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Accountants key to small business survival in pandemic

In new research from Xero, conducted by World Wide Worx, two-fifths of small business owners said their accountant helped them save jobs in the past year

More than half (56%) of South African small businesses say their accountant has been crucial in helping them survive the impact of Covid-19. An overwhelming proportion of SMEs (86%) indicated that they would support a call on government to recognise accountants as ‘essential workers’ in economic recovery.

According to new research from global small business platform Xero, 37% of small firms said their accountant was more important than ever before. Almost half (46%) also admitted that they were more likely to turn to their accountant for advice than looking at government websites and resources (37%).

The data also revealed the positive impact accountants have had in supporting the wider economy.  40% of business owners said working with an adviser helped them to better manage finances and keep employees on the payroll. This is particularly significant given the South African economy lost 2.2 million jobs in the second quarter of 2020, according to a survey released by Statistics South Africa.

Colin Timmis, country manager at Xero South Africa and professional accountant, says: “Behind every resilient small business sits a hard-working accountant. This new research shows that they are the unsung heroes of the past year. They’ve helped our small business community remain open and retain employees. We’ll see so much more from them in the months ahead as we enter the next phase of recovery.”

The changing role of accountants

The research reflected the changing role of the sector from number-crunchers to business advisors. The top areas SMEs were supported by their accountant over the last 12 months were: planning for the future (49%), accessing relief funds (35%), accessing other sources of capital (34%) and advice on digitising processes (23%). 43% said their accountant has been acting as more of a business consultant – advising them on how to develop their business.

“The most interesting insight highlighted by the research is the continual evolution of the role of the accountant,” says Arthur Goldstuck, managing director of World Wide Worx, which conducted the field work for the project. “When we first began researching the state of small business in South Africa for Xero, we saw a high level of intention to use accountants in a more strategic role. Now that has become a reality and a key to survival during the pandemic. This will, in turn, further accelerate the evolution of the strategic role of financial professionals.”

Adam Young, owner of Cape Town-based leather bag company Rowdy says: “Our accountant is an irreplaceable part of our business.”  According to Adam, Rowdy has relied on their accounting firm for reporting, best practice advice, and guidance about international sales, especially though the pandemic. “With the help of our accountant, we don’t have to be bogged down by the numbers. We can just focus on the actual running of the business.”

Milton Segal, Senior Executive at SAICA, says:“Today’s accountants bring a wide-ranging skill set to small businesses. They will continue to support core compliance activities like tax, VAT and payroll, as well as bringing significant technical and strategic guidance too. Their guidance this year will play a critical role in helping businesses to remain afloat, but also to support with broader business strategy, digitalisation and long-term sustainability.”

Accountants set to play critical role in recovery

The top three areas small businesses said they will need support for as they emerge from the pandemic are all related to managing finances: cash flow forecasting (50%), general budgeting (44%), and financial management (41%). They are also looking for support in areas like cloud tech (18%) and digitalisation (19%). These are all areas accountants have the potential to make a big impact.

Timmis says: “The government, industry bodies and the technology community all need to work together to support the transformative role that accountants can have on South Africa’s small business industry. This means ensuring they have the right digital tools and skills to thrive. Creating a healthy accounting industry will help build a healthier economy in South Africa.”

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