Late payments crisis destroys small businesses as Government reviews payment reporting

AAT calls on the Government to change its approach to late payments before more companies go to the wall.

Research published last year by Pay.UK and the Chartered Institute of Credit Management (CICM) indicated that more than half of all small businesses were affected by late payments in 2020 and that they were collectively owed over £17bn. Last month, a Federation of Small Business (FSB) survey suggested that over 400,000 small businesses will collapse in 2022 due to late payment.

Whilst small businesses are being destroyed by the late payment culture at many larger organisations, the Government is reviewing the payment reporting regulations it introduced in 2017.

What are the Payment Practices and Performance Regulations?

The Payment Practices and Performance Regulations require any medium or large company, public, private or quoted, to report their payment practices via a Government portal every six months.

The Government’s objectives for these regulations were to “increase transparency and public scrutiny of large businesses’ payment practices and performance, and to give small business suppliers better information so they can make informed decisions about who to trade with, negotiate fairer terms, and challenge late payments.”

Regulations fail to deliver

The problem of late payments has grown rather than decreased since the introduction of these regulations in 2017. This was already the case prior to the pandemic, and the pandemic has exacerbated the problem.

The objective of transparency is greatly undermined by the fact many companies are purposefully avoiding reporting their payment performance.

In addition, the Department for Business, Energy & Industrial Strategy (BEIS) does not publish any statistics as to how many of the UK’s five million-plus SMEs access the portal for information. Given the reluctance to make such information publicly available, combined with anecdotal evidence from AAT members, it is reasonable to assume the intended audience is rarely accessing that information.

The payment reporting regulations make no real difference because, while there is an obligation to report, there is no obligation to address any poor payment practices. A quick check of the BEIS pay reporting database reveals that numerous companies continue to pay the vast majority of their suppliers outside agreed payment terms. With several such as Randstad Middle East Ltd and KCA Technical Support Ltd staggeringly failing to pay 100% of their invoices within agreed timescales over a six-month period – both pre-pandemic examples so immune to suggestions that the pandemic was to blame.

Expecting a transformation of payment culture simply from imposing reporting requirements, without any form of sanction or consequence is wholly unrealistic.

Reputational risk?

The Government has grossly overestimated big business concerns about reputational damage from reporting bad payment practices in the same way that most of the very largest businesses in the UK have virtually zero concern over reputational damage from exorbitant executive pay.

Self-interest and shareholder interests trump any short-lived media focus on a company’s payment practices, as was amply demonstrated by the performance of several FTSE 100 companies during the pandemic.

For big business, delaying payment to suppliers can bring considerable financial benefits from a cash flow perspective. This, combined with a lack of consequences, means it is no surprise that reporting information to an obscure government database, rarely used by suppliers and only occasionally referenced in the media, has not delivered the slightest change in payment practices – let alone the culture change required of UK businesses.

AAT’s stance on late payment

For many years AAT has campaigned against the UK’s serious late payment culture. We’ve argued for three key recommendations:

  1. AAT has campaigned for the maximum payment terms under the Prompt Payment Code to be reduced from 60 to 30 days. This ultimately proved successful with this change coming into effect last year.
  2. AAT, along with various organisations, has repeatedly pushed for the Small Business Commissioner to have the power to impose financial penalties on serial late payers. This is now belatedly being addressed.
  3. Lastly, AAT has always stated that Government should legislate to ensure all companies have to pay 95% of their invoices within 30 days of receipt.

AAT’s response

The law obliges the Government to assess the effectiveness of the Payment Practices & Performance Regulations after five years. This assessment is now due. They must produce a report by 6 April 2022.

In 2018, AAT was highly critical of the Payment Practices and Performance Regulations in its submission to Government on the culture of late payment in the UK. Nothing has subsequently happened to prompt a change of view. In fact, there is now an evidence base to reinforce AAT’s concerns about the inadequate nature of these payment reporting obligations.

So, AAT has again strongly recommended that the Government legislate for all companies to pay 95% of their suppliers within 30 days.

This would remove bureaucratic reporting requirements, such as those imposed by the 2017 regulations, or the need for disclosures on payment practices being made within company annual reports, and all the other burdensome tweaks made over the past decade that have failed to make any real difference to the problem.

There is widespread support for such a move from the business community and even from policymakers – a YouGov poll commissioned by AAT showed that 73% of MPs back the idea of a 30-day maximum payment term.

