Inflation in the UK is at its highest rate for almost a decade, but what does this mean for businesses? How can they respond to rising prices without losing customers?
Inflation is a general and sustained increase in prices over time. It reduces the purchasing power of money, so as the price of items rise, more money is needed to buy the same items. Therefore, unless income keeps up with the rate of inflation, people are worse off.
Thomas Westcott Chartered Accountants has signed up to the Miscarriage Association’s Pregnancy Loss Pledge. The national initiative has been set up for employers to commit to supporting their staff through the distress of miscarriage.
Back in October 2021 it was reported that HMRC plan to send cryptoasset holders letters encouraging them to review whether they have paid sufficient capital gains tax or, if applicable, income tax on their cryptoasset holdings.
We are delighted to welcome Becky Hayes as a new Partner of Thomas Westcott Chartered Accountants, bringing 20 years’ experience in VAT and other indirect taxes and with a brief which includes developing Thomas Westcott’s specialist tax advice.
New SRA accounts rules and the pandemic have forced the legal sector to make fundamental changes to the way it works. It is important to reflect on what we’ve learnt over the last couple of years, and what law firms should now be considering and doing as we move forward.
The new SRA accounts rules
It has been two years since the Solicitors Regulation Authority (SRA) accounts rules changed. In November 2019, the SRA removed prescriptive detail and introduced a more flexible, principle-based approach.
There has been some hardening of the rules in terms of how firms deal with disbursements. In particular, firms can reimburse from the client account for a disbursement already paid from the office account. Firms also need to document the new policies and procedures, and define their ‘pay promptly’ policy rather than adopting the old 2011 rule approach, which perhaps some smaller legal firms would be tempted to do.
The Covid pandemic
In March 2020, just as the legal sector was adapting to the new SRA accounts rules, the Covid pandemic hit. The Government introduced home working for all but essential services.
Whatever way you interpreted ‘essential’ work, solicitors, along with the rest of the professional sectors, had to adapt to remote working. This meant delivering the same quality service as efficiently and seamlessly as possible. And a prerequisite of this was ensuring the right IT infrastructure was in place.
The legal sector then had to ensure compliance with the new SRA accounts rules while working remotely. Any new system or procedure is difficult to install in normal conditions, so adapting and changing while working remotely was extra challenging.
So, what can we take from these two challenging years? The pressures have highlighted some key areas for the legal sector to focus on now.
1. Improving financial management
The importance of monitoring, controlling and improving working capital became mission critical during and after the pandemic. After all, cash is king.
Legal firms, together with other businesses, had to deal with working capital lock-up. This meant collecting cash quicker from debtors and ultimately protecting cash by managing overheads.
Many firms also furloughed staff and delayed profit distributions of partners and staff promotions. Others tightened discretionary spend and made use of Government support in the form of extended VAT payment terms and business loans available.
The pandemic highlighted the importance of good quality and frequent management accounts. Reporting the key performance indicators in a clear format makes it far easier for management teams to access, understand and interpret information and make informed decisions on cashflow. For some firms, the pressures of the pandemic highlighted the fact that their systems were no longer sufficient for the job. Many had to look for new, improved cloud accounting software to aid with better management financial reporting and cashflow forecasting.
2. Updating IT infrastructure
It has been crucial for law firms to get the IT infrastructure right as the legal sector has moved to remote or hybrid working. In the earlier days of the pandemic, the main considerations were likely to have been maintaining service delivery and cyber security. As we look to the future, many firms are building on IT investments they’ve made in the last two years.
The pandemic has shown that hybrid working can improve productivity. It could also help the legal sector secure talent that isn’t limited by geography, reduce office space requirements and bring down our carbon footprint. That means that law firms are likely to be reviewing their software and moving towards cloud based secure systems that can be accessed easily from anywhere.
3. Investing in talent
Protecting and investing in the future by finding (and keeping) the right people has always been a challenge for the legal sector. The pandemic could have exacerbated this issue further. For firms in survival mode, the focus was on responding to more ‘urgent’ issues than recruitment and retention.
Some staff who were furloughed have chosen to leave the profession to follow other career paths. With promotions delayed, and recruitment and training of fresh new talent sidelined, some firms are now struggling.
However, as we emerge from the pandemic, protecting and investing in talent for the future is even more vital. This will involve training up existing talent, looking at measures to retain existing team members and recruiting for new positions. Legal firms are now looking at employee packages and working conditions and expectations. Some are being more inventive and open minded about the way in which their teams can work. This is helping them to attract because people are not necessarily limited by where they live.
The last two years have shown that it is crucial for legal firms to embrace change. Being forward thinking and flexible means you can continually adapt and respond to whatever challenges lie ahead.
We can provide law firms with:
By Veronique Walkey, Director
Please do not hesitate to contact the team.
There are many reasons why a company may want to incentivise a director or employee via the grant of share options or the issue of shares. This could be for recruitment or retention purposes or to ensure that company and individual objectives are aligned.
Congratulations to Kelly Davies, who has been made a Partner of Thomas Westcott Chartered Accountants. Based in our Bridgwater and Somerton offices, Kelly originally trained and qualified with the firm.
Kelly joined Thomas Westcott in 2012 and provides businesses and individuals with a full range of accountancy services. Supporting a large number of agricultural clients, she also advises limited companies, partnerships, sole traders and charities in and around Bridgwater and Somerton. Working mainly with small owner-managed businesses, she supports many of our long-standing Somerset clients.
After qualifying as a Chartered Certified Accountant in 2017, Kelly quickly progressed through the firm. She was promoted to Manager in 2017 and Director in 2020.
Kelly said: “Being promoted to Partner means fulfilling a long-held ambition. Working for Thomas Westcott, I’ve benefited from the phenomenal expertise and experience across the firm and this has been instrumental to me progressing in my career.
“Working with people is what drives me and, over the last nine years, I have developed trusted relationships with long-standing clients. Many of my most rewarding career moments have involved helping people to set up their businesses and then supporting them as they’ve grown and succeeded.
“My focus now is on growing my network of contacts and further raising the firm’s profile in the local area as well as continuing to offer my clients the very best service.”
Thomas Westcott Partner Phil Butterworth said: “Congratulations to Kelly whose promotion to Partner is so well deserved.
“Kelly is the perfect general practitioner who has fully embraced every opportunity at Thomas Westcott. We’re at the heart of the local communities here in Bridgwater and Somerton, with most new clients coming through personal recommendations. Therefore, it’s vital that we develop and maintain strong long-term relationships with our clients. That’s Kelly’s real strength. She really understands our clients and gives them the attention they need to succeed.
“I have no doubt that Kelly will continue to grow and develop her skills as she progresses further in her role.”
Thomas Westcott Chartered Accountants has risen in the league table of the UK’s top accountancy firms. In the prestigious Accountancy Age Top 50+50 Firms 2021, we are ranked 47th out of the leading 100 accountancy practices.
We are celebrating after retaining our Investors in People accreditation for 25 years. We are delighted to have been awarded Silver following the latest review carried out by the national accreditor.
The Farming Investment Fund has now been launched with £27 million available to farmers, growers, foresters and contractors related to these sectors. The funding scheme is in place to help those in these sectors to invest in items to help them improve productivity and enhance the natural environment.