Smaller accountancy practices 'less optimistic' in 2016 – IFAC
Accountants working in smaller practices are slightly less bullish about their growth prospects than they were in 2015, according to an international survey.
The poll, carried out by the International Federation of Accountants (IFAC), the global organisation for the accountancy profession, found that small and medium-sized practices (SMPs) remain generally optimistic about their revenues across all service lines, with 35-44% predicting increases in their fee income for 2016.
This represents a slight decline in confidence since last year’s survey, however, when 39-50% of those polled predicted revenue growth.
The survey also shows that, during 2015, the largest portion of respondents reported that revenues held steady, and more had experienced growth than has experienced a fall in revenue.
- 33%-38% said revenues stayed the same
- 23%-27% said revenues had increased “moderately”
- 6% or fewer said revenues had increased “substantially”
- 13%-17% said revenues had decreased “moderately”
- 5%-12% said revenues had decreased “substantially”
In this year’s survey, SMPs with more than 20 partners and staff were most confident about prospects for 2016, with 44-55% predicting growth for 2016; of the sole practitioners only 30-39% expected to see their business growing.
Internationally, firms in Africa, Central and South America/Caribbