The pandemic, the war in Ukraine and surging inflation; with all these having taken their toll on small business over the last year, you’d be forgiven for awaiting the arrival of the plague of locusts next. But what impact will that have on business? And how can accountancy professionals help to keep their clients afloat during this period of turmoil?
When Russian tanks started to roll into Ukraine in February, it was clear that this conflict would have longer-term consequences for the economy. With Ukraine once being the ‘breadbasket’ of Europe, its invasion has had a huge impact on food prices across Europe, including in Britain. Trade sanctions and the confrontation between Russia and Western states has also created uncertainty around global gas and oil supplies, further increasing prices. Inflation in prices of everyday products will of course have an impact on small business’ bottom lines, creating concerns over viability.
Surging prices will deal businesses a second blow, however, with consumer spending likely to remain static. The figures bear this out, with Deloitte’s Consumer Confidence Index showing consumer expenditure to have increased by 11% in the first quarter of 2022, as compared to the previous one. The cause of this spending? Essential items, such as utilities, food and transport. With costs increasing, consumers’ lack of disposable income could translate into a drop in sales for businesses, creating a challenge to their profits. The best way for a business to weather the coming storm is by enlisting the support of a trusted advisor with an in-depth knowledge of its day-to-day finances, a skill that is ingrained into ICB bookkeepers from the earliest stages of their training.
It’s not good news for HR departments or our friends in payroll either. The squeeze on workers’ personal finances will likely lead to demands for pay increases, and with the 1.25% increase in National Insurance (NI), this is likely to further stretch company finances. Whilst it may be the case that the rise in NI is reversed with the change in Prime Minister, freezes on staff budgets will persist as long as the cost of living remains an issue. It will be for payroll and accountancy professionals to ensure that pay policies balance their client’s bottom lines whilst still enabling the retention of their employee base. ICB’s highly-qualified bookkeepers and payroll experts are qualified and ready to rise to this challenge, and can provide the guidance to ensure that businesses hold on to those all-important skills and headcount over the coming months.
A way forward?
With the economic outlook so uncertain, it is pivotal that businesses have access to the advice of trusted accountancy and payroll professionals and the right digital tools to enable them to stay abreast of their figures in real time. It is qualified bookkeepers, like ICB members that are best placed to help businesses navigate these difficult times with their day-to-day insight of their clients’ finances and their aptitude for software.
Advisors can serve their clients by reaching out to them to understand their goals and concerns for the coming months and working with them to prepare for the potential downturn. Now more than ever, it is your knowledge that could save countless businesses and livelihoods from what is likely to be an exceptionally hard time.
Stay up to date
The most effective thing you can do to support your clients in this difficult environment, however, is simply to keep your skills and knowledge up to date. An understanding of legislative change, new software and technical updates from HMRC will provide you with all the information you need to provide the very best service to your clients. ICB’s programme of training and support is an excellent way of keeping you up to date and, in November, we will be hosting our premier CPD event, the Bookkeepers Summit.
A two-day event taking place both in-person and online, the Summit has a packed agenda featuring practice advice, technical updates and talks from influential speakers. You will also have the opportunity to network with like-minded professionals and to meet with software providers and other vendors at our exhibition stands both in-person and online. Book today at www.bookkeeperssummit.com to avoid disappointment, using the code XUVIP to save £10 on the price of tickets.