French disconnection

Civil servants frequently use the example of France as an argument against legislating for maximum payment terms. This is a red herring. The main weakness here is not the existence of a maximum payment term but the fact payment terms are too long and too complex – a maximum of 45 days for periodic invoices, 60 days for construction industry invoices, 90 days for those exporting outside the EU (and other variations).

A single maximum is required to avoid confusion and unnecessary complexity and one that is not too long is essential to guarantee success.

30 days would meet this criterion and 30 days is what AAT will continue to campaign for.

AAT CEO calls for Government to fix the Help to Grow: Management scheme

AAT CEO Sarah Beale is calling on the Government to make prompt changes to its Help to Grow: Management scheme to help boost uptake from small and medium-sized businesses (SMEs) across the UK.

Up until 31 October 2021, only 810 people had signed up to the 30,000 places available in the programme.

In a letter to Paul Scully MP, the Minister for Small Business, Consumers and Labour Markets, she has called for changes to the eligibility criteria to increase applications and uptake.

The recommendations include:

  • Allowing more than one person per company to participate, which would help more staff to gain additional management skills and understanding
  • Making employees of the 3,000 small businesses which participated in the Small Business Leadership Programme eligible for Help to Grow, which they are currently prohibited from joining
  • Reducing the minimum number of employees required for an SME to take part in Help to Grow from five to one, retaining the existing safeguard that participating employees should be employed in a line management role
  • Permitting charities to participate, helping to increase take-up as well as boosting the economic performance of the charity sector which is predominantly made up of small and medium-sized entities.

AAT believes restrictive eligibility criteria as the key factor holding the scheme back.

Beale comments:

“We would very much like to see this scheme succeed… However, without prompt government intervention, the scheme may prove to be another missed opportunity and frankly underdeliver, despite good intentions and ambition.

“AAT members provide tax and accountancy services to over half a million UK SMEs, so we know how important it is to help support skills growth in the sector.

“AAT is committed to working with the Government to give the Help to Grow: Management scheme every chance of success and we’ll continue to signpost our members and stakeholders to the scheme in the meantime.”

Making accountancy digital: the technology clients and employees are expecting as standard

Finance professionals are detail-orientated and risk-averse. They are extremely thorough in their work and are analytical. This is what makes them good at business.

But this sometimes overly cautious attitude is a contributing factor that has seen the accounting industry be overall slower to adopt new technology.

This technology will reduce costs and make their work more accurate, efficient and the business more desirable to clients and talent. It’s essential that all accountancy firms now have a digital plan to adopt and adapt to new systems, or they will be left behind.

Digital Decoded: 24 February – 31 March 2022

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What do clients and employees expect?

A new client or employee won’t want to move to an organisation with less advanced processes than what they are used to working with. Expectations these days will be that businesses:

  • Continually look to learn and develop their systems, are adaptable and have a forward-thinking mindset.
  • Will work remotely with employees and clients with appropriate communication systems in place, allowing everyone to stay connected.
  • Have intuitive tools in place so that work can be done efficiently and automation is put in place where possible to free up time for higher-level work.
  • Have synchronicity between the tools and systems used, aligning with the business’ goals.
  • Have systems in place that reduce risk as much as possible – ensuring the security of the business and the protection of data.

What technology needs to be in place?

People expect to have the ability to communicate, visibility on data and the ability to deal with their money all in an instant, and the technology is available to be able to do all of these things conveniently.

Online banking

The primary and latest features that online banking offers:

  • Up-to-date account activity
  • Search functionality for transactions
  • Instant payments and money transfers
  • Monthly spending is split by category for easy visibility of different types of costs
  • Different pots to arrange your money into to help reach savings goals or keep money separate for things like tax bills
  • Greater security with account and fraud alerts with the ability to instantly freeze your card from your phone 
  • Access with face or touch ID
  • 24-hour access to customer service
  • Online statements
  • Mobile cheque deposit – the ability to pay in a cheque just using your phone

Communication platforms

An accountancy business should be looking to have communication tools that allow:

  • Private and group messaging and instant chat
  • Collaborative project and task management
  • A client relationship management system
  • Video calling and meetings
  • Access to online learning and internal updates, blogs and videos
  • Marketing and social media management tools   

Accounting software

Features that you should be looking for in your accountancy software:

