North West accountancy firms are responding to the economic chill with impressive innovation, flexibility and resilience. Despite widespread redundancies and severe pressure on fee income, they have adopted a gritty, entrepreneurial approach to rethinking operations.
Take, for instance, Business in a Box, an online start-up service launched by Lancashire firm Studholme Bell. The concept aims to remove the hassle of setting up a business by providing a range of start-up services, from a basic registration package to a comprehensive launch programme including business advice and marketing back-up.
Founder Alex Bell says: “The services we deliver as an accountancy firm are provided to customers of Business in a Box. It’s an added-value service where we help budding entrepreneurs reach their full potential, and grow our own client base.”
Recessionary conditions have also prompted firms to adapt conventional service lines, while shifting skills from one discipline to another.
“We are challenging ourselves to plan very carefully, with an eye on flexibility,” says Jonathan Hurst, northern chairman of KPMG based in Manchester. “For example, we have enabled our particularly busy restructuring practice to use the skills of people from other teams. This has had the positive effect of retaining valued employees and broadening their experience.”
Other practices have also adapted operations as a way of keeping people in jobs. “We have introduced flexible working arrangements under which staff are volunteering for reduced hours or extra unpaid holiday, and people are moving from one department to another,” says David Ingram, managing partner at Moore and Smalley in Preston. “Avoiding redundancies is vital to ensure we retain all our expertise as the economy begins to recover.”
Far from shrinking from the recession, Ernst & Young is taking a bullish approach. The firm says is has grown its UK practice by more than any other big four firm this year, with revenues rising by eight per cent to £1.38bn. “We think it’s really important to build our business even in tough times”, says senior partner Simon Allport. “We’ve invested in our North West practice by appointing 11 partners in the past two years.”
Not surprisingly, corporate recovery and turnaround is the accountancy sector’s main growth area, although firms report other strongly performing service lines including public sector, forensic accounting, business advisory work and pensions.
“Our advisory services are in demand as our clients try to take control of their destiny by strategic planning and being proactive,” says Paul Stansfield, managing partner at Cowgill Holloway in Bolton.
There is no shortage of work among forensic accountants as contracts are disputed and employees in financial difficulty resort to fraud. However, an even busier period is predicted. John Reynard, head of BTG Forensic in Manchester, says: “When times are really bad we see an increase in fraudulent activity and disputes. Many businesses can’t afford the time or resources to litigate so in the upturn we expect to see the highest demand.”
Public sector work will continue to be a growth area – regardless of the colour of the next government. “There are likely to be significant spending cuts whoever wins the next election, but the opportunity exists to support public sector organisations in becoming more efficient and innovative in the way they deliver front-line services and back office functions,” says Peter Chambers, a partner at PricewaterhouseCoopers.
Expansion in pensions sector work is also expected to gather pace because the recession is forcing some of the region’s businesses to close their defined benefit schemes to future accrual.
“Companies have huge rumps of pension liability on their balance sheets that no longer act as recruitment tools,” says Patrick Loftus, North West senior partner at Deloitte. “Advisors who work closely with clients to generate innovative alternatives will be greatly rewarded in 2010.”
The corporate finance sector has suffered more than any other as a result of the credit shortage, with relations between financial advisers and banks sometimes becoming strained. “Accountants have witnessed some inconsistent decision-making by the banks,” says Graham Travis, a partner at Campbell Wooley in Manchester. “It will take some time to regain full confidence in funders’ decision-making.”
Other commentators are less sceptical about relations between accountancy firms and banks, though no-one suggests the situation is straightforward. “Lenders are willing to provide funding, but often with a greater level of security”, says Tim Mills at Pierce Corporate Finance in Blackburn. “So it’s vital to get a full understanding of funders’ requirements.”
Opinion varies on the prognosis for the region’s accountancy sector, although the consensus is that any recovery will be at least another 12 months of accountancy firms continuing to tweak their structures,” according to David Grundy, managing partner at Grant Thornton in Manchester.
A survey of mid-corporate finance directors, conducted by Baker Tilly, indicated that the majority did not expect trading conditions to improve until the end of 2010, while a sizeable proportion thought trading conditions would worsen before getting better.
“Through recovery may be just around the corner, there will be a time tag before confidence returns,” says David Gwilliam, managing partner for the firm’s northern region.
“I feel that 2010 will be at least as challenging.”
Julie is a law graduate who qualified with Price Waterhouse in 1994. Julie joined Smith & Williamson in 1997 and became a partner in 2001. With Mike Stevenson, Julie set up Middleton Partners offices in Salisbury and Southampton, both of which are now part of Begbies Traynor.
Julie is a member of the Insolvency Practitioners Association and the None Administrative Receivers Association and is a Fellow of The Association of Business Recovery Professionals. Julie deals with all aspects of Corporate Recovery and turnaround work and takes all form of personal insolvency appointments.