From XU Magazine, 
Issue 19

Building a digital future through funding

How access to finance changes the advisory landscape

Access to funding has always been a key challenge for small businesses, and, historically, funding advice is an area that many accountants have shied away from.But Anil Stocker, CEO and co-founder of MarketInvoice, believes there’s a golden opportunity for accountants to become the go-to funding adviser for small business clients. Here he lays out the benefits of including funding advice as a core element of your advisory proposition…

We’ve all seen the transformative changes that have taken place in the accounting industry over the past decade. Cloud accounting has replaced desktop software and integrated apps have replaced complex and unconnected practice tools. Automation has also driven the focus of revenue generation away from repetitive compliance work and towards advisory services.

We at MarketInvoice, along with a growing number of our accounting partners, believe there’s another change afoot in accounting; the emergence of the accountant as funding adviser. A role where you become the driving force behind clients sourcing additional finance.

So, is your firm ready to dive into the world of funding?

Setting the foundations for advisory services

To successfully step into the world of advisory services, firms need the right strategy, an experienced team of people and the best in practice software solutions.

Firms that are making advisory work well are generally cloud-based, connected digital practices. Xero’s most recent UK Accounting & Bookkeeping Industry Performance Report showed two key trends that are driving this growth in advisory services.

  1. Firms that have larger numbers of online accounting clients grow faster and have an easier time signing on new clients.
  2. Firms that provide advisory services earn considerably more revenue per client than firms that offer only compliance.

In a successful Xero practice, your basic compliance work is taken care of by the software. Integrated apps automate the bookkeeping, coding of transactions and cash collection. With the tech doing the heavy lifting, you and your team can focus on the important things. That means more time to get to know your clients, understand their goals and challenges and (crucially) spot the gaps where funding is required.

The big question for many Xero firms, however, was not whether the practice was digital ready but rather whether the UK’s small businesses were ready for digital.

The digital imperative for small businesses

Small businesses account for at least 99.5% of UK business, across every main industry sector. But Xero statistics from 2017 showed that only 18% of UK accounting firms had virtually all clients using online accounting.

Adoption of digital may have changed how some accounting firms operated but many small business clients still hadn’t made the switch to a digital approach for their core financial processes and accounting. To achieve the potential software efficiencies that cloud offers, a push towards digital was needed – driven by a mixture of education and relationship building.

Fortunately, the UK Government’s Making Tax Digital (MTD) initiative has pushed the digital agenda to the forefront for small businesses. Mandatory registration for MTD for VAT by April 2019 has pushed businesses towards adopting digital for their key accounting and tax requirements.

While MTD may have mandated this switch to digital, the benefits and opportunities of becoming a digital business have gone way beyond just streamlining the tax return process.

By switching to a cloud-accounting platform, businesses have:

  • Better financial management through digital accounting
  • A clearer view of key numbers, through real-time reporting
  • A quicker way to analyse when additional finance is needed

Accountants remain the most trusted adviser for most business owners. You’re their confidant and the person who truly understands their long-term vision and strategy. What digital has done is to make it easier to drill down into a company’s finances. That ability to review a client’s financial data at a granular level, revealing the patterns and trends, gives you the starting point for a new strand of advisory work.

You can now link funding directly into the whole business planning cycle.

Highlighting the funding gaps

A Xero accountant spends less time pouring over historic ledgers, and more time looking at KPI dashboards and cash-flow forecasts. So you’re ideally positioned to spot any funding needs.

You know the owner’s growth plans, you understand the seasonal dips in their industry and you have the real-time data to reveal their current financial health. This gives you the ability to start asking meaningful questions about where revenue, cash flow pipelines and capital are going to come from. The deeper your client relationships, the easier it becomes to spot the gaps, highlight the need for finance and start helping clients to source this much-needed funding.

A third of UK small business expect accessing business finance to become more difficult post-Brexit. In this atmosphere of funding uncertainty, now’s the time for your firm to step up to the plate.

Streamlined access to a world of funding

So, how do you source the right funding for your ambitious small business clients?

Recent search carried out by MarketInvoice showed that accountants are undoubtedly beginning to provide more in-depth support and guidance around additional finance:

  • Two thirds (66%) of accountants surveyed said that they recommend external finance providers to their clients
  • Half (50.8%) indicated that they would recommend their clients speak with a bank about their finance needs
  • More than a third (36.3%) are recommending an invoice finance provider ahead of a business loan provider (33.66%)

The traditional routes to funding (banks loans and overdrafts) may still be there, but there’s also an ever-growing range of other complementary and alternative finance options. In the same way that accounting has evolved to meet the digital age, so has the funding sector. There’s a far greater choice of financial products for your small business clients to choose from. And many are available through online application, making the most of the connected efficiencies of being a digital business.

“It’s great to see accountants using a variety of funding options for their clients, but the opportunity to provide more value here is significant. For accountants to remain relevant, they need to learn more about the funding options available to their clients.” - Ed Berks, Business Platform Director EMEA at Xero

When your firm can easily source a finance provider for a client, that changes your perceived value. You can quickly and efficiently work a funding solution into your ongoing planning conversations with clients, and it’s this kind of solution-driven advisory work that cements your reputation as an invaluable part of this business’s advisory team.

How MarketInvoice helps

At MarketInvoice, we believe that funding has the potential to transform the future paths of small businesses. To transform how advisory services drive your own practice growth and, ultimately, to bring about transformative change in the world at large.

Our vision is for entrepreneurs to have the time to build the world we all want to live in. That’s why we’re making it quick and easy to get funding through our invoice finance and business loans. We make it easier to find the financial solution that fits your client’s needs – whether it’s a secured or unsecured business loan, or fast access to cash through invoice finance.

A current lack of funding doesn’t need to become a negative and destructive impasse for small businesses. With the right access to additional finance, a business can turn its vision into reality. We believe Xero accountants can apply their experience, insight and funding connections to deliver access to positive finance and, by doing so, become a force for change.

As a funding expert and adviser, you can:

  • Keep cash-poor clients trading, and help them get through the tough times
  • Fund the growth plans of ambitious small businesses and nurture their success
  • Help businesses cut crippling debt repayments by refinancing existing loans
  • Facilitate investment in new assets, bigger teams and larger premises
  • Provide the financial support that small business owners are crying out for

A bright future through funding

If you see the future of your Xero practice as being one based in relationship-driven advisory work, funding has to be a key element of that.

Combine compliance, financial performance, business planning and funding services together and, by doing so, create a holistic approach to advisory. With those solid foundations in place, and a deep, personal and connected relationship with your clients, you’re set for a bright future – through funding.

Why leave it there?

Find out more

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