  • A user-friendly system with good customer support
  • Integrated billing, invoicing and inventory management
  • The ability to identify and prevent errors with functionality like automatic calculation
  • Easy connectivity between all users
  • Excellent levels of and reputation for security
  • Compatible with sending digital tax returns for Making Tax Digital

Making Tax Digital

Compatible accounting software is crucial to send digital tax returns for Making Tax Digital. Your digital records don’t all have to be held on one piece of software, but there must be links in place. HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is:

  • more effective
  • more efficient
  • easier for taxpayers to get their taxes right

VAT-registered businesses with a taxable turnover below £85,000 will be required to follow the Making Tax digital rules for their first return starting on or after April 2022. Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for Making Tax Digital for Income Tax from 6 April 2024.

Digital Decoded: 24 February – 31 March 2022

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Further reading

Civil service strengthens its talent pipeline through apprenticeships

Apprenticeships are making inroads in Whitehall as they create an impact in the Department for Digital, Culture, Media & Sport (DCMS).

The average person might be 50 times more likely to be struck by lightning than win the National Lottery, but somewhere within the corridors of Whitehall, one young charge believes he’s already hit the jackpot.

As part of his apprenticeship at the Department for Digital, Culture, Media & Sport (DCMS), Piranavan Kaneshamoorthy works on the National Lottery Distribution Fund, reporting on ticket sales income and ensuring payments are made to good causes. It’s a stimulating job that sees the 24-year-old get a real buzz every time he walks into the grand London building.

A decade or so ago, apprentices were a rarity in the civil service. Back then, the institution had a reputation for being somewhat stuffy, with incoming talent most likely to be Oxbridge-educated graduates.

However, since the civil service launched its fast-track apprenticeship scheme in 2013, it’s earned a reputation as being one of the UK’s most progressive employers – three years ago it took on its first intake of apprentice economists. Over 29,000 apprentices have been recruited across the civil service since the scheme started.

Employing youngsters from all walks of life can be a game-changer for boosting the diversity of an organisation, providing a broader range of opinions that can help prevent groupthink. “By boosting the diversity of the team, apprentices really do bring a fresh approach,” says Mark Mawtus, a financial accountant working at DCMS.

There are currently three finance apprentices working at DCMS, with Mark noting that “apprentices are usually taken on as full-time staff”. It chimes with his view that “apprentices build capability in the team and department – they’re a great long-term investment.”

In the short term, however, apprentices can provide benefits for an organisation, not least by employing their tech knowledge in the workplace.

“The pandemic has accelerated a move from paper (or part paper) processes to fully digital ones and accordingly we’ve looked at how we can make our processes more efficient,” says Mark. “Piranavan is an expert with many of the Google apps (Sheets, Docs and Forms) and has taken the lead in designing forms that those responsible for the information can complete, in order to efficiently update our accounting records. He also ensures the quality of the information provided, and the maintenance of controls over the quality of the information provided…”

Apprentices are required to spend 20% of their time in off-the-job training. This is usually conducted a via a training provider, where they are exposed to the latest industry trends and knowledge. When they deploy these freshly-learned skills in the office, the benefits are immediate. Shortly after studying a module in accruals at training providers Babington, Piranavan returned to DCMS and subsequently designed a DCMS journal for accruals.

It’s just one of many ways that Piranavan has impressed colleagues since he joined the department in October 2019. In particular, Mark is awed by Piranavan’s “ability to successfully study for exams with holding down a different job at the same time.”

Piranavan joined DCMS after a frustrating experience studying maths at university, where he felt unable to apply the knowledge he was picking up in books to real-life scenarios. “The course was focused on ethics and theory, but I wasn’t exercising this outside the classroom,” he remembers. Working at DCMS is completely different. “From my very first day, I’ve constantly been learning, but also getting to practice what I’m studying,” says Piranavan.

He’s also part of a steering group for the civil service’s apprenticeship network, a role that sees him plan events plus give guidance to new apprentices.

His eagerness to get involved also highlights the commitment many apprentices apply to their roles. “Once they start a job, apprentices are keen to be seen to be able to finish it, and that is best done by finishing the full period of their apprenticeship,” says Mark.

This loyalty is also underscored by Piranavan’s wish to stay with DCMS once his apprenticeship finishes in spring 2023: he has plans to become a senior financial accountant and manage others.

Mark has no doubt Piranavan can achieve this. “In five years’ time, I’d expect Piranavan to be managing a team of some size, depending upon how well he does with the department or whether we have managed to keep him.”

