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The number of accountancy, bookkeeping and auditing companies operating in the UK has fallen by 3% in the past year and almost 8% over the past five years, analysis from the Global Payroll Association (GPA) has revealed.
The latest figures show that there are currently an estimated 40,275 active accounting, bookkeeping, and auditing companies in the UK. This equates to just 1.4% of all UK businesses.
The GPA analysed the changing market size of the UK payroll, auditing, and bookkeeping industry between 2018 and 2023, based on the number of operating businesses in the sector.
Despite the vital role that the sector plays in supporting the success of every industry in the UK, the number of active service providers is falling at a significant rate. The current total of 40,275 businesses marks an annual decline of 2.9%.
Moreover, it marks a five-year decline of 7.6% compared to 2018’s total of 43,575 active accountancy, bookkeeping, and auditing businesses.
London is home to more businesses in this sector than any other region, with 9,670 companies accounting for 24% of the UK total. But compared to 2018’s London total of 11,390, the capital has seen a five-year decline of 15.1% – the largest drop of all UK regions.
Despite this widespread decline, three regions have still seen an increase in active businesses over the past five years.
The North West’s current total of 860 active businesses marks a 3% increase since 2018, while numbers are up 2.1% in Northern Ireland, and 0.8% in Wales.
Melanie Pizzey, CEO and founder of the Global Payroll Association, said: “The stark decline in the number of active accountancy, bookkeeping and auditing businesses suggests that more businesses are bringing their processes in-house in order to avoid the additional expense of outsourcing these services.
“You can’t blame them given the difficult economic environment we have been dealing with for a number of years, but given the importance of accountancy and bookkeeping, of which payroll plays an essential role, it’s vital that when bringing these services in-house, businesses are doing it properly. This means hiring experienced staff, installing good processes, and making use of the right software platforms.”
Pizzey added: “If in-house processes aren’t properly thought through and end up failing, it can have a huge negative impact on any business. For example, if there are errors in the payroll process, staff can be incorrectly paid or even go unpaid which means they’re going to spend time worrying about whether the money they’re owed is going to arrive in their account, instead of giving full focus to getting their jobs done.”
