The COVID-19 has already taken a tragic toll on the global economy, destroying the very foundations of global financial markets and plunging the global economy into a state of recession that may be much worse than the “Great Recession.”
While the pandemic’s severity and length seem to be growing by the day, a few major accounting firms have seen a shift in their roles from accounting to consulting services, which companies desperately need right now. Small business accountants, on the other hand, have been severely harmed by the Corona outbreak’s unannounced arrival.
At Reliable Melbourne Accountants, we provide Accounting services in Melbourne and this is where our concerns lie. So we will be discussing how COVID-19 is influencing the Accounting industry.
Influence on Accounting Services:
Obtaining funding has become much more difficult for a few small accounting firms during these difficult times when the economic downturn has already caused enough harm. As a result, many of these companies are responding to the crisis by either selling their company or downsizing their operations in order to save money.
Delay in payments or breach of agreements
Although everyone is trying to stay afloat, accounting firms, especially small ones that provide services to small businesses, are experiencing payment delays or contract termination. Despite the fact that the Australian government announced numerous business aid schemes in response to the ongoing pandemic, the effects have already penetrated the economy.
Incapable of keeping up with the digitization of taxation and cloud accounting applications
Small accounting firms that have seized to respond to the growing need for cloud accounting software over conventional practices are the most impacted by the COVID-19. Owing to a failure to respond to the needs of tax digitization, small businesses in Australia have declined in recent years (nearly 490 companies between 2017 and 2019).
And the Covid-19 has made it more difficult for them to transition to cloud accounting technology. When the crisis is over, the world will not stop coming at us at breakneck speed. As a result, small business accountants should be well-prepared.
Adapting to a remote-work community
Although the country is still not readily available, as social distancing appears to be the new standard, the work culture has shifted to a remote work culture that necessitates the use of technology such as the previously mentioned cloud accounting, digitalization, and others. As contact and outreach have become the only way to solve the current crisis, this is the gap that distinguishes the most competitive companies from the least successful ones. Small accounting firms are in a difficult situation due to a shortage of both professional staff and funding.
We are in the middle of a global recession that seems to be getting worse by the day, implying that the financial markets will be disrupted by the time we are ready for the new normal. Small businesses must map out contingency plans to thrive, and this is where cost and capital are needed.
Investment in Technology
The lockdown started in mid-March, just weeks before the deadline for filing tax returns. Despite the fact that the deadline was finally extended, the situation is a great example of the problem that many small businesses have had to deal with—a pressing need to enter the online world.
Anyone who isn’t already paperless is already losing the fight. All of this should have been completed ten years ago: archiving, documentation.”
He adds, however, that there is no one-size-fits-all solution because each company must decide how much to invest in new technologies. Investments in cloud storage or a customer platform, for example, can have a big impact.”
Cancellations of clients due to COVID-19
Due to the pandemic, the average accounting firm reported losing 4% of their clients. However, responses were extremely varied, with some respondents losing nearly half of their customer base.
The most surprising finding was that 44% of accounting firms reported losing 0% of their clients as a result of the pandemic. Half of these businesses were one-person operations, 25% had two to ten employees, and the rest had 21 to fifty employees.
Overall, this is very good news for the accounting and bookkeeping services providers: many accountants will be unaffected. We don’t know how respondents determined whether a client loss was due primarily to the pandemic or primarily to other factors. The findings are more difficult to interpret as a result of this.
Change brings confusion, and small accounting firms must adjust rapidly to the changes, even though they were unexpected. We’re here to help accountants get through this challenging time. Accounting firms in Melbourne, now more than ever, need to save time so they can concentrate on higher-level programmes, customer relationships, and revenue.
Reliable Melbourne Accountants provides their clients with all valuable services.
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