Mark’s advice to fellow bosses is simple: “Definitely consider apprenticeships. The day-to-day benefits are clear, and if you get the right balance, the apprentices will stay at your organisation long after they finish the scheme.”

How to get your CV noticed

The UK job market is thriving but the number of candidates often significantly outweighs the number of job roles.

So how can you make sure your CV stands out and doesn’t end up on the rejection pile?

Make it relevant

Greg Statham, managing consultant at Macildowie, recruitment consultancy, says many people’s CVs are just an updated version of something they wrote when they were 16. “The last two roles that you have had are most likely to define the type of role that you secure next,” he notes. “The achievements should be tangible. Did you help to increase revenue? Did you have an impact on margin and what was the percentage improvement? Did you drive a reduction in costs? Make these specific, clear and overt.”

Make it on point

Statham says: “It’s also crucial to think about the order of your main points. The most complex and senior elements of your job should be at the top. Don’t just have a brain dump of the things you do most regularly. Your audience needs to identify your seniority in a post straight away.

Don’t use generic terms

“Something along the lines of, ‘I’m an AAT qualified accountant with a track record of delivering management accounts, financial reporting and reducing costs’, sounds much more impactful than “I am a nice, intelligent individual that works well on my own or as part of a team,” says Statham.

Think about using the right ‘buzzwords’

Mark Walker, finance director at Integris, says you have Mark to use the right buzzwords to ensure that your CV is picked up in word searches. “Do not use corporate jargon that is specific to a previous company you have worked for,” he notes. “If you are responding to an advertisement and it uses specific terms, tailor your CV and use those terms.

Do not presume that the technology, or the recruiter, will know that there could be multiple terms for the same thing e.g. “accounts payable” is the same as “purchase ledger.”

Do it yourself

Walker advises not to spend hundreds of pounds on people who offer ‘professional CV writing services.’ “It’s just is not worth it,” he says. “Most of it is common-sense and a good recruitment consultant will always be happy to offer help and advice for free.

If you spoke to a hundred different people, you will get a hundred different pieces of advice on CV writing, so do not get too caught up with hard and fast rules.”

Keep it clear and concise

Tracey Hudson, managing director of The HR Dept, says photos and listing hobbies are a big no. “We don’t want to have to read through lots of irrelevant information and your new manager isn’t going to choose you because you are a great snowboarder or love gardening,” she says.

“Don’t waste valuable space on your CV by adding in references either. We will ask you when we need that information.”

Tailor your CV to the job advert

“A job advert will usually include a list of duties or responsibilities and requirements of the successful candidate. Read these and ensure that your CV highlights these points,” Hudson advises.

“This makes it easy for the recruiting manager to see that you have relevant experience and qualifications and add you to the shortlist. Realistically, when you have hundreds of CV’s on your desk, you spend under a minute glancing at each one so if it is too hard to work out if your experience or qualifications match what we are looking for then you will be put on the rejection pile.”

Explain anomalies

“Did you leave school or college at 18 and go travelling on a gap year? Are you a mum who had a couple of years out of work raising your children? Were you really naughty and spent some time in prison? Whatever the reason is, explain the gap in employment,” advises Hudson.

“Consider and highlight the skills that you have developed during those periods. Just because it wasn’t paid work doesn’t mean it isn’t valuable experience to a new employer.”

4 tips for accountants helping small businesses with MTD for VAT

*this content is brought to you by Xero

Accountants play a greater role than ever in ensuring the wellbeing of small businesses. In fact, recent Xero research found that almost half (45%) of small businesses believe their advisor is more important to them than ever.

At a time in which the trading environment is extremely harsh it’s no surprise that SMEs have turned to their advisors to help tackle issues like cash flow uncertainty and stimulus packages. And as we look to the future, there are new government-mandated regulations looming for small businesses as the pandemic-driven restrictions loosen.

That’s right  – we’re talking about Making Tax Digital (MTD). The next wave of MTD requires business owners who charge VAT with a taxable turnover under £85k to comply from April 2022. Letters from HMRC will have hit affected SME doormats (or will do so soon), informing them of this next phase.

Now, hundreds of thousands of these businesses will need to maintain their financial records digitally and file VAT returns through approved software. This is easier said than done for many small business owners, who may struggle with the demands of digital technology.

