The year 2022 is now very much underway. Given the events of recent times, we can all be forgiven for feeling some trepidation. But hopefully there’s some optimism mixed in too.
Let’s take a look now at some of the issues that accountants and their clients are likely to face—and what can be done to help.
Is the pandemic over?
At the time of writing, we appear to be in the final stages of the pandemic. The western world is effectively entering a phase of recovery.
But the pandemic has left multiple unique problems in its wake.
In September 2021, the Office for National Statistics reported that prices are increasing, it’s becoming harder to fill vacancies within businesses, while over a quarter of businesses also reported that turnover had decreased.
In the latter regard, service industries have been particularly badly hit, with nearly 50% reporting that turnover had decreased.
Simultaneously, most of the government’s COVID-19 relief measures have ended.
Accountants continue to be centrally placed to help businesses recover. As well as helping access the remaining Covid relief schemes (or those that might yet arise), accountants can help businesses owners and managers aim for growth when they don’t know one end of a profit and loss from another.
Accountants need to be ready for this and create service offerings to match. Quarterly or even monthly financial check-up packages are just one example. These also allow accountants to switch to a more lucrative retainer/subscription model, rather than rely upon intermittent fees.
It’s a sad fact of life that disastrous occurrences often lead to opportunities. For example, the phrase “post-war boom” has become a cliché. Similarly, we may well see a post-Covid boom. And businesses will turn to expert voices for help.
Do you have an ESG policy?
2021 saw the world of business wake-up to environmental and social issues. It’s now rare to find medium or larger-sized businesses who don’t have some kind of environmental, sustainability or governance (ESG) policy in place.
As with most business innovations, there’s a strong chance this will flow down to smaller businesses too. Government legislation may encourage this movement, as will the rise of more accessible schemes such as small-scale carbon offsetting for energy and transport use.
Customers, banks, investors and shareholders are also placing importance on ESG measures. HSBC’s sustainable financing and investing survey in September 2021 reported that 89% of capital market issuers and institutional investors believe such issues are important, while 51% believe they can improve returns.
PWC research reveals that 68% of UK businesses say they have better access to finance options if they have stronger ESG credentials. The same research points out that nearly half of the businesses surveyed considered it a key recruit tool for future talent too.
For accountants, ESG is a coin with two sides. The first side is applying ESG policies to their own business. The second is assisting client businesses with their own policies, wherever an accountant’s knowledge and experience might be required—grant applications, for example.
Having an ESG policy is a marketable commodity, in that it’s something that new clients may ask about. Similarly, recruiting the best new talent in a post-Covid competitive market may come down to having sound ESG credentials.
Are you ready for compliance challenges?
2021 was an incredibly busy year when it came to business tax compliance, with introduction of the CIS VAT reverse charge, the EU e-commerce VAT package, plus a whole host of changes related to Brexit early in the year.
2022 looks comparatively quiet in comparison, but accountants are already gearing up to the final wave of MTD for VAT switchers in April 2022.
The interim VAT rate change for hospitality ends in March 2022, while a new plastic packaging tax comes into effect in April. The introduction of the new social care levy in April is also likely to present unique challenges.
The MTD for Income Tax (ITSA) pilot scheme is also set to be opened substantially, removing many of the limitations that currently exist.
Furthermore, accountants should be looking to prepare for basis period reforms, arriving alongside MTD for (ITSA), for which 2023/24 is the transitional year. Put simply, any unincorporated business not using the tax year for its basis period will need to do and may have to extend their next basis period to make this happen.
It’s once again the accountant that businesses will turn to upon learning about these issues, perhaps through maildrops from HMRC or the media.
But the progressive accountant takes these issues to their clients ahead of time, as part of an education/marketing drive, and helps them prepare. Doing this not only generates revenue. It also creates a different kind of relationship with clients where the accountant has more of an advisory role. This in turn offers opportunities for more service offerings.
Technology: Always providing an answer
Binding together everything mentioned so far is increasing digitisation.
For many businesses, the pandemic was a crash course in more effective use of technology. Experts have said that around 5-10 years of organic acceptance of technology was crammed into the space of just a few months as the pandemic got underway.
And nobody is going to be able to slam the lid on this pandora’s box. Put simply, the world of business is now more technologically savvy, and more relaxed about relying upon technological solutions when faced with key challenges like ESG and compliance issues.
This is accompanied by a boom in technological development. Machine learning/artificial intelligence, increasing miniaturisation and mobilisation, and even a promised metaverse running alongside our everyday world—2022 and beyond will be like nothing seen before.
Accountants need to drive this change. After all, accountancy is an industry that’s been enabled by technology since the 1950s. Winners in the industry have always been those that adopt rather than reject technology.
But this isn’t digitisation for its own sake The focus has to be on the benefits, and the admin time saved. The more processes that are digitised, the more efficient they become. As such, the goal is to look for ways to leverage technologies to solve problems or streamline processes.
Here at AutoEntry we know all about this. The success of our products is testament to how digitisation can transform business admin. By using AutoEntry to automatically process paperwork, our customers are proven to save days if not weeks on tasks like bank reconciliation.
And this message is at the heart of it. It’s about aiming to digitalise practices and businesses to create a complete digital transformation. That transformation saves time, yes, but also leads to better decision making and encourages growth.
It’s also the only way businesses can be in the correct position to respond to 2022’s challenges, such as coronavirus recovery, increasing ESG importance, and seemingly never-ending compliance challenges.