by Andreea Deac, Founder & CEO Lexarox Accounts
In this world, we are influenced by two major laws: Gravity and Economy. Absolutely everything in this universe moves thanks to gravity, and absolutely any other thing that moves the planet is because of the economy. And as we all know, talking about the economy, means we are talking about MONEY.
Everywhere you go in the world you will notice that people use different financial instruments such as money, stocks, bonds, cryptocurrency nowadays and other commodities to purchase goods or services for themselves or for their business. Normally you are not able to buy products or services with likes or shares on Instagram, only if, of course, you are a famous influencer, and this is how your work is paid for.
To keep a track of the movement of money we need accountancy, and accountancy is the bread and butter of the economy in every society in the world.
During the covid-19 pandemic, accountants all over the world have been placed under huge pressure, both professional and personal. Without exaggerating, accountants could be considered front line workers, and this is because they had to be in constant contact with the clients in order to help keep the business to stay healthy, up and running as well as to avoid catastrophic financial losses.
People’s fear in general created a threat to the industry and this fear has been growing gradually from three different areas:
👉 Lockdown and Restrictions during Covid-19 Pandemic
👉 The impact of Brexit along with the threats generated by the pandemic
👉 Fast migration to a digital era
Lockdown and Restrictions during Covid-19 Pandemic
In general, the big changes are produced by situations caused by fear and crises, especially in the business world. Entrepreneurs had to take fast decisions, apply rapid strategies to save the business, but at the same time bear in mind the interest of the business, employees, partners, and also personal interest. Risk assessments and budget reports of small and medium-sized companies did not include anything that was about to happen. No one could imagine that over the night the world would lockdown and neither for how long. We had to act fast and that is what a real entrepreneur should do.
It is true that the government allocated a huge budget for supporting the economy. In order to access these funds, there is a process that needs to be followed, and eligibility criteria need to be met. In order to bring the money from the government’s pocket into the businesses and employees’ pockets, the accountants had to act quickly and work day and night. As every business was a priority and time was of the essence.
Furlough schemes, bounce back loans, self-employed grants, eat-out-to-help-out, VAT reduced rates, and many other new governmental new schemes that never existed before, now were the hottest topics of discussion between accountants and clients. We can truly say that the government in this country, compared to others, had done a great job. And this by setting up the financial help system for businesses and individuals and making it very accessible and reliable for anyone who had been following the rules. Of course, some of the businesses considered that the only way out is to give up and file for insolvency. But we have always advised this as a last resort to our clients. We know how hard is to materialize a dream from the scratch, therefore we support our clients and help them cross these difficult situations.
The impact of Brexit along with the threats generated by the pandemic
Not long before the pandemic financial crisis, we have experienced the threat and fear produced by the political changes of the UK leaving the European Union. As CEO of Lexarox Accounts, I was asked during an interview back in May for a Romanian Magazine how does the impact of Brexit affects society. I said then, we are not able to see these changes yet, but for sure, by the end of the year, we can apportion the percentage between the impact of Brexit and the impact of the pandemic in the business world.
The right to work in the UK for EU citizens has been limited and it is possible only based on a working visa. To obtain a working visa is becoming harder and harder, especially for non-skilled workers, therefore creating a crisis of the labour force in many industries.
- Employees are finding it harder to find a cheap labour force as before (therefore leading to a higher cost of labour, impacting direct proportional on our services and products).
- The educational sector is also suffering as there are fewer and fewer European union students who are eligible to access the student loans for university fees and maintenance.
- The international transport industry is affected, having to adapt to the new legislation and custom rules.
A big number of industries needs to comply with new regulations and tax treaties and for this reason. Therefore, it is highly important to have a good relationship with an accountant that is knowledgeable enough and that is constantly up to date with the new rules and legislation. We are all part of the movement, and we need to keep the economy of the planet going.
Fast migration to a digital era
During my studies in law, my colleagues find it very hard to understand the basics of accounting, but at the same time, an accountant must understand the basics of law. As an accountant, if you don’t know the legislation, then you can’t really help your client. Financial and legal go hand in hand. You should always look for this combination when you are choosing your business advisor.
I like to consider that accountancy is half science and half art. Science because you need to respect accountancy standards and fiscal legislation. And art because you need to know how to apply the legislation and how to achieve your business targets. Of course, through all the legal means available. Apart from all these aspects discussed earlier, the biggest challenge is the transition to a pure digital era.
In 2016, Amazon dismissed many of their accountants as most of the accounting process was replaced with software technology. They are not the only ones, that are reducing the human workforce and replacing it with artificial intelligence. Slowly, the world is moving into a more automated way of producing and transferring information. This is an extremely advanced and fast development in the accountancy industry mainly for avoiding errors and mistakes. Businesses are able to produce any type of report in just a few seconds. And that is important for any businessman who needs to take decisions smart. Digitalization is one of the biggest threats in the accountancy industry. Therefore, the ones who are not able to adapt and adopt the new technology will inevitably disappear or be bought out by others. In the essence, the accountancy industry was not actually threatened by the pandemic, nor by the Brexit, but for the quality of the services.
Every business person and entrepreneur should understand by now that the old type of accountant is described by the following:
- having a lot of experience
- doing everything in Excel
- or even worst, in the physical ledger books
will not be able to offer anymore the most suitable services, nor the most efficient and qualitative communication and access to information as an accountant that lives in the digital era.
To conclude my idea, I would like to urge every business person to understand the importance of having an accountant from the beginning of your business journey, but not only that, I believe you should choose wisely and look for an advisor that can help you grow your business and advice you how to be always prepared for the financial and political crisis, especially in this unstable world we are living at the moment.