Accountants will be well aware of the importance of not only guiding their small business clients towards compliance, but in communicating that MTD, and the push towards digitalisation, isn’t something to fear. In fact, MTD can give small businesses the opportunity to accelerate innovation and drive efficiencies through the adoption of digital tools.

For advisors looking to ease this journey for their SME clients, here are four tips.

HMRC services have changed

With MTD, the online portal through which accountants list the clients they want to submit tax information for is changing. Now, HMRC has introduced the Agent Services Account, which is intended to house all relevant tax administration in one place.

Without signing up for this account, accountants will be unable to register their MTD clients and work on their behalf. The only potential issue for accountants during this migration, however, is in ensuring their anti-money laundering (AML) checks are up to date, because advisors that set up an agent services account for MTD for VAT now must confirm they have AML supervision.

Whether an established accountant or someone doing a friend a favour by submitting their tax return (don’t we all need friends like this?), everyone handling tax for a third party will have to abide by this new rule.

With this in mind, accountants should absolutely confirm they are fully paid up, whether that’s fees to their AML supervisory body or directly to HMRC.

Communicating client deadlines

While some small businesses may have a firm grasp on the key dates and deadlines of MTD, it’s probably safer to assume they’ll be relying on their advisor to offer those vital reminders. While accountants will always offer themselves as the first line of response to any pressing questions, HMRC’s MTD for VAT page and Xero’s own SME resource page also contain a host of useful insights.

In order to avoid becoming an MTD for VAT alarm clock, advisors can encourage clients to diarise the key dates, avoiding a late push to ensure VAT returns are delivered digitally on time. HMRC’s free VAT payment deadline calculator can also help ease this process. Finally, it’s worth communicating that availability to provide support in the lead up to the deadline may be diminished, with a large number of clients requiring help during this period of change.

Don’t rush in

Registering for VAT arguably hasn’t been as easy as it could be, and this is still very much the case. Accountants registering their clients for MTD for VAT will find that businesses are now required to verify a number of links via email. Not hugely taxing (ho ho), but it does add another step in an already convoluted process.

It’s also vital for accountants to copy existing clients for MTD for VAT across from the traditional online portal to the Agent Services Account. This can only be done once they have completed their obligations with non-MTD VAT – submitting their non-MTD VAT returns, and paying any liability.

With this in mind, it’s imperative that advisors take the time to establish who is handling the registration process, as well as who has access to the account, and then transfer clients across before they begin their MTD for VAT journey.

Help clients see the upside of digitalisation

It should be no surprise that many small businesses will view MTD for VAT as yet another obstacle to overcome. But it should not be seen as a necessary evil – but a means of making their businesses more efficient through digital tools.

Accountants and other advisors can help SMEs overcome their trepidation and understand the potential of digitalisation. For businesses that weren’t considering digital adoption in the near future, this might give them a push to put the right processes in place and see real enhancements.

A good first step is in advising small business clients on the MTD technology options available to them. While businesses can turn to spreadsheets to calculate or summarise VAT transactions, there is the HMRC-approved list of software they’ll need to adopt to actually submit information to HMRC (unless they have a legal exemption, that is).

While the level of choice may seem overwhelming at first, helping clients cut through the slew of options to find the right one for them can be an important form of support.

With 2022 now very much underway and MTD for VAT looming large, small businesses may feel the pressure of compliance. But with strong guidance from their accountants, this can become less of a hurdle, and more of an opportunity for future growth.

If you’re not yet a Xero partner, visit our Xero Partner Programme page where you can find out more about becoming a partner. Make MTD for VAT a breeze with Xero, get ready with free resources and webinars and gaining access to resources for your practice.

*this content is brought to you by Xero

Access unbeatable quality with 10% off through AAT skills training with The Skills Network

*this content is brought to you by The Skills Network

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*this content is brought to you by The Skills Network

5 types of digital tools accountants need to understand now

In many ways, the pandemic massively accelerated changes that were already occurring in terms of technological advancements in the workplace.

Digital tools and skills in accountancy were already necessary, but now they are critical to meet client expectations, stay competitive and be able to make contributions to the industry and broader community.

It’s about attitude as well as practical skills

When we talk about levelling up your digital knowledge, the advantage comes not only from the new things you will now know how to do but also because you are committing to adopting a mindset of continuous learning. You are taking on challenges, being adaptable and competitive in order to help future-proof yourself and your business.

