Xero report revealing advisors are being relied upon by small businesses for services beyond traditional accounting and compliance, with app and software setup the most frequently offered service.
Xero’s State of the Industry report, which surveyed more than 550 accountants and bookkeepers across Australia, provides insight into how the post-pandemic landscape and ongoing talent shortage has changed the role of advisors and their offering to small business clients.
The report found 85 percent of large practices surveyed are being relied upon by small businesses for more services and support in the past six months, following the pandemic. Beyond traditional practice offerings, value-adds such as support with app and software set up (35%), HR advisory (38%), and startup mentoring (33%) are sought-after services.
Will Buckley, Country Manager, Xero Australia said, “As we look to the year ahead, we know that small businesses will have a lot to navigate. I am encouraged to see this research confirm what we suspected; that accountants and bookkeepers are playing a more holistic role in supporting their clients, and the digitisation trend that accelerated during the pandemic looks to be continuing.
“The findings from Xero’s research highlights more clearly than ever the critical role accountants and bookkeepers play in keeping small businesses up and running – not just with their finances but now in other business-critical functions as well. Making up over 97 percent of all Australian companies, small businesses are the lifeblood of Australia’s economy and supporting them is an important responsibility for the industry.
“However, as the role of advisors and the value they offer small businesses continues to evolve, addressing the skills and talent shortage required to offer these services continues to be a key priority.
When it comes to staff retention, practices need to start thinking differently about attracting and retaining employees” says Buckley.
Across the industry the demand for skilled workers remains a challenge, with 38 percent of all practices surveyed citing hiring experienced team members as a concern, and almost one-quarter (22%) of all practices surveyed reporting having difficulty with hiring in general.
To mitigate these challenges within the people and culture space, practices are taking action. One third (33%) of firms surveyed are now tracking staff wellbeing through surveys and performance apps, while 40 percent are offering employee benefits and the same amount are providing development and training opportunities. Only 29 percent of all practices surveyed have increased remuneration, and 32 percent are choosing to hire new graduates/interns to support workflow.
A varied outlook for the year ahead
With more economic turbulence predicted in the year ahead, two thirds (66%) of large practices surveyed anticipate their clients will need more support, however this is less evident with smaller practices (36%).
This comes as 44 percent of first-time small business clients over the last 12 months originated from newly created businesses. For practices themselves – 45 percent are forecasting an increase in fees, while 31 percent of all practices have revealed they’re likely to reduce staff, due to the impact of the economic environment.
“There is no doubt 2023 is going to be another demanding year for Australia’s small businesses and the accountants and bookkeepers that support them. As advisors become even more ingrained in the small business support system, it’s imperative we get behind the accounting industry so they can continue to evolve their services to support Australian small businesses to flourish,” concluded Buckley.
Key findings from the State of the Industry report include:
- 85 percent of larger practices claimed some (41%) or most (44%) of their clients were relying on them more for services and support over the past 6 months.
- Larger practices are providing more advisory related services in areas like HR advisory (38%),
- sustainability reporting (24%) and startup mentoring/business development (33%) and advice on capital raising (32%).
- One third of all practices are prioritising the importance of tracking staff wellbeing (33%)
- Almost half of all practices foresee a need to offset rising inflation by increasing their staff wages (44%) and consequently increasing their fees (45%).
- Despite pressures on practices (and clients) 79% are managing to meet compliance deadlines without needing extensions.
- Larger practices (11+ employees) gained half (53%) of their new small business clients from entrants to the market.