By Xero Malaysia
The role of accountants today is more important than ever. The pandemic brought economic uncertainty and a host of difficulties to many businesses globally. Accountants are instrumental in helping their clients navigate the unprecedented business challenges, sustain operations and leverage governmental relief packages. While we enter into a phase of recovery, now is the time to look back at how practices in Singapore have fared over the past 18 months, and the learnings they can take moving forward.
In spite of the challenges, there has been one clear upside — the acceleration in tech adoption. According to Xero’s latest annual report, over half (56%) of practices in Singapore say they were able to take advantage of their client’s changed attitudes to implement new technology. Tech isn’t only beneficial to SMEs, but also proves advantageous to accounting practices themselves. For example, practices with a greater proportion of clients that use client accounting software have more clients on average than those who don’t (52 clients vs. 31 clients on average). The net impact of this translates to additional revenue.
In a competitive market, there is no excuse for practices to waste time on manual tasks that can be easily automated, from invoice processing, purchase order matching to payment reconciliation. The time freed up can be spent instead on creating value through decision support, by interpreting and analysing data to make recommendations.
As a trusted advisor, accountants can and should encourage clients to shift to tech solutions. Data shows that practices have a great deal of influence over the accounting software used by their clients, with six in ten (62%) saying that the software they recommend gets adopted by their clients. Given the level of trust clients place on their accountants, it is important that accounting professionals share their expertise in recommending software, instead of leaving it to a client’s suggestion. This helps reduce the load on internal software training and streamlines workflow.
There are other missed opportunities for accountants that do not take on an advisory role. Looking at revenue generated by Singaporean practices over the past year, compliance services account for 62% of revenue, while advisory services account for only 35%. This shows significant potential for practices who have yet to take on an advisory role. To demonstrate, for those in simple advisory practices, startup mentoring offers the highest revenue potential, averaging $53,349 in annual revenue. This is perhaps unsurprising, considering that over 50,000 new businesses are formed on average in the city-state each year, according to the Singapore Department of Statistics. For those in complex advisory practices, audit and other assurance services show the highest revenue potential.
Overall, accounting and bookkeeping practices appear to have held their ground through the pandemic, with almost two-thirds of practices reporting that revenue has stayed the same (25%) or increased (39%). This is a testament of their inherent value and contribution to existing and new clients that are turning to advisors to help sustain and grow their businesses during these critical times and adopting new ways of work.