Digital Decoded: 24 February – 31 March 2022

Join us for this six-part webinar series to get the practical understanding you need right now to start capitalising on the digital revolution in your day to day work – whether you’re working in a finance team or running your own business.

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5 tips for learning new digital tools

1.Everyone finds learning new things hard

You’re not too old or not “techy” enough to learn new things. Everyone finds different aspects tough to pick up, so work out how you learn best and commit to it.

2. Don’t wait for the next thing

Don’t think that you’ll wait for the next thing to come along to learn. Pick up something now as it will make learning the next thing easier.

3. Set time aside

Prioritise time for learning as you would your other work. Do it in small, manageable chunks.

4. Use it or lose it

The best way to get to grips with technology is to use it. To not expect to know how to do everything with it instantly, to work through those frustrations, try to enjoy the process and feel proud of yourself for adding to your personal knowledge bank.

5. YouTube and Google are your friends

Often the secret to knowing how to do something is Googling it or watching a YouTube video. They are brilliant ways to learn. You know that person in the office who knows how to do everything? I bet they get a lot of help from Google.

5 types of digital tools accountants need to understand now

1. Accounting software

It goes without saying that using accounting software is almost non-negotiable these days. It speeds up processes, simplifies taxes, reduces the margin for error (and therefore offers protection for you in audits) and allows for a clear picture of the understanding of what’s happened in the business historically and for forecasting.

2. Automation tools

Understanding the different tasks that can be automated and putting them in place creates higher levels of efficiency and accuracy, reduces costs and will free more of your time up to focus on work that calls for critical thinking or creative flow. Examples of things that could be automated could be email responses, generating reports, scheduling appointments, client reminders and data back-up. 

3. Communication platforms

People like to communicate in lots of different ways these days. Of course, it’s up to you if you let your clients Whatsapp you or jump on a quick Zoom call but understanding the different tools for communicating with customers, colleagues, and peers is vital.

Whether that be an email service provider for your marketing newsletter, joining an industry-focused community in a Slack group or Zoom for meetings, webinars and workshops.

4. Social media networks

You might not quite be making your own videos for TikTok yet, but figuring out what the main channels are, how people use them and why they are popular can help you keep your finger on the pulse and to spot trends. If you are using social media for your business, best to focus on one channel your target audience uses. Master the etiquette, updates, how to create good content, and grow your audience on that network rather than spreading yourself too thin. 

5. Website analytics

As a finance professional, you will be used to performing analysis and asking questions of financial data, so it makes sense to apply those skills to other areas of the business, like looking at website analytics. Look for patterns and trends in website traffic and sales, which you can use to make business decisions to boost profit or increase revenue streams.

Digital Decoded: 24 February – 31 March 2022

Join us for this six-part webinar series to get the practical understanding you need right now to start capitalising on the digital revolution in your day to day work – whether you’re working in a finance team or running your own business.

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Further reading

Apprentices are our future leaders, says top 10 firm Azets

Danielle Walmsley Azets talks about how apprenticeships have boosted business – and her own career.

Everybody knows the role of an apprentice involves learning – but not everyone expects apprentices to be making an impact by solving pressing business problems, bringing colour to company culture or ascending to lofty roles.

But in the Coventry office of accountancy firm Azets, Partner Danielle Walmsley regularly sees apprentices developing innovative solutions for problems encountered by senior colleagues and generally making an impact.

“We definitely see our apprentices as future leaders,” says Danielle. “Any growing business needs to be investing in this.”

Azets currently has a network of over 160 offices in the UK and internationally. Having become a top ten accountancy firm just 18 months ago, the firm views apprentices as playing an significant role in its expansion plans, employing over 400 apprentices nationwide. In an industry where recent research has shown nearly three-quarters (74%) of accounting firms are suffering because of a lack of skilled workers, apprentices can be a long-term strategic investment.  

“I started as an apprentice. Now I’m a partner managing them and constantly seeing the benefit they bring.”

One area they are making their presence felt is in technology.

“As we adapt to new software, occasionally some of the apprentices ask, ‘Why are you doing that when you could be using this [system/app/hack], which could save you hours of time?” says Danielle.

It’s a big boon for Azets, especially as the company and its clients – just like many other businesses during the pandemic – are in the process of speeding up their digital transformations.

