Embracing growth and efficiency: Key Insights from the UK Accounting and Bookkeeping Industry Report 2023
We are pleased to share the key findings from our study of the accounting and bookkeeping sector. This report involved engaging with over 600 accounting and bookkeeping professionals practising across the UK, from sole practitioners to large practices.
Despite global economic uncertainty and rising inflation, this sector has shown remarkable growth and resilience. Encouragingly, over half of the respondents reported substantial business growth driven by increased revenue, profits and client numbers.
Take a look at some of the key highlights from the report below.
A year of consistent growth
Across all practice sizes, 72% of those surveyed confirmed an increase in revenue and profit. More than half (57%) of micro-practices and 65% of small practices also reported revenue increases. Large practices emerged as the biggest winners, with 30% reporting a significant increase in revenue.
New client acquisition has been a driving force for growth, with practices adding an average of 31 new clients to their portfolio.
Diversified service offerings are vital to driving growth
Nearly half (42%) of the firms we surveyed cited offering new services as one of the leading reasons why their practices have experienced increased profits and revenue.
On average, practices offer around six services to their clients, with bookkeeping and advisory being the most common. While bookkeeping remains prevalent across all practice sizes, medium and large practices generate more revenue from advisory services.
Much of this is thanks to practices adapting to rising economic changes by reevaluating customer requirements and focusing on enhanced service delivery.
A promising opportunity for small practices to further drive practice efficiency
Nearly all practices we surveyed (95%) have embraced cloud-based software to some level. While cloud adoption is widespread, a promising opportunity exists for smaller practices to further harness the benefits of cloud technology. Practices leveraging cloud software for multiple tasks exhibited a 75% increase in profits, in contrast to the 39% reported by those using it for a single task.
While this is an excellent sign of progress for the industry, what’s interesting is that medium and large practices are more likely to use cloud-based software for multiple tasks than micro and small practices. This indicates an opportunity to encourage optimised usage across micro and small firms by raising awareness of the power of cloud software to drive practice efficiency.
Positive client relationships, increased job satisfaction & greater efficiencies
An impressive 63% of respondents credit cloud-based software with significantly improving client services, leading to more positive client relationships and enabling a better understanding of their client needs.
Amidst industry-wide talent challenges, 53% of practices that have adopted cloud-based software saw a surge in job satisfaction and employee satisfaction.
Furthermore, seamless cloud integration with existing software has boosted practice efficiencies across firms of all sizes, with 52% of practices saying that they have saved time on manual daily tasks. This has also facilitated the introduction of simpler billing models in 47% of practices, streamlining their billing process, saving time and allowing them to do more of what they love.
Not only this, practices using Xero for bookkeeping, accounts production and tax and practice management (67%) reported more time saved on daily manual tasks compared to non-Xero cloud users (49%).
Unlocking the full potential by maximising features and tools in cloud-based software
While the appetite for cloud adoption is rising, there is room for improvement to maximise the usage of cloud-based software’s various tools and features.
Connecting bank feeds, data capture tools, and payment tools still need to be adopted by practices, especially the micro ones. It’s also worth bearing in mind that practices implementing payment tools for over half of their clients have reported an impressive 80% surge in profits.
Embracing growth and efficiency
The UK accounting and bookkeeping industry has experienced growth and positive changes in 2023. Cloud-based software has played a crucial role in this success, driving increased efficiency, enhanced client services, and improved employee satisfaction.
The ability to seamlessly integrate cloud-based software with existing accounting tools presents an opportunity for practices, particularly smaller ones, to further optimise operations.
Through better cloud adoption, and by offering a diversified range of services, accounting and bookkeeping practices can enjoy continued growth and success in the years to come. Download the full UK Accounting and Bookkeeping Industry Report 2023 for all the key data and insights to help you embrace growth and efficiency in your practice.
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Source: Xero Blog
