.

We were making progress but frequent delays led us to ease off the gas

Ben Rose, MAAT, Partner, Martin Seitler & Co

Most accountants are fed up of the goalposts moving every few months or with every budget. As a firm, we spent considerable time preparing ourselves before HMRC delayed the start of MTD. I’m sure many firms did the same, ultimately wasting weeks of preliminary work.

While we accept why the delays happened, delays have wasted our time. We now aren’t so much ‘fatigued’ as fed up! Of course we know it’s going to happen but at the moment, my feeling is it may well be pushed back again by the new government who may see it as an extra expense that they don’t need.

This is what’s causing the perceived complacency/fatigue and frustration. It’s in part an expectancy (maybe even a hope) that it is going to be delayed again.

As a firm, we’re definitely on the way to becoming prepared, but because of the delays we’ve stopped getting ready, even though we know inevitably we need to get back on it at some point. I think after this budget, if nothing is mentioned about a delay then we can finally say “right, we have a year to get going, let’s sort our clients out.”

I think HMRC need to do more to explain who is exempt and what the final thresholds are going to be. Many accountants still don’t know which of their clients are going to be exempt or not. I think a final MTD for IT email needs to go out detailing everything.

Verdict: We were making progress with MTD preparations but due to HMRC delays, we’ve eased off the gas.

I’m prepared for the technical aspects, but I’m concerned about teething problems

Sarah Hedley MAAT, Brickbooks and Payroll

I think there’s some complacency around MTD, especially because of the repeated delays and frustrations with HMRC’s service in recent years. Accountants and bookkeepers are fed up with not only the shifting MTD deadline dates but also the quality of service from HMRC.

There’s a growing sense that if HMRC struggles to provide accurate advice on their own tax rules and legislation and manage customer service, it raises concerns about their ability to effectively roll out MTD.

Personally, I don’t feel MTD fatigue, but I understand why some professionals might.

I feel prepared for the technical aspects of MTD itself, but I’m concerned about the inevitable teething problems. HMRC’s frequent errors cause massive delays, and I fear the roll-out might create chaos for clients. These issues could have serious consequences if not addressed, particularly for trades and construction businesses that rely on timely and accurate reporting.

HMRC needs to become more visible and proactive. They should ensure departments communicate better, especially where taxes overlap, like PAYE/CIS and corporation or income tax. Often, an issue in one area triggers penalties in another. Transparency and better client support are critical to restoring trust in the MTD project.

Verdict: I’m prepared for the technical aspects of MTD, but I’m concerned about the inevitable teething problems.

The key things accounting firms must consider when outsourcing

Posted by & filed under Members, Practice management, Remote teams.

Outsourcing can be very beneficial, but it comes with risks and difficulties that must be planned for.

Outsourcing services can streamline operations, cut costs, and enhance service quality for finance departments and accounting firms. But how do you choose the right outsourcing model and implement it successfully?

The benefits

Cost Efficiency
Outsourcing allows firms to reduce labour costs by leveraging skilled professionals perhaps in lower-cost regions, while also eliminating the overheads of maintaining an in-house team. This can significantly reduce the overall cost structure and allow firms to pass those savings on to clients or reinvest in growth.

Access to Specialized Expertise
Outsourcing gives accounting firms access to a broader talent pool, often including specialists who are experts in particular accounting software, tax regulations, or industry standards.

Scalability
As your client base grows or fluctuates seasonally, outsourcing allows you to adjust your workforce easily without the need to hire or let go of in-house staff. This ensures that you can meet client demands without overextending your internal resources.

Focus on Core Competencies
By outsourcing routine tasks such as data entry, accounting firms can free up their internal teams to focus on high-value tasks such as financial analysis, strategy and client relationship management. This shift not only enhances productivity but also enables firms to deliver greater value to their clients.

The risks

Loss of Control
Handing over responsibility for daily bookkeeping tasks to an external provider involves also relinquishing direct oversight of the processes. This can make it more challenging to ensure that the outsourced firm is adhering to your company’s standards, policies and procedures.

Data Security
If the outsourcing provider doesn’t have robust cybersecurity measures in place, there’s a higher chance of data breaches, unauthorized access or even misuse of your clients’ financial information. Not all outsourcing firms invest in the same level of security infrastructure, and even small vulnerabilities can lead to significant risks, including regulatory penalties, reputational damage and legal liabilities.

To mitigate this risk:

  • Ensure your outsourcing partner has robust data protection policies in place.
  • Review the provider’s data security protocols, including encryption standards, access controls, and employee training.
  • Include explicit confidentiality and data security clauses in your contract, specifying compliance with applicable laws.

Communication Barriers
Time zone differences, language barriers, and cultural misunderstandings can slow down processes or lead to costly mistakes. For instance, questions about unclear transactions or reconciling discrepancies can take longer to resolve due to delayed responses, or worse, may be misunderstood.

Reduced Client Confidence
Clients may be uncomfortable knowing that their financial records are being managed by an external party. Even if the outsourced provider is reputable, the mere perception that sensitive bookkeeping tasks are being handled outside the firm could raise concerns about privacy, accuracy and confidentiality.

Integration Challenges
If the outsourced firm uses different accounting software or workflows, it could create inefficiencies. You might find yourself spending extra time manually reconciling data or adapting your systems to work with theirs. Even when there is software compatibility, the need to constantly import, export or verify data can create bottlenecks, leading to delays or errors.

