Accountancy Opinion Exchange

Transcription

1 Accountancy Opinion Exchange 8 Minute Read

2 Accountancy Opinion Exchange 1 / 2 / 3 / 4 / 5 / 6 / 7 / 8 / Executive Summary Introduction Methodology Cost of Accountancy Services Offered What type of accountant/accountancy firm should companies use? Reasons for not using a large accountancy firm Conclusion 2

3 1 / Executive Summary KPMG commissioned an independent research firm to survey 200 small businesses as to their views on their current accountant, what services they receive, which services they would like to receive, and what they currently pay. 3

4 Key Findings: Almost 1/3 of small businesses pay more than 5,000 a year on accountancy services. The more money small business owners part with, the less satisfied they are with their accountant. There is little difference between the number of services business owners who pay less than 1,000/year get, compared to business owners who pay more than 4,000/year. Small business owners are only getting an average of 5 out of the 13 primary services for their annual fee, this is just 38.5%. Not enough small business owners are getting the services that they want from their accountant/accountancy firm. Small business owners want to change accountants but they fear it will be too much hassle to move. Small business owners believe that large accountancy firms are too expensive, however the average spend for those using a freelance accountant or high street accountancy firm is 3,097 a year. This is comparable to what they could pay for a small business arm of a national firm. Finally and most importantly we have discovered that small businesses are using the wrong type of firm. Nearly half of small businesses should be using a large national/global accountancy firm, however only 10% actually do; and only 1/3 should be using a high street accountancy, however almost double currently do. 4

5 2 / Introduction It is estimated that there are over 6,500 registered accountancy firms operating in the UK and thousands more unregistered firms and freelance accountants. The challenge for business owners is to choose the right one to support their particular requirements, ambitions and budget. The most popular approaches for finding an accountant include word of mouth recommendations, networking or searching for a local firm. Arguably none of these are thorough enough for selecting arguably the single most important supplier of services to a small business: the supplier that could, at best, make you grow faster and more profitably; or, at worst, leave you bogged down with paperwork, unaware of looming financial crises and possibly even facing the wrath of HMRC. So how can you choose better? Should you chose a freelance accountant, a high street accountancy firm or a large national (or even global) accountancy firm next time? To help businesses make the right decision we, KPMG, conducted an Opinion Exchange to compare the views and experiences of 200 UK small business owners to see exactly what they are currently doing, and whether it is the right choice. 5

6 3 / Methodology It seemed that you all had a lot to say, with varying experiences and views. This report brings these views and experiences together to give you a bird s eye view offering you the chance to explore what your peers are doing at a glance, and help you decide which approach is best for your business. It might come as a surprise. While KPMG offers accounting services to SMEs, we didn t want this to influence the opinions expressed. So we asked an independent research organisation to undertake the opinion gathering, and analyse the results. More than 200 small UK business owners (those with 1 to 30 employees) from over 40 industries took part. 6

7 What type of accountancy does your business currently use? The majority (64.2%) of business owners that responded use high street accountancy firms. However, this doesn t mean it is the best option for them (see later in the report): We do our accounts in-house / 10.0% National or large accountancy firm / 10.0% Other / 2.0% Freelance accountant / 14.4% Local or regional high street accountancy firm / 64.2% 7

8 4 / Cost of Accountancy 8

9 How much do you currently pay your accountant/ accountancy firm? We asked business owners how much they pay each year for their accountant/accountancy firm, and the figures were surprisingly high considering the number of services they get for this money (see later): Less than 250 per year per year 1.0% 2.0% 500-1,000 per year 9.0% 1,000-2,000 per year 19.9% 2,000-3,000 per year 3,000-4,000 per year 4,000-5,000 per year 11.9% 10.0% 13.4% More than 5,000 per year CONCLUSION / Almost 1/3 of small businesses pay more than 5,000 a year for accountancy services. 9

