Even at the best of times, accountants face a myriad of challenges but continuing economic difficulties, advancing technology, changing regulations and increasing client expectations mean that 2024 is set to be an especially difficult year.
Unfortunately, adding to these is the fact that most accountancy practices have not been immune to the succession of macroeconomic challenges that have plagued the UK since 2020. This makes it all the more pressing for accountants to proactively confront and solve these problems so that their practices remain competitive and compliant.
Without further ado here are the top five challenges facing accountants in 2024.
AML Compliance has become one of the most pressing issues to UK accountants and is frequently a cause of confusion and stress, with practice assurance assessment visits being a dreaded occurrence. But with the government and professional bodies cracking down on non-compliance, AML requirements are here to stay.
Three of the main challenges posed by AML are the nebulous and unclear nature of the regulations from both the government and professional bodies, the extra work it generates and the additional costs it brings.
Unfortunately, the regulations are purposely vague as the UK’s AML policy places the burden of responsibility on businesses, which essentially means each individual practice has to identify their own risk exposure correctly and build the appropriate procedures to protect against them.
Because of this lack of guidance, many professionals feel that their governing body is pursuing an aggressive policy of compliance checks and fines without providing them with the necessary support to be compliant in the first place.
Whilst the exact processes needed to be AML compliant will vary from practice to practice it is extremely important that they all have a properly completed and regularly reviewed companywide risk assessment, have all AML documentation properly filed and easily available, and the correct tools needed to perform compliant checks.
Whilst these tools come at a price it ultimately should not cost a practice anything, as it is becoming increasingly common to charge clients for these checks and onboarding procedures or to include them in the price of fees.
Red Flag Alert provides a the perfect tool to help accountants to perform AML checks without sacrificing efficiency or client experience. Our fully digital platform takes seconds to send out a check, contains all the compliance checks you might need, and delivers them as convenient, highly accurate digital checks that feature your branding and take your client 60 seconds to complete. We also store your audit trail digitally in the cloud so providing evidence in practice assurance assessments is quick and easy.
For many practices recruitment is becoming more of a challenge, especially for candidates with experience and/or specialisms. This has led to strong competition for talent which in turn has driven wages to rise and practices outside of major cities to increasingly struggle to attract the required personnel.
One of the issues behind this is the rapidly evolving nature of the modern day accounting industry and the technology and tools available to it. This is creating new roles and specialism that then must be filled. As these roles are newly emerged, the talent market has yet to catch up and candidates that are experts in them are in short supply. In this absence, many firms are instead looking for tech savvy recruits that can be trained in the required roles and systems.
There is also an increasing demand for individuals with experience and skill in data analysis, financial modeling and analysis as accounting becomes more data driven.
Those accountants seeking to attract hard to find talent are increasingly having to rely on increased salaries, more benefits, and improved workplace culture to fill their vacancies.
Wages are not the only costs accountants have seen increase since 2020. Almost all facets of business are significantly more expensive than they were a year ago, let alone before COVID.
Whilst inflation has fallen significantly since the peak of the cost of living crisis, it still remains high and businesses continue to raise prices to account for this. Independent of inflation; supply chain issues, shortages, and energy costs have led to price rises.
Most firms are facing this with reserves that are already seriously depleted. Making rising costs a legitimate threat to many UK companies solvency.
Accountancy practices must maximise their efficiency to combat this problem. By leveraging the correct technology, processes can be made quicker and more accurate, time to revenue reduced, and cashflow protected.
This is a trend seen across many sectors and is especially true of accounting. As customers, we are expecting more and for it to be delivered faster.
Accountants are now expected to provide services beyond just accounting as part of their basic offering. Increasingly, accountants are being relied upon to be a source of advice for their clients and to help them navigate both day to day and complex problems.
This means that accountants are now spending more time on each client than they were previously. Often these additional services were not discussed in the initial fee negotiations and are essentially delivered for free as a part of scope creep.
Whilst accountants should embrace this evolution to their role, as it actually increases their value to their clients, they should not be shy about charging appropriately for them.
Accountants will be acutely aware of the levels of bad debt and insolvency present in 2024. With 2023 seeing 30 year high levels of insolvency and this year expected, and on course to, exceed it, accountants exposure to the risk of bad debt will only increase.
It is imperative that this is avoided as a company that has experienced a bad debt is three times more likely to fail in the following twelve months than has that has not.
Fortunately, accountants leveraging Red Flag Alert data are in an especially strong position to protect themselves from the risk of bad debt. Our platform provides the most accurate insolvency score in the UK, live data feeds, winding up petition data direct from the UK courts (6-8 weeks earlier than the gazettes), UK first CCJ information, and much more.
We also provide the most effective company monitoring tool available that allows you to create separate monitoring portfolios and select which events trigger alerts for each. These alerts can be shared across your business to ensure that your business never misses a critical event and reacts before it becomes threat.
Accountants can then not only monitor their own clients but also their clients key customers. This provides an added layer of protection to their business and provides a service that differentiates them from their competition.