“This new generation are like a sponge when it comes to new technology: you can just give them a new system, and they’ll get their head around it instantly,” says Danielle. “As accountancy goes digital, and we teach our clients to do the same, the skillsets these apprentices have right now will be invaluable. Also, because apprentices are immersed in the nuts and bolts of the company from the very outset of their careers, they develop an innate understanding of how that firm works.

“When apprentices combine their on-the-job training with a hard work ethic and professionalism, you’ll often find that they progress much quicker than graduates,” says Danielle. “Putting accounting knowledge into practise within a working environment often yields great results when you’ve learned it from day one, hands-on within the company itself.”

Danielle believes Azets’ young apprentices benefit the firm in other ways too.

“Our company culture is thriving because of our apprentices,” she says. “They bring a breath of fresh air, helping to create a team environment by making people more upbeat and happier, having a laugh and a joke. They’re also really proactive about socialising, getting involved with team-building, volunteering and social committees.”

Danielle knows all too well about the advantages of accounting apprentices: she was previously one herself. In 2008, Danielle gingerly stepped into Azets’ Coventry office as a 16-year-old apprentice, having already decided not to study A-Levels.

“It was a shock; I’d gone from pocket money to earning a £7,500 salary,” she remembers. Within two years, Danielle had moved from living with mum and dad, to buying her own home. Career-wise, her progression was just as rapid.  

“As Azets grew, I grew with it, going from an office junior making cups of tea to being a partner of a large office, managing my own client bank and bringing in new apprentices,” she says. Part of Danielle’s wide-ranging remit today includes managing several of the Coventry office’s 25 apprentices (the office takes on three to four apprentices every year).

The new apprentices at Azets are typically school-leavers, starting at AAT Level 2 and reaching Level 4 after 18 months. During this time, they’ll get exposure to Azets’ clients, plus learn about tax returns, VAT and corporate tax. After that, they can progress to Level 7 through ACA. However, the primary goal for Azets, just like many other firms offering apprenticeships, is for the apprentices to join the firm as accountants one day.

“Our intention is for the apprentices to be our employees; they’re not just there for the term of their apprenticeship, and that’s it. One-third of our roles are filled with internal promotions,” says Danielle, who notes most of the trainees remain with the firm.

Helping apprentices realise their full potential may require some inspirational management. Having role models within the firm who they aspire to be like – is invaluable. says Danielle.

“We provide apprentices with regular support by offering constant feedback and refreshing their continuing professional development (CPD).”

This feedback process can help nudge them towards success. “Sometimes apprentices don’t see their progression because they’re just doing their job,” says Danielle. “It’s only when you sit apprentices down and say, ‘Last month when you started this job, you couldn’t do this task but now you’re helping others on it’, that it makes sense and they get a confidence boost.”

“Because we view our apprentices as future leaders, I want to be involved with them on a day-to-day basis and ensure they’re on the right path,” says Danielle. “It’s worth it: if you invest the time, they’ll support you for as long as their career continues.”

Further information

AAT

For help and assistance in setting up an apprenticeship go to our apprenticeship pages.

Azets

For more information about trainee routes in audit, tax, forensics or corporate finance, as well as current opportunities, visit the careers section.

How finance apprentices helped the NHS in its hour of need

Apprentices proved how they can have an immediate impact as an NHS finance team faced its greatest challenge

Spring 2020: the first few weeks of the pandemic saw the NHS flung into the biggest crisis of its six-decade history. As medics risked their lives protecting patients in the face of this new mysterious menace, the finance teams supporting these healthcare heroes also underwent unprecedented challenges to their jobs. Suddenly, they were thrown into military-style operations: totting up supplies (or lack thereof) of much-needed PPE, calculating the costs of shutting services for safety issues, dealing with payroll changes – all following a long-lasting public sector funding squeeze.

This was a time when apprentices came to the fore demonstrating beyond doubt the value they can add to organisations while still studying for their qualification.

How to build a great career with an AAT apprenticeship

Have you considered an apprenticeship as a route to gaining your qualification and getting the skills needed to progress your career? Do you have unanswered questions about how they work, who they are for and what roles that can lead to? Look no further, hear from us, along with Network Rail and Whyfield Accounting Services, to find out the answer to these and many more questions.

Watch now

“It was hell,” recalls Sue Lyddon, finance workforce manager, University Hospitals Birmingham (UHB), NHS Foundation Trust. “We were relocating staff to work on the frontline, working incredibly long hours and dealing with worries about staff welfare – all at a time when we were delivering year-end accounts and bringing two different hospitals together.”

