Effective and meticulous accounting is the backbone of every business. Accountants are used for much more than just ongoing tax advice. They also offer services that can help a company develop strategy, make decisions, and adhere to accounting standards and regulations, thus becoming a strategic partner.
However, just as in any industry, accounting is continuously developing to meet the ever-changing business needs, especially in the light of evolving technology, regulatory changes, and market demands.
So, with this article, we want to bring you up to date with the top ten accounting industry statistics and trends that can hopefully help shape your decision-making when choosing the right accounting partner for your business.
So, without further ado, let’s dive in.
Ten Accounting Statistics and Trends That You Need to Know
1. The biggest issue facing all the companies in 2022 is keeping up with regulatory changes (AccountingToday).
Yes, that’s right. Covid-19 is a recent example of how financial reporting has been affected. Keeping up with the regulatory environment can be overwhelming, and noncompliance can result in fines. Working with a reputable accountant can save time and uphold quality in your financial reporting.
2. 58% of organisations embraced the benefits of shifting to cloud computing and using cloud-based accounting systems (Sagenext).
Cloud technology enables organisations to securely access their data anytime and anywhere, improving accounting data accuracy and automating routine operations. In the long run, cloud accounting provides cost-effective gains while supporting the expanding needs of scaling businesses.
3. The return on investment from accounting automation is usually between 6 and 18 months (MHCAutomation).
Investing in a fully automated accounting system will reward you with a high ROI in a relatively short amount of time. You should not think about whether it is worth automating your finance function – it is an absolute must moving forward.
4. Only 61% of business owners are completely satisfied with the range of services provided by their accountant (Onpay).
Are you having doubts about the efficiency of your current finance function? Do you feel like your existing finance staff lacks the expertise to support your growing business? Would you like your accountant to be more proactive?
Having a high-functioning finance team is critical since it can help drive the costs, improve processes, safeguard your business from risks and navigate challenging circumstances while sustaining growth.
5. 29% of company owners do not know which area of their business has the highest expenses due to the lack of day-to-day insight into the finances (APQC).
Studies indicate that business owners find it hard to understand where their money is spent, how much they have, and, more importantly, where they could optimise for growth or savings. As a result, organisations can be exposed to financial risk because executives are guided by incomplete information every month.
6. Among businesses that use accounting services, 22% employ a full or part-time outsourced accountant (Clutch).
Outsourcing your finance function could be a great option, especially if you do not have the resources to employ an in-house finance team. An external accounting partner can help you automate routine accounting tasks, audit your business, and ensure your company’s financial health. In addition, they can shape the strategic direction of your business and optimise processes, so you can focus on growing your business.
7. 45% of businesses outsource their payroll function (NSBA).
Running payroll internally can be costly. Outsourcing the payroll function might be a time- and money-saving option for internal processing if your organisation has employees working various hours each week or has a high turnover rate.
Let’s also not forget the calculation of statutory payments, such as sick pay or maternity pay, and the preparation, reconciliation, and submission of employee documentation as needed by HMRC. Such a broad range of activities necessitates the hiring of several human resources professionals, ultimately straining your working capital.
8. Only 36% of UK SMEs make use of external finance, with 6 in 10 companies resorting to personal funds rather than borrowing from alternative sources (Bank of England).
Access to external capital is a challenge for small-to-medium-sized businesses, stalling long-term productivity and growth. There are many reasons for this, from market failure due to asymmetric information between the lender and the borrower to business owners not wanting the hassle of finding alternative funding options.
No matter your circumstances, your financial advisor should be able to provide direction in relation to the many fundraising options available for SMEs.
9. For 34% of companies in the United Kingdom, increasing costs are one of the main obstacles in running a business (Statista).
With soaring energy prices and declining sales, organisations are struggling to stay afloat. Often business owners must make difficult decisions, such as laying off employees or cutting marketing budgets.
If you want to protect your margins, it is essential to work alongside your accountant to see which costs could be reduced or eliminated altogether.
10. 38% of startups go bankrupt due to running out of cash or being unable to raise additional capital (CB Insights).
Inadequate cash flow in and out of the organisation is caused by various issues, such as a lack of product-market fit, a failure to capitalise on opportunities, or delays in seeking funding.
Equally, cash flow is a common problem among more established businesses. Late payments, slow business performance, and insufficient cash reserves – can all contribute to poor cash flow management. However, your finance department should be able to revise your current financial situation, identify weak areas and advise you on the best course of action.
Here you have ten accounting trends and figures to look out for before reconsidering if your existing finance staff is effectively supporting your business.
At Sanay, we can be your virtual book bookkeeping partner, a remote financial controller, or an outsourced finance department. No matter your needs, we can help you get your business finance on track.