The UK’s accountancy industry has gone through immense changes in the past twenty years. Between 2008 and 2015, the number of accountancy firms in the UK had risen by a large percentage. Since then, the accounting industry has gone through a period of rapid consolidation. The victims of this rapid consolidation and power grab by the larger firms are all the small-scale accountancy firms in the UK.
Many smaller firms have had to bear the brunt of disproportionate growth amongst the country’s leading accountancy firms. Numerous small-scale accountancy firms in the UK have had to shut down because they just can’t compete with the bigger firms with more resources.
According to a recent report, over five-hundred small-scale accountancy firms in the UK have shut down between 2017-19. Between 2011-2017, 1,212 new accountancy firms were being launched every year.
The small-scale accountancy firms in the UK with turnovers of less than £100,000 suffer the most. All preexisting partnership models between these firms have failed. Even individual firms with no partnership ties are reducing in number.
These shutdowns have affected small-scale accountancy firms in various regions of the UK, the worst-affected regions being London, Northern Ireland, Yorkshire, and South East England.
However, during this period, the profitability of the existing accountancy firms in the UK has increased. The number of small-scale accountancy firms that earn over £100,000 per has increased by 4.35%.
How are these accountancy firms in the UK navigating this period of stunted growth? Studies prove that the most profitable accounting firms’ team up with top accounting outsourcing firms to expand their market offerings.
How Outsourcing is Helping Small-Scale Accountancy Firms in the UK
Outsourcing has often been viewed as a negative practice for business owners in the UK. But the truth is that almost all leading accountancy firms in the UK use outsourcing services. It’s the only plausible way they can compete in this harsh yet ever-growing market. Highly-qualified offshore firms offer small-scale accountancy firms in the UK a wide range of benefits that include –
Increased Capabilities
The modern-day market is very confusing for small-scale accountancy firms in the UK.
Businesses demand more than just tax processing or bookkeeping from these firms. They demand services like –
- Business guidance
- Proactive advice regarding wealth management
- Face to face financial services
- Guidance on specific corporate needs
Small-scale accountancy firms in the UK that invest too much time and effort in carrying out the day to day responsibilities (bookkeeping, creating financial reports, etc.) cannot afford to offer these services.
By outsourcing, small-scale accountancy firms in the UK can delegate this day to day responsibilities to offshore experts. They can then have adequate time, resources, and manpower to respond to the more nuanced client requirements.
Offshore experts almost act as strategic partners for small-scale accountancy firms in the UK. They take over key responsibilities like bookkeeping, creating financial reports, etc. so that other members of the accountancy firm can engage in more complicated tasks.
Firm Expansion
The small-scale accountancy firms in the UK who have teamed up with offshore accountancy experts have been able to make the most of the consolidation period between 2017-19.
They’ve recognized key business needs and demands to reshape their revenue chains. These accountants have taken up on-going advisory roles by offering deep engagement and customized services to their clients. Meanwhile, the offshore experts have helped them stay on track with their regular responsibilities as accountancy firms. That’s why small-scale accountancy firms in the UK with offshore experts have been able to evolve, adapt, and scale-up on time.
Access to Talent
Capital-constrained accountancy firms in the UK find it difficult to scale up because they lack infrastructure, efficient workers, and technological prowess.
Outsourcing enables these firms to engage with innovative accountancy experts from around the world. As long as these small-scale accountancy firms in the UK invest in basic technological devices such as – cloud computing, high-speed internet, outsourcing software, etc., they can scale up. The lack of infrastructure, efficient workers, and technological prowess are all addressed by these outsourcing accountancy firms.
Plus, this process takes place using limited resources. Offshore accountants typically charge three times less than what an accountant from the UK would charge. However, their accountancy skills are often better. These offshore experts are trained in British accountancy. In a way, they’re almost made for these types of jobs.
These offshore experts provide these missing elements to small-scale accountancy firms in the UK so that scaling up isn’t an issue.
Flexible Pricing
Much like the accountancy industry in the UK, competition amongst offshore accountancy firms is also fierce. That’s why more and more offshore accountancy experts are offering a wide range of high-quality accounting services at lower prices. Small-scale accountancy firms in the UK can even ask for free trials from these offshore experts before signing official contracts.
For small-scale accountancy firms in the UK, the only way to survive and stay competitive is to evolve. The country’s leading accountancy firms are already enjoying the benefits of outsourcing. The smaller firms do the same.