10 Annual fee vs. employee numbers This graph shows the fee breakdown by company size. As you would expect, the larger the company, the more they pay for accountancy services: 1 to 5 employees 2,201 6 to 10 employees 3, to 20 employees 4, to 30 employees 4,283 CONCLUSION / The average price small businesses are paying for their accountancy services is 3,402 annually. 10

11 Annual fee vs. satisfaction with accountant Overall, small business owners appear happy with their freelance accountant or high street accountancy firm. However, as this report will show, this may be because they don t realise that there are better options out there. This graph shows the correlation between the amount paid for accountancy services and satisfaction with accountancy firms: Up to 1,000 a year 8.7 1,000 to 2,000 a year 8.6 2,000 to 4,000 a year 8.3 More than 4,000 a year 8.1 CONCLUSION / The more money small business owners part with, the less satisfied they are with their accountant. 11

12 Number of services based on price paid You would expect there to be a big difference in the number of services those paying less than 1,000 get for their fee, compared to those paying more than 4,000. However, the difference is very small. Those paying less than 1,000 get an average 4.5 services for their fee, compared to those paying more than 4,000 who get an average 5.9 services for their fee. What s more, those paying 1,000 to 2,000 only get an average 4.2 services for their fee, highlighting inconsistencies in the industry. Up to 1,000 a year 4.5 1,000 to 2,000 a year 4.2 2,000 to 4,000 a year 5.1 More than 4,000 a year 5.9 CONCLUSION / There is little difference between the number of services business owners who pay less than 1,000/year get, compared to business owners who pay more than 4,000/year. 12

13 5 / Services Offered 13

14 Which of the following services do you get for the fee you pay and which are you charged extra for? The most common accountancy services that business owners get from their accountant/accountancy firm is what you would expect - annual returns and tax returns. However, there are a number of services that not even 50% of business owners get as part of their fee, and many accountants/accountancy firms don t even offer them. My accountant/accountancy firm does not offer these services My accountant/accountancy firm offers this for an additional fee I get this as part of my fee 1.2% 1.8% 2.9% 2.4% 3.7% 7.1% 9.4% 22.4% 23.6% 24.7% 91.7% 88.9% 74.7% 74.0% 71.6% 23.2% 15.4% 15.0% 35.4% 29.4% 45.0% 38.7% 46.4% 30.8% 35.0% 17.6% 27.2% 20.7% 59.2% 24.2% 53.8% 17.5% 50.0% 20.6% 43.9% 43.4% 37.5% 37.1% 33.0% Annual Returns Tax Returns Unlimited help from a dedicated accountant Payroll VAT Real-time overview of the business finances Bookkeeping Cash flow analysis Submitting expenses digitally Access to broader services as your business grows Access to a wide network of companies Monthly calls about your business performance Online accounting software CONCLUSION / Small business owners are only getting an average of 5 out of the 13 services outlined above for their annual fee, just 38.5%! 14

15 What small business owners think of their accountant We asked small business owners what their freelance accountant/high street accountancy firm could do to offer them a better service. Generally the message was that they wanted them to add value it isn t about just doing the end of year returns, but helping them make decisions and give them some direction to help the business grow. Here are some of the comments: Be able to answer questions that are not the basics like about tax, ownership, international trade, overseas companies etc. etc. etc. Advice about my business. Prepare a dashboard of my current financial position. Perform better (accuracy). Online accounting software. More regular contact, with more analysis of my business through the year Perhaps talk to us about the profitability of our company and be able to steer us in what direction to take to expand. Help me implement tighter financial controls/ systems & business KPIs. Also, a more forensic look at our outgoings and providing help with identifying inefficient and costly parts of the business and cutting them out. 15

16 % of companies who receive each of these services as part of the fee vs. importance of these services This graph shows a clear disconnect between the services that freelance accountant and high street accountancy firms offer their clients vs. the services that small business owners think are important. In almost every case the service is desired more than it is actually provided. Percentage who get this as part of their fee How important this service is % 93.7% % % % 73.8% 74.5% 31.8% 36.1% 36.7% 40.5% 42.0% 45.8% Online accounting software Monthly calls about your business performance Access to a wide network of companies Access to broader services as your business grows Submitting expenses digitally Cash flow analysis Bookkeeping Real-time overview of the business finances VAT Payroll Unlimited help from a dedicated accountant Tax Returns Annual returns CONCLUSION / Not enough small business owners are getting the accountancy services they need. 16