Hidden Costs
Hidden costs can quickly accumulate, eroding the initial financial benefits. These costs might include the need for additional management oversight, increased time spent reviewing the outsourced work for errors, or the expense of implementing new systems to ensure integration with the outsourced provider.

Contractual and Liability Issues
If the outsourced bookkeeping provider makes an error – such as incorrect financial reporting, late tax filings, or missed payments – the accounting firm may be held liable for the resulting damages, even if the error originated with the outsourced provider.

Additionally, unclear or inadequate contracts can lead to disputes over who is responsible for specific tasks or errors, creating legal ambiguity that could harm both your reputation and your bottom line.

Key contractual elements to include:

  • Clear Scope of Work: Define the exact services the outsourced provider is expected to perform, ensuring there is no ambiguity regarding their responsibilities.
  • Liability Clauses: Specify who is liable for errors, including financial penalties, legal fees or corrective actions that may arise from mistakes made by the provider.
  • Indemnification: Include indemnification provisions that protect your firm from legal claims or lawsuits resulting from the outsourced provider’s actions or omissions.
  • Dispute Resolution: Establish how disputes will be resolved (e.g., arbitration, mediation or litigation) and which jurisdiction’s laws will apply in the event of a legal dispute.

The outsourcing model

Offshore Outsourcing
Offshoring involves outsourcing to countries that are geographically distant, typically in regions like Asia, and can be controversial. One benefit is that labour costs are significantly lower, but this comes with ethical considerations. Offshore outsourcing is an attractive option for firms looking to cut costs drastically. However, it may come with challenges like time zone differences, language barriers and compliance with international regulations.

Nearshore Outsourcing
Nearshore outsourcing involves contracting with service providers in nearby countries, often within the same time zone or region. This model reduces some of the communication challenges associated with offshore outsourcing while still offering cost benefits.

Onshore Outsourcing
Onshore outsourcing involves working with service providers within the same country. While this model tends to be more expensive than offshore or nearshore options, it provides better control, ease of communication and regulatory alignment. It’s a great option for firms handling highly sensitive data or complex regulatory requirements.

Hybrid Outsourcing
A hybrid model combines elements of offshore, nearshore and onshore outsourcing. This approach allows firms to balance cost savings with control and flexibility. For example, a firm might outsource routine bookkeeping tasks offshore while keeping more strategic or compliance-driven activities onshore.

Implementation

Define Clear Objectives and Scope
Before engaging an outsourcing partner, it’s essential to clearly define the objectives of the outsourcing initiative. Determine which tasks will be outsourced, the expected deliverables, and how success will be measured. Clear communication of these expectations to your outsourcing partner will set the foundation for a productive relationship.

Choose the Right Partner
Take the time to vet potential partners by assessing their experience, technical capabilities and client reviews. Look for partners with expertise in accounting and bookkeeping, who use the same software and systems as your firm, and who understand the regulatory environment you operate in.

Communication Channels
Use regular communication routines and platforms, such as weekly status calls or project management tools, to ensure both teams are aligned. This is particularly important in offshore or nearshore arrangements where time zones can complicate real-time collaboration.

Monitor and Measure Performance
Set key performance indicators and metrics to track the effectiveness of the outsourcing relationship. Regular performance reviews will help identify any issues early and ensure that the service provider is meeting your firm’s standards for quality, timeliness and accuracy.

Maintain Data Security and Compliance
Ensure that your outsourcing partner adheres to industry best practices for data protection and that they are compliant with relevant regulations such as GDPR, or any local tax compliance rules. Draft comprehensive contracts that outline data security protocols and confidentiality agreements.

To conclude

Outsourcing offers a range of benefits from cost savings to increased scalability and access to specialized expertise. However, success hinges on choosing the right outsourcing model and implementing it effectively. Loss of control, data security issues and communication barriers are just some of the many challenges that can arise.

For many firms, the key is finding a balance between leveraging outsourcing when appropriate and maintaining enough internal control to ensure high-quality, secure and compliant services.

Our new AAT website logged in pages are live

Posted by & filed under AAT news, Members, Students.

We’ve updated our website to simplify navigation and improve access. Here’s what’s new for you.

The team has been hard at work rebuilding the logged-in areas of our website for all users. The new content went live this week.

Following our updates, your experience should be smoother and more efficient. Expect easier navigation, better access to key resources, and a fresh look. The first thing you’ll notice is that navigation is more streamlined, and the search function is much improved.

We’ve reviewed and improved every page’s content to enhance readability. We’ve also retired and consolidated some pages to reduce unnecessary navigation.

We’ve listened to you, the website’s users, to understand better what you’re looking for. Your needs change as you journey through your experience with AAT, from studying to sitting assessments, from membership to running your own business, and it’s our job to provide content that meets those needs and helps you to quickly understand what you need to do next, and to do it.

Lots of people at AAT have lent their expertise to this, and we’re confident it’s a big improvement. Log in and see what you think, and use the green feedback tab on any page to let us know what you like or you don’t.

Ed Williamson, Web Content Manager

Licensed members

Save time navigating to the resources essential to running your practice. We’ve also upgraded the licensed member toolkit with a new business support section to meet your needs.

Professional Members

We’ve listened to your feedback, making it easier to access key areas such as CPD and career support.

Students

Quickly find everything you need for your studies. That includes exam prep, booking your assessments, CPD opportunities, career support and more.

Training providers

Content and assessment information is more accessible for you and your students. We’ve also made it easier for your students to find assessment support and book assessments.

Log in now