After the Coronavirus made its significant impact on the British economy, the country’s accounting industry now stands in a tight spot where firms must carefully plan their next steps.
As businesses and customers alike continue to face further restrictions on their regular activities and operations, cash flows in companies all over the country are facing a slight standstill that financial professionals must remedy. In the case of most accountancy firms, this heightened time of need for their services may also spell a potential disaster as some firms have been struggling to keep themselves afloat.
While the impact of COVID-19 on the United Kingdom’s economy is undoubtedly widespread, accounting firms are slated to take the biggest hit because of their dependence on various industries. With this current situation posing significant questions, however, UK firms, both small and large, are uncertain of what the future holds for them.
A rising question for every accounting firm
Although the country’s accounting industry has been resilient in its efforts in past global economic crises and recessions, this pandemic poses a new challenge that the sector has yet to be familiar with. Although accounting firms are relatively stable and clear-headed during economic downturns, this current predicament proves to be a different hurdle in itself, especially because many professionals are being forced to stay home.
In the context of the Big Four
According to insider sources, the Big Four accounting firms were the first practices in the UK to act and collaborate to devise a plan, an effort which manifested mainly in the avoidance of the Coronavirus Job Retention Scheme (CJRS). Beyond avoiding the furlough scheme in question (and subsequently foregoing more than £40M of support), these major players also discussed the possibility of cutting partner take-home pay to avoid major retrenchments.
Companies that follow after
Bigger firms notably took the alternate route as opposed to Deloitte, E&Y, KPMG, and PWC when it came to the furlough scheme as they wasted no time jumping on the CJRS to support a quarter of their staff with £2M of monthly support. In terms of long-term context and preparation, larger firms are expected to administer bigger pay cuts for their senior staff and partners, which would be compromised with reduced hours.
Currently, many bigger to mid-tier firms are waiting on an impending sharp decline in their client base in what would be best dubbed as a blood bath in its purest form. Despite earlier forecasts in the year for continued growth, accounting firms must shift their focus from profit and growth to mere survival.
In general, the majority of accounting firms are expected to see a rise in disgruntled investors as cost-cutting is expected to increase in the long run, and client need is set to reduce conversely.
Although the UK accounting industry may only be a few months into the pandemic, many are already set to expect immense changes in their operations, investor sentiments, and long-terms planning and cost allocations. If your accounting firm is currently slumped in a pool of uncertainty and underperformance, you can turn things around and make sure that your efforts are revised and redirected to keep your operations afloat!
When it comes to the latest accountancy news in the UK, we’ve got you covered with our continuous reporting of top stories. Subscribe to our newsletter today to stay up-to-date on trending news!