You only have to pick up the financial papers at the moment to see that accountancy firms are going through a period of regulatory pressure, structural change and evolution. Twinned with the challenges of COVID-19 there is a clear disruption to what was business as usual.
Whilst that is a gloomy opening salvo the reality is that the change is an opportunity for all accountants to revisit what they do and how they work with businesses in our region to hit their aspirations.
The regulatory pressure (and subsequent structural change of audit versus non audit services) the bigger accountancy firms are facing is giving rise to significant audit reform, the impact of which is passing down the full length and breadth of the sector.
From a North East perspective the reality is that accountancy services provided to the core business demographic, entrepreneurial SME’s, may well move from the great bastion of the larger accountancy firms to mid tier and independent practices.
This is great for society as the capacity it frees up in the larger firms means that the quality of work provided to the region’s largest enterprises should improve, assisting in the preservation of jobs and pension scheme values by reducing the risk of the next large corporate failure.
But it creates a bigger and more exciting opportunity for independent practices like Armstrong Watson. Our roots are wedded to entrepreneurial and family owned SME’s, where we believe that the year end compliance cycle is not a tick box transaction but in fact the bed rock of a relationship.
Whilst an auditor at heart, the best conversations I have had with clients in the last twelve months have been in conjunction with the audit as opposed to be being a part of the audit, for example; helping a client to implement an EMI scheme so that their team has the right motivation and drive to grow the business.
This is the real challenge for independent firms like Armstrong Watson, demonstrating to North East businesses that we have the strength in depth, band width and expertise to provide continual support and ideas that run alongside the annual compliance process.
The impact of this change is most evident on LinkedIn where senior people seem to be moving accountancy firms on a daily basis at the moment. By our own token, both Jim Meakin and Chris McCourt have joined us in Newcastle to lead our proposition.
But why are firms like Armstrong Watson making that investment?
Well firstly it’s about ensuring firms like ours have the right expertise and talent to service the capacity shift in the audit market - and that includes significant investment in graduates and junior teams - but most importantly, it’s about accountancy firms being self aware and evolving to the changing world we all live in.
In my experience, businesses in the North East no longer want a generalist accountant who they go to with every problem they have from cradle to grave. They invariably want to work with a gate keeper they respect and value who can introduce them to the right skills within their firm, at the right time to help them achieve their ambitions. This has never been more apparent than now, where social media content means most businesses already know what an R&D claim is or which funders may be open to financing their assets.
What businesses do not know is the small print, and the biggest challenge compliance partners in accountancy firms like me face is getting that relationship right so that I am spotting the ideas and opportunities before the business owner does.
The second strand to investment in the sector has been technology. It’s easy to explain the impact of the Cloud and using data and analytics to enhance outputs as an academic piece, but the recent challenges of COVID-19 have demonstrated just how important technology, and the related investment, is to the accountancy profession.
Like any SME, our business’ biggest challenge during the crisis has been maintaining production sufficiently to drive cash flows. Whilst cloud based accountancy products have made the physically booking of transactions easier, it has also allowed us to access our clients’ information in a responsible way i.e. no physical contact as we exchange brown paper bags full of receipts and invoices.
It’s also meant that when our client asks about accessing Business Interruption Loans we have been able to access live information to help them build expectations in their 13 week cash flows for submission to the banks.
But most importantly for businesses in the North East, technology has allowed us to demonstrate that we can operate business as usual in challenging times. This has been essential to our clients as they do not want the annual compliance cycle being a key job when the pandemic risk has passed.
There is change afoot in the accountancy sector. Whilst driven primarily by regulatory change and the impact of government reform, I truly believe that how we interact and deliver for our clients will evolve following COVID-19. Although mahogany board rooms may not be gone for good, the flexibility that has been demonstrated through virtual and remote working I suspect is here to stay.
Regardless of how our work is delivered, one thing remains key; people buy from people. As such, the most successful accountants of the future will be those who truly understand their target market and are able to use that knowledge to drive relationships in a time when there is more contradictory noise than ever before.