Small business clients need help with more than just the numbers

This article was current at the time of publication.

Accountants played a vital role in supporting small businesses during the pandemic. However, as challenges continue with rising inflation, talent shortages and rapidly changing technologies, these businesses are now seeking help with more than just the numbers.

This is one of the findings in Xero’s latest State of the Industry report 2023, which provides a snapshot of the trends shaping Australia’s accounting practices. Based on a survey of 550 accountants and bookkeepers, the study reveals how public practices are adapting their services to meet changing market needs.

Accounting practices are offering more

Beyond traditional practice offerings like tax and advisory, the report shows 35 per cent are providing IT support, such as helping with software setups, and 38 per cent are providing HR advisory services.

Andrew Pearce FCPA, Advisor, Director and Head of Growth at Hobart-based practice Collins SBA, says his clients are requesting a wider range of services. While his team can provide basic IT support, he says the practice draws on a network of experts to help clients with more complex needs.

“We’ve been proactive about building a network of advisors we can refer clients to,” Pearce says. 

“I'm not an expert in HR, for instance, and I’m not qualified to give HR advice, but that’s where having a network for referrals is so valuable. I think it’s important to understand your boundaries, and when clients come to us for advice outside our area of expertise, we can confidently refer them on.”

Dhash AJ CPA, founder and director of Melbourne-based practice Finite Group, also refers clients to relevant providers within his network and helps them identify issues that may be limiting their growth.

“We are deeply involved with the work of all our business advisory clients, but I think it’s important to stick to our core offering, which is advisory from a numbers perspective, rather than spreading ourselves thin by adding other services,” AJ says. 

“But, by all means, we do highlight issues when there’s a need and offer recommendations for clients to seek [specialised] expert advice.”

Responding to inflation

Like most industries, accountants are feeling the impact of inflationary pressure. Xero’s report shows almost half of all practices foresee a need to offset rising prices by increasing staff wages, as well as their fees. 

Staff wellbeing is also a key focus, with a third of practices prioritising the importance of tracking the overall wellness of their staff.

Collins SBA, which employs about 40 people, uses software like CultureAmp and Employment Hero to conduct employee engagement surveys. Pearce says the findings are used to identify strengths and weaknesses in workplace culture and to “take action where it’s needed”.

“One example has been the strong desire of our people to give back and to work for a company that prioritises sustainability,” he says, adding that the practice recently reviewed the B Corp certification criteria, which designates that a business is meeting high standards of verified performance, accountability and transparency on factors like employee benefits, charitable giving and supply chain practices. 

Notably, Pearce says the firm aims to pay staff “top of the market” salaries.

“We have [decided on] several wage increases – even out of the usual cycle – over the last 18 months or so,” he says. 

“Unemployment is low and it’s becoming increasingly difficult to find the right people. Sometimes you just need to pay more but, having said that, we also want everyone already here to feel proud of the salary they’re earning.”

Collins SBA has also increased its fees to ensure it remains sustainable in the current economic environment. Pearce says clients generally understand this because they’re having similar conversations with their customers.

“We’re talking to our clients about what they are doing to offset the increase in prices that they’re seeing with their suppliers as well as the lift in wages,” he says. “They need to remain sustainable as a business as well, and that means pricing appropriately.”

At Finite Group, which employs two full-time contractors, fees are increased annually. 

“We practise what we preach,” AJ says. “Back in 2015, we focused 100 per cent on tax compliance services, but now that’s about 40 per cent of our business and the rest is advisory. This has allowed us to strengthen our relationship with our clients as we’re much more involved with their business.

“The fee increases almost become irrelevant because there are so many opportunities for us to add value to the client,” AJ elaborates. “If we were just providing the same service each year, it would be harder to justify an increase. Inflation would be the only thing that we could point to, but that has to end at some stage.”

Matter of time

Despite pressures on practices and clients, Xero’s report shows 79 per cent of practices are managing to meet compliance deadlines without needing extensions.

While Pearce says Collins SBA generally hits all deadlines, AJ says extensions are frequently required for his practice. 

“I’m quite surprised that most firms don’t need an extension, given the extra time required to address changes in tax compliance, like allocation of profits within professional firms and trust distribution,” he says. 

“There’s so much more to consider from the compliance side of our business and it just takes more time.

“Having said that, much of our work now focuses on advisory services, because that’s where clients see the greatest value,” AJ says. “That’s the biggest change I’ve noticed in recent times and we’ve adapted the business to meet the need.”

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