From XU Magazine, 
Issue 33

Scaling up, scaling back, specialising and more

The world of accounting is pivoting with increasing government requirements and evolving client needs. If you don’t manage change in the coming years, change could manage you—leading to a career forever on the treadmill. Take control now and ensure the coming years are everything you want them to be.
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The pandemic showed how accountants are the true superheroes of the business world.

Yes, there was significant extra work. But a door was opened. As accountants performed tasks like helping clients prepare reporting to access government assistance, clients were educated about a closer relationship with an advisor they could trust.

Similarly, Making Tax Digital in the UK has indicated that client relationships can evolve as accountants focus more on additional service offerings, such as periodic financial check-ups, and less on basic compliance now that the government demands technology do much of that work.

All of this is becoming the norm, rather than the exception.

In the very near future, more and more taxes will be digitalised—everything from income tax to corporation tax. Simultaneously, governments worldwide are increasing business regulation.

You need to choose how you and your practice will fit into this new world.

The issues are the same as they ever have been: ensuring you’re relevant to clients, pricing services optimally, remaining profitable, and so forth, all while being guided by your values.

There isn’t a single path that’s right for everybody. But it’s wise to jump off the treadmill for just a few minutes and plan your route. The focus should be less about the specific and unique challenges. Instead, look at the ways you can navigate through the challenges in a way that will create a future perfect for you.

Scaling up, scaling down, specialising or more radical options—all must be explored, and a destination selected.

And that’s perhaps the most important point. All journeys start with a single step. But less often mentioned is that all successful journeys start by choosing the best destination for you.

Scaling up

As the philosopher Alan Watts said, the only way to make sense out of change is to plunge into it, move with it, and join the dance.

For accountants, this means scaling their practice to exploit challenges in the coming years.

But while basic growth is simple—do more of what you’re already doing—accountancy practices have opportunities to instead evolve what they do, driven by aforementioned increasing government requirements and changing client demands.

After all, basic accounting services have become commoditised over the last decade, resulting in an inevitable fight to the bottom when it comes to pricing and profit. Nowadays a high street accountant competes with online services.

Providing more of the same is unlikely to be effective. Instead, fresh service offerings and increasing your practice’s understanding of client needs must be central to any plans to scale.

For example, Making Tax Digital for Income Tax Self Assessment (MTD ITSA) arrives in the 2024/25 tax year, with the expectation that many businesses will sign-up to the pilot programme ahead of time as of the 2023/24 tax year.

There remains industry-wide incredulity about clients being able to cope with the increased demands of at least quarterly reports for each trade and landlord income, plus discrete end of period statements (EOPS). And that’s before we discuss the requirements for digital record keeping and digital linking.

Clients that scribble down income and expenses as they occur, then hand this over to their accountant each January along with a bag full of receipts, are in for a huge shock.

But some accountancy practices are seizing the chance to manage this change and in doing so, they illustrate perfectly the mindset needed for practices looking to scale.

Client accounting services

MTD ITSA’s quarterly reporting requirement in particular means some business owners and managers will need to have much more contact with their accounting.

Because of the obvious reluctance of those clients to do so, some accountancy practices are pondering offering in-house bookkeeping services of some kind.

One recent survey suggested over half of UK practices are either doing this already, or planning to do so.

This is a classic thin end of the wedge that accountants can exploit. It’s driving discussion of a concept popular in the US, known as the Client Accounting Services (CAS) model.

With CAS, the accountancy practice takes on any number of accounting and advisory tasks agreed with the client, such as handling accounts receivable and payable, and other daily accounting needs. This is made easy by the use of cloud accounting software, along with data entry automation software such as AutoEntry.

In other words, the vast majority of the work can be carried out virtually.

Understanding the value of CAS is to switch to a forward-looking mindset, compared to the normally reactive approach of accountants. With CAS, you’re responsible for creating the books moving forward. With traditional accounting, you simply review the previous years’ books retrospectively.

As such, further services are easily tacked on to any CAS offering, such as running the payroll, growth forecasting and more. Auditing services are also possible, if there isn’t an existing conflict of interest, of course. 

A virtual finance director (VFD) is a logical end point, in which an accountant effectively becomes  part of a business’ leadership team, advising on routes to growth and key financial decisions.

With CAS, existing clients are your marketing channel. You’ve already developed relationships and have the opportunity to sell additional services to them and ask for referrals. Successful clients tend to have successful friends and business acquaintances.

CAS as a growth model

Here are four tips when it comes to applying CAS when looking to scale-up:

  1. Free up time: CAS is going to require work and commitment to do properly, and shouldn’t be attempted as a sideline alongside your standard workload. You’re going to need to free up some time in your schedule to make the transition, so in the weeks following the end of the hectic tax season, get to work identifying who can benefit from your financial and business acumen.
  2. Create a shortlist: Make a list of clients who you only provide traditional services to, but could benefit from CAS. Keep the list small enough to manage at first, ensuring that you provide the best service possible to your client base.
  3. Analyse your clients’ industry: Once you’ve selected suitable clients, you’ll need to develop a sound strategy. Even if theirs is an industry with which you’re familiar, start by leveraging industry data reports to see where the possibilities lie in providing services to your clients.
  4. Commit: You must carry this process through to completion, and be prepared for any stones in the road as well as the time it will take. There can surely be nothing worse than offering CAS to a favoured client, and then not following through with what was promised.

It should be noted that clients won’t have much interest should you talk about CAS. To them, you’re simply solving problems and providing solutions to their needs. You should couch your additional service offerings in those terms.

When it comes to pricing, CAS is typically a subscription model (monthly or yearly), but one that’s bespoke to each client’s needs. Effectively, you provide a menu of services, and clients say what they want. The client is ultimately determining the value and this should feed into what you charge. 

One thing is for sure: Thinking in terms of charge out rates and fixed fees is becoming increasingly irrelevant. You charge for an overall package, rather than for each hour worked.


While adopting a broader and more diverse range of service offerings is one response to the changing world of accounting, it isn’t the only way forward.

Some accounting professionals are responding by simply turning their back on the demanding requirements of general practice.

Referred to sometimes as niching, becoming a specialist practitioner is a terrific route to scale a practice and can provide much more job satisfaction, to boot.

There are typically several types of specialist, as follows:

  • Industry verticals: Retail, taxi drivers, construction, landlords, hospitality, charities/NPOs, medical and legal professionals… Most industry sectors benefit from inside knowledge when it comes to taxation and government regulations. Can a magician claim carrots as expenses, in order to feed the rabbit he pulls from his hat? A specialist practitioner working in the entertainments industry is sure to know!
  • Taxation: Most common are VAT specialists, of course, but customs and excise specialists are in extremely high demand since Brexit, as one other example. For another kind of client, a true specialist in capital gains tax might be worth their weight in gold (if the gold is inherited!).
  • Business type or size: You might specialise in IT contractors and freelancers, or entrepreneurial businesses, or SMBs aiming for growth. As mentioned earlier, the virtual finance director (VFD) accountant can provide a unique service for businesses large enough to benefit from such a role, but that can’t yet support a full-time position.
  • Technology: Combining accountancy services with a technological-driven approach creates a useful hybrid for many clients, especially in our world of Making Tax Digital. Business for such accountants is about selling and supporting an app stack, as well as providing services. Remember that many of those starting businesses today are from the Gen-Z and Gen-Y generations, who have never known a world without advanced technology. These kind of specialists meet that need.
  • Lifestyle and culture: Less common but perhaps still worth investigating are specialisms built around specific client connections. This might be a similar cultural background, or belief system, such as Christianity or Islam. There’s even a vegan accountant!

Often your choice of niche will grow from a passion or understanding that you may already have, or perhaps from experience of a role within an organisation.

This is because specialism benefits from a laser-like focus and true interest in deep diving into specific knowledge. This provides the insights needed to be a successful specialist practitioner.

The key benefit of a niche specialism is ease of new client acquisition and marketing. Provide a good service as a taxi specialist, for example, and you’ll be recommended to other taxi drivers. Furthermore, advertising online is much easier than for a general practitioner, because you can target specific advertising keywords—or simply post for free in relevant groups on social media.

Specialist accounting also got a boost from the pandemic, when the world quickly learned that Zoom teleconferencing was a viable way to carry on doing business. Above all, clients are much happier to accept their accountant may not be local, creating the potential for online-only specialist practices with a national or even global client base.

Scaling back

Some practitioners have looked at the developments required in the coming years—and taken the decision to scale back, or at most maintain equilibrium with their existing setup. For sole practitioners in particular this is a viable way forward.

Ensuring profitability from existing clients is key. The Pareto Principle, known as the 80/20 rule, can provide a path forward, in that it’s likely a minority of a practice’s clients are providing the majority of its income. Identifying them becomes key, as does potentially cutting any dead wood.

Putting it another way, scaling back is less about aiming for a larger client list, as it is returning value per client.

Timekeeping software can be used to measure the amount of work individual clients require. Using this data, client fees can be renegotiated on a periodic basis. Client contracts shouldn’t be set to automatically rollover each year, but should be reviewed and renegotiated if required.

When it comes to the requirements of MTD ITSA and subsequently MTD for Corporation Tax, client continuation with your practice can be based on how willing they are to do the work of tasks like periodic reporting. Bookkeeping services via a third-party provider can be recommended to those that will struggle.

Technology can be used to automate wherever possible so that MTD is feasible for the client and accountant. AutoEntry can be used by the client to quickly extract the data from receipts, invoices and bank statements, for example. All clients need do is take a snapshot with their phone.

Selling up

As an alternative to scaling back in the face of a changing world of accounting, what might seem the most extreme possibility might be deployed: selling up. That might be selling your practice as an ongoing business concern, or selling your client list to another practice if the Gross Recurring Fees (GRF) are attractive enough.

While there are plenty of agents and brokers who specialise in selling practices, good advice for those intending to sell is to make the plans a reality sooner rather than later. With new client acquisition often ceasing to be a focus when a practice owner decides to sell, churn rates can rise, making the practice appear to be in decline. Any sale should be orderly and planned well in advance, with business as usual maintained until that point.

Technology at its heart

Whether you’re scaling up or scaling down, all the destinations we’ve discussed above have technology at their heart.

Cloud accounting and practice management software is the basic requirement for a modern practice aiming for growth, while to free-up time for services like CAS or practice specialisms, automation tools such as AutoEntry are a fundamental necessity.

Why devote hours or days of work to drudge tasks like data entry when you or your staff could be using that time to grow the business—while demonstrating their expertise and passion?

Client engagement tools like GoProposal should be used to price consistently and end scope creep, allowing you to focus on maximising profits while supplying a dependable client service.

If you’re scaling back or aiming for higher value from clients, tools like Futrli are vital in being able to provide budgeting, prediction and reporting so that you and your clients know their position—and are able to act on that information.

Most of all, if you’re planning to sell-up in the future, a practice that has robust digital systems in place is a far more attractive proposition because it enables easier transfer, as well as the auditing of any necessary information.

Why leave it there?

To learn more about AutoEntry by Sage, including a limited-time special offer for 3 months free

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