The pandemic has forced many businesses, and their accountants, to consider how to run their businesses more effectively. A dramatic drop in revenues, alongside the need to be agile based on the changing needs of the economy, has created an extra urgency related to automation and gaining insights from real-time data to aid better decision making, alongside much-needed visibility on cash flow
The pandemic has the potential to create an unprecedented economic disaster, like no other experienced in modern history. Now is the time for accountants to critically rethink how they support SME clients, with a suite of services, powered by technology, to help them navigate whatever the economy can throw at them.
Here we outline the five strategies we believe accountants will enhance client services in 2021 and post-pandemic Britain.
Working capital management
Accounting firms should work with their clients to help optimise their working capital to ensure that their cash position is not put under unnecessary strain. This will enable businesses to utilise their cash efficiently and reduce the need to access finance for everyday trading.
This can be delivered through a combination of client conversations and technology. Longer credit terms should be sought for key business partners who have a vested interest in the growth and sustainability of clients.
Using faster payments technology to make payments will ensure that a real-time view of finances is available on-demand, alongside reducing the need to make payments earlier than they need to be transacted. By only releasing funds up until the point they are needed, this makes the process more agile and gives a better view of what cash a business has and when in a given period without accounting for funds-in-limbo, as has traditionally been the case with Bacs.
Offer quarterly financial health checks
The integrity of businesses’ financial data should be checked every three months, in line with their VAT return submissions for MTD.
Finances should be reviewed at the bookkeeping and transactional levels so that invoices and journals have been assigned to the correct ledger code, alongside payments reconciled to the appropriate invoices.
Utilising fintech software which enhances bank reconciliations, so that payments are automatically matched to the correct invoice will increase the accuracy of data and reduce the time accountants need to spend on this service. An additional benefit of this exercise is that the integrity of the data will make it easier to provide higher-value advisory services.
Roll out cash flow forecasting across your client base
With the pandemic putting the finances of SMEs under strain like never before, cash flow forecasting is now an essential service to offer clients, as opposed a nice to have. There are many cloud cash flow forecasting providers on the market which connect directly to cloud accounting software to make this process automated, without the need to manipulate data on Excel.
2021 will see accountants adopting an end-to-end real-time process, for a truly responsive, accurate and visible service. That’s to say, even with cloud capability improving accountant data hygiene no end, it is only half effective if the real-time process finishes at the payment, rather than end-to-end in post payment reporting.
The accuracy of cash flow forecasting services can be improved by using Faster Payments technology which will reflect transactions as debiting bank accounts within around 90 seconds of being paid. This means that banking data in cloud accounting software will be fully up to date, without any pending transactions. The main benefit of this is that the cash position on which forecasts are based will be accurate and complete.
Additionally, unlike Bacs, this allows for interest-bearing cash to stay in businesses for an additional three days.
Provide payments as a service
Providing payments as a service can be a powerful and lucrative extension to bookkeeping.
Historically, managing payments on behalf of clients was a minefield due to being time consuming, carrying a risk of creating costly errors which are damaging to client relationships, and its competitive pricing making it not worthwhile to carry out when weighing up the time spent on it versus the cost of doing the work.
However, new tools and technology mean that this can now be delivered through automation, as a compliant and secure service. For the first time accountants are able to provide this service profitably and at a more competitive rate to their client base.
Payments as a service frees up clients to spend more of their time on the key competencies associated with their businesses, which is particularly relevant now given the pandemic.
As an added incentive, clients are now actively looking for this service, with a recent study in AccountingToday revealing that a third of small businesses expect their accountants to provide payments as a service, and in particular payroll. If clients aren’t asking about this service now, they are likely to be in the future so firms should be mindful of not innovating their service lines and falling behind.
Access to finance consultancy
Many businesses will need to access finance to survive and adapt to the new normal. This may require investment into new technology, purchase of equipment or the need to expand to new markets. As accountants are commonly cited as the most trusted business adviser, this creates an opportunity for firm to provide and package consultancy services related to accessing finance.
By outsourcing manual and time consuming administrative tasks to accounting technology providers, accountants will have more time to explore offering unique-to-practice services, including advisory.
Providing access to finance will help businesses meet their growth ambitions, and is a cornerstone advisory service of accounting firms due to providing follow on service opportunities such as virtual FD.
Accountants can work with service providers directly or with brokers, the latter of which will be able to offer a more comprehensive view of the market.
Applying for finance requires up to date finance data including bank statements, Companies House filings and accounting software outputs. Accountants can speed up this process by using software which automates reconciliations on accounting software.
As we move towards 2021 accounting firms who are able to fully utilise advances in technology to generate real-time insights and follow on advisory services will be those most likely to retain their clients as well as help them best prepare themselves for whatever comes next.
The forced work from home setup which applied from the start of lockdown showed how ill prepared accountants were who had not yet adopted working from the cloud as default. Those who seek to adopt a secure and seamless offering to clients should fully adapt their services to the cloud if they have not yet done so.
The checklist of services which should be offered to help sustain clients and power their growth (working capital management, quarterly financial health checks, cash flow forecasting, payments as a service and access to finance), are unable to be delivered to their fullest capabilities without a continuous improvement mindset approach facilitated by the latest technological developments.
To learn how you can use the latest technology to enhance SME services, apply to join Modulr’s closed Pathfinders programme. This is a first of its kind industry network, giving its members perks and benefits so they can forge new paths in the world of finance and technology. Apply to become an Accountancy Pathfinder.