Accountants can help SME clients build resilience to stay afloat in choppy trading conditions.
At a glance
- The economic climate is increasingly strained, and SMEs are feeling the impacts
- There are proactive steps they need to take to safeguard against uncertainty
- Accountants must act as strategic advisers – not just number crunchers
Regulatory changes, inflation, rising costs and supply chain and talent squeezes have created a challenging trading environment. Businesses that build their resilience will be able to better manage the external volatility.
New research from e-Residency reveals that nearly a quarter (24%) of small business owners say that financial pressures mean their businesses are not growing, and 63% UK are unsure their business will survive the year ahead. Over two in five (42%) cite inflation and rising borrowing costs, while 20% highlight global trade uncertainty as a factor.
We spoke to experts about practical ways accountants can support small business clients through turbulent times.
Assessing and planning for shocks
The first step, says Todd Davison, Managing Director of Purbeck Insurance Services, should be working with the client to develop their risk register. “This is an opportunity for a firm and accountant to take a step back from the day to day running of the business and focus on critical aspects to determine what the key risks to the business are,” he says.
This register should outline all potential risks – whether financial, regulatory, customer reliance, key person dependency, reputational, competitor or succession.
The next step is conducting scenario planning, which includes modelling and analysing the impact on the business of developments such as the loss of a major customer or supplier or increased competitive pressures.
Once the risks have been identified and assessed based on their likelihood and potential impact, appropriate mitigation strategies can be developed and implemented.
Building resilient business models
A focus on diversifying revenue streams, strengthening client relationships and retaining staff are critical in the current climate.
Davison notes that firms should engage with clients to understand service levels, using net promoter scores and identifying any gaps in the service or product provided. “This could also provide an opportunity to understand whether any cross or up-selling opportunities exist with clients to increase revenues,” he says.
On the issue of staff retention, he says: “Employee satisfaction surveys are a useful indicator of morale of employees and recommendations/suggestions should be harnessed to encourage retention.”
Davison also recommends looking at schemes such as EMI (Enterprise Management Incentive), CSOP (Company Share Option Plan), and salary sacrifice schemes to encourage staff engagement.
Financial buffers
AdvanceTrack’s Managing Director, Vipul Sheth, recognises that clients increasingly expect their accountants to provide strategic advice to help weather the financial storm, particularly in terms of assessing liquidity and debt and cost control.
Accountants are more than number crunchers, providing clients with guidance during tough economic times and helping clients review their cash flow and everyday financial plans can play a key role in keeping businesses on track.
“Accountants are perfectly placed to provide analysis on things like cashflow, debt structures, and scenario planning – and as things progress, I think we’ll see more accountants being asked to provide this kind of analysis in order for businesses to look at liquidity,” he says.
Safeguarding through digital transformation
Inefficiencies caused by outdated systems and processes are costing UK accountancy firms up to 16% of potential revenue, according to a recent Silverfin report.
Turning to technology can not only optimise operational costs, says Cameron Ford, UK General Manager at Silverfin, but also unlock more capacity. “The right technology has the potential to become a true growth engine for accountancy firms, and by extension, their clients.”
AI and automation have a critical role to play in streamlining workflows, reducing errors and freeing up time to focus on strategic tasks. However, adoption alone isn’t enough and many firms are not yet realising the full benefits of their technology investments.
Ford believes this is a good opportunity.
“The firms that thrive through economic uncertainty will be those that not only invest in technology but align strategy with execution, rethink workflows, and equip their teams with the skills and training to truly make it work,” he says.
The human factor
Communication is the best way for accountants to better understand their clients’ vulnerabilities, says Sheth. “Firms need to take time to nurture relationships with clients. If the relationship is merely transactional you won’t be able to get a real deep understanding of your client’s needs, wants and goals.”
It’s important for accountants to provide consultative advice on liquidity and future forecasting. Sheth says: “As part of that, it’s essential to really get under the bonnet of your client’s business to understand not just their strengths, but also their pain points too.”
Regulatory outlook
The Office for National Statistics revealed that during the 2024/25 financial year the UK government borrowed £151.9 billion – £14.6 billion more than the OBR had projected. Sheth notes that small business owners tend to be affected more acutely by economic struggles.
The key is to start financial planning now. “Make sure financial advisers are providing dynamic advice on how the finances are looking; and most importantly, it’s vital that your balance sheet has been stress tested to ensure that your business can handle any potential fiscal policy changes in the coming months.”
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