17 6 / What type of accountant/ accountancy firm should companies use? Of the 13 services listed, we have calculated how many of these were an important service for a company s accountant/accountancy firm to offer. Based on this the number of services they need determines if they are best suited to a freelance accountant, a high street accountancy firm or a large national/global accountancy firm. Here are the results: Those who need just one or two services best suited to a freelance accountant. Those who need between three and five services best suited to a high street accountancy firm. Those who need six or more of the services best suited to a large national/global accountancy firm. 17

18 Best accountant/accountancy option based on services needed Actual Best option Best suited to a large national/ global accountancy firm 10.0% 46.3% Best suited to high street accountancy firm 32.8% 64.2% Best suited to freelance accountant 14.4% 20.9% CONCLUSION / Small businesses are using the wrong type of firm. Nearly half of small businesses should be using a large national/global accountancy firm, however only 10% actually do. Only 1/3 should be using a high street accountancy firm, however almost double currently do. 18

19 7 / Reasons for not using a large accountancy firm So why are so many businesses using high street accountancy firms if it is not the best option? To shed some light we asked those who said they were unhappy with their accountant why they haven t moved and the most common reason cited was it is too much hassle to move. 19

20 If you are unhappy with your accountant/accountancy firm why have you not moved to another one? It is too much hassle to move 59.4% I don t have the time 31.3% They are all the same 31.3% Other 21.9% I am in the process of moving 18.8% It will cost too much 12.5% CONCLUSION / Small business owners want to change accountants but fear it will be too much hassle to move. 20

21 Common misconceptions There are also some common misconceptions amongst those using a freelance accountant or high street accountancy firm that could be leading businesses to sway towards a high street accountancy firm: 64% of small business owners agree that the larger an accountancy firm is, the more expensive it will be; and 57% agree that the larger an accountancy firm is, the less personal the service will be: The larger an accountancy firm is, the less personal the service will be 7.3 The larger an accountancy firm is, more expensive it will be 7.7 CONCLUSION / Small business owners believe that large accountancy firms are too expensive, however the average spend for those using a freelance accountant or high street accountancy firm is 3,097 a year, which is comparable to what they would pay for a small business arm of a large firm. 21

22 8 / Conclusion Almost 1/3 of small businesses pay more than 5,000 a year on accountancy services. The more money small business owners part with, the less satisfied they are with their accountant. There is little difference between the number of services business owners who pay less than 1,000/year get, compared to business owners who pay more than 4,000/year. Small business owners are only getting an average of 5 out of the 13 services for their annual fee, this is just 38.5%! Not enough small business owners are getting the services that they want from their accountant/accountancy firm. Small business owners want to change accountants but they fear it will be too much hassle to move. Small business owners believe that large accountancy firms are too expensive, however the average spend for those using a freelance accountant or high street accountancy firm is 3,097 a year, which is comparable to what they would pay for a small business arm of a larger firm. Finally and most importantly we have discovered that small businesses are using the wrong type of firm: Nearly 1/2 of small businesses should be using a large national/global accountancy firm, however only 10% actually do; and only 1/3 should be using a high street accountancy, however almost double currently do. 22

23 This research clearly shows that needs vary and sometimes freelance accountants and high street accountants are absolutely the right choice. However, if your needs are complex and you do not choose your accountant based on their proximity to you, then one option that might suit your business is a large accountancy firm. If this is you, then we would love to talk to you about our small business accountancy offering which gives you all the services listed in the report plus more for a low fixed monthly fee. To find out more and start a free 30 days trial please visit our website: If you could like to discuss further please contact us on: Phone / / support@kpmgenterprise.co.uk kpmgsmallbusiness.co.uk 2015 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.