In her team at UHB, Sue employs 35 apprentices, taking on 8-12 new apprentices a year, employing “nearly all of them,” she notes.

Yet, Sue was impressed with the practical impact they had. “They were really important [to our operations],” says Sue. “The pandemic left many finance departments short-staffed; meaning we had to temporarily relocate apprentices. But they were great: they rocked up every day, ready to take on the challenges and get involved… There were some real stars to come out of this period.”

One such star is 20-year-old Harry Wright. The 20-year-old joined UHB as an AAT Level 3 apprentice in September 2019 shortly after finishing his A-levels at a nearby Solihull sixth-form. He’s since had two promotions and currently works as a senior financial management assistant. It’s a role that sees him carry out tasks above that of an average accounting apprentice: a typical day may see Harry visiting a trauma or orthopaedic ward, or meeting ward managers and matrons to discuss where their departments could slash costs.

“Working in management accounts involves identifying savings; I get to meet budget-holders to discuss ideas for savings, which helps reinvest money in other areas of the business,” says Harry (who was temporarily drafted to work in the payroll team in March 2020). “It’s tasks like this where junior apprentices can have a real impact.”

Sue has no qualms about Harry meeting senior stakeholders. “Harry is my PR star,” she enthuses. “He’s incredibly good at public speaking. I can put him in front of an audience and he’s very confident. Harry has represented the team at a recruitment fair and given a speech to my new cohort of apprentices.” The young apprentice has developed such an aptitude for accounting that Sue says she has “no hesitation in picking up the phone and saying, ‘Harry, what do you think about this?’”

Apprentices can make particularly effective sounding-boards when it comes to recruitment, says Sue: “The apprentices are great at bringing in new ideas; I’ll often ask them for their input and honest opinion if I’m looking to bring in somebody new.”

Sue views apprentices as playing an integral role in building a management pipeline within her team. “We’ve had senior accountants who have suddenly become managers and couldn’t do it,” says Sue. “But if you get junior apprentices to look after any new cohorts coming in, it’s a clear pathway and the chance for them to gain some great all-round skills.”

Indeed, Harry – who currently acts as a ‘buddy’ to younger apprentices – has set his sights on a management role. “Management is definitely something I’m aspiring towards,” he says. “There are a couple of managers here not much older than me. After I’ve studied ACA and my apprenticeship has finished, I’d like to work my way higher up the organisation.”

In 2017 the government started asking large public bodies employing more than 250 employees to ensure that 2.3% of its staff are apprentices. This has helped reshape recruitment in the NHS, armed forces, and civil service.

But Sue’s team started even earlier. Her department began taking on apprentices in 2014, a time when it was struggling to recruit local talent. “We realised that finance wasn’t attracting the local community,” she remembers. “We’ve got lots of competition in the area: Jaguar Land Rover, plus all the businesses in Birmingham. However, when we went live with the first apprenticeship, we were inundated with applications…”

How to build a great career with an AAT apprenticeship

Have you considered an apprenticeship as a route to gaining your qualification and getting the skills needed to progress your career? Do you have unanswered questions about how they work, who they are for and what roles that can lead to? Look no further, hear from us, along with Network Rail and Whyfield Accounting Services, to find out the answer to these and many more questions.

Watch now

There are other benefits of filling an office with apprentices. “It’s injected new life into the organisation,” says Sue. “We’re a very young team now, which helps all of us look at things differently.”

She also refutes the belief – held by some business-leaders – that it could take many years for an apprentice’s impact to be felt within the organisation. “You’ll see the benefits within the first few weeks,” says Sue. “When you’ve got an apprentice who’s really switched on, it makes such a difference. Starting an apprenticeship isn’t straightforward, but once it’s up-and-running, it runs itself. The benefits we’ve gained from investing into our apprentices has been returned tenfold.”

The success of the apprenticeship scheme in her department means that Sue is looking at expanding it, perhaps creating a two-tier approach, incorporating both school-leavers and graduates.

If any bosses are undecided about whether to recruit apprentices, Sue advises, “I would speak to somebody in another organisation. If you try to go it alone and wade through the paperwork, you’d never get anywhere…”

In the meantime, Harry is understandably proud that his job is helping to make a difference.

“I know we’re not patient-saving heroes [in finance] but we’re all part of the same machine. When you work at the NHS, everybody knows who they are. It’s a real privilege to work for them.”