Retaining and growing their client base is the top ambition for the UK accountancy sector but practices are not geared up for long term success, according to new research of over 100 firms by alternative finance provider Syscap.
While UK accountancy firms aim to facilitate expansion by introducing new marketing activities and launching new fee earning services for clients, they are being held back by a lack of succession planning, an unprofessional marketing approach, lack of customer service and a lagging attitude to technology. Syscap’s research, conducted by Panalitix and in conjunction with practice management software provider Iris, found that while accounting firms were regularly winning new clients they were also ‘leaking’ business too. 67 percent of firms gained up to 20 clients in the last year but the majority also lost a similar number too. 52 percent of firms say that at least half of their clients are price sensitive, suggesting that new clients may be demanding cheaper rates and impacting profitability. Accounting firms could be fast approaching financial difficulty as a result.
In terms of marketing, 52 percent of firms have no resources at all and less than one in ten have an in-house marketing professional, suggesting they will struggle to retain and grow their client base. In 26 percent of firms partners carry out some marketing activity, which could detract from their fee earning potential and quash new business opportunities. Under 10 percent call on assistance from professional marketing contractors. Ageing partners who are critical to client relationships, coupled with a lack of succession plans, suggests many firms have a worrying lack of long-term strategy. Around half of firms’ partners were in their 50s and 60s and approaching retirement age, with the oldest at 83. Considering 29 percent of firms say that they lose clients when partners retire, around a quarter say that they have no future partners in their current team, meaning that they have no plans to train employees who they can hand over the reins to.
Technology lag could be another issue holding accounting practices back. Although two thirds have had to evolve with their clients moving from on-premise to cloud accounting software, this transition towards cloud computing is still on-going and firms are pressured into accommodating a broader range of technology skills and services. Equally, while their clients are forging ahead with cloud only 14 percent of firms are realising the benefit of moving to cloud-based practice management systems. The accountancy sector shows little sign of exploiting cloud to drive business efficiency and growth or to allow for more flexible working.
Customer management processes appear to lag behind too, with 58 percent of firms being challenged in this area, citing workflow management as the common problem. This calls for firms to implement better internal processes to deal with new business enquiries quicker, providing better grounds for client growth. Philip White, MD at Syscap said: “No sector can escape the need to innovate. The challenges that accountancy firms are facing call for them to address areas of the business that get in the way of client growth and retention. Without adequate marketing, succession planning, innovation and effective processes, firms can’t nurture existing and potential clients in the way they need to. The research suggests that firms are losing business by not having satisfactory systems in place, so the need to invest in better technology couldn’t be higher.”
95 percent of firms don’t employ people offshore, and respondents who said that they do only employ one. Only around one in ten firms said that any of their revenue was delivered through outsourced or offshore services, while the maximum percentage of that revenue was only 5 percent. The accountancy sector shows scope to introduce new services that come from offshore or are outsourced to gain a more diverse client base without the stress of internal investment.
The research was conducted in summer 2015, surveying over 100 partners in UK accountancy firms.
