How Are Top Accounting Outsourcing Firms Helping the UK's Accountancy Industry During the Pandemic
Despite the hazardous situation of the UK's economy, local accounting firms have continued to hire employees for one reason – they have no other choice. Small-scale accountancy firms in the UK are service providers, and the demand for high-quality accountancy services has rocketed during the pandemic. Clients are looking for financial advice and support during these uncertain times. Unfortunately, many firms have to say, 'we'd love to help, but we don't have qualified accountants at the moment.'
Small-scale accountancy firms' open-door recruiting policies haven't worked at all. Small-scale accountancy firms in the UK are finding it increasingly tough to attract high-caliber accountancy experts. As it is, they were having trouble attracting qualified accountancy experts given that the country's major accountancy firms are hell-bent on consolidating power.
The sheer the number of client inquiries regarding the unprecedented market shock brought about by the COVID-19 pandemic is taking a toll on these firms. As a result, many accountancy firms have to hire professionals with little or no background in finance or accounting. London, one of the hotbeds of the virus outbreak, is experiencing a strange phenomenon. The number of professional vacancies in the city has increased rapidly. Most of these job offers pay over £40k. In October 2020, Deloitte and EY, two of the country's largest accountancy firms, posted 122 and 144 jobs respectively. There was a total of 752 vacancies in London's accounting sector in October.
Understanding the UK's Accountancy Crisis
In 2019, over five-hundred small-scale accounting firms closed shop. The inability to attract and retain high-quality accountants was a major factor behind these small-scale accounting firms’ failure. Despite being in the middle of a technological revolution, small-scale accounting firms in the UK have been unable to scale up using opportunities like Open Banking or technologies like cloud accounting because they're understaffed.
The Office for National Statistics looked into employee shortages in UK's accounting industry. They discovered that employee retention rates in the UK's small-scale accounting firms were very poor. The accountants who retained their role in 2019 were rewarded with 5.2% increases in their wages. On average, a full-time salaried accountant earns £36,611! That's more than what most small-scale accounting firms in the UK can afford.
In short, the crisis experienced by small-scale accounting firms can be explained in these five points -
· With salary demands ramping up, it's extremely challenging for small-scale accounting firms to retain their finance teams. A bigger firm will likely offer 5-10% salary incentives to snatch these high-calibre professionals.
· To meet work demands, small-scale accounting firms are having to adopt open-door recruitment policies. These lacklustre recruitment policies attract underqualified or low-quality accounting professionals.
· Unskilled accounting professionals require a lot of training. Small-scale accounting firms have to spend a lot of their minuscule budgets on training their underqualified staff members.
· Despite training, most underqualified accountants aren't able to cope with large workloads. They're either given more time to become better or laid off.
· The overall output of small-scale accounting firms drops drastically due to these factors. They become perfect victims for larger firms who want to buy out their businesses.
Accounting Outsourcing Firms – The Last Hope
Have all accounting firms in the UK suffered because of the pandemic? No. Quite contrastingly, many large-scale accounting firms in the country are experiencing higher demands, and they're delivering on their promises. The only difference is that these firms have partnered with the world's top accounting outsourcing firms. They essentially operate two teams – the in-house accountants in the UK and an offshore team consisting of accountancy experts from across the world. These offshore accountancy experts help these firms -
· Generate more profits. Firms can take on more tasks as their offshore partners handle regular accountancy tasks such as creating yearly reports, tax reporting, payroll management, etc.
· Reduce overhead costs as the cost of training, pension, bonuses, sick leaves, paid leaves, etc., is zero. Offshore accountants work on an hourly basis. Large-scale accounting firms have leverage in this partnership. They pay limited amounts for high-quality work. If they don't like the output, they can terminate the partnership on the spot (no severance pays involved).
· Maximize efficiency. Most large-scale accounting firms have been in partnership with these offshore accounting experts for many years. During this period, they've honed a system of managing day to day responsibilities of the firm. As the offshore experts manage the accounts of the firms' clients, in-house workers offer face to face financial consultancy. The two teams work together to improve their firms' service delivery capabilities.
These offshore experts use the latest accounting software and cloud service tools to offer efficient and timely accounting services from remote locations. They charge less than half of what an in-house accountant from the UK charges. Small-scale accounting firms must replicate this ingenious model to make the most of the increased demand for accounting services in the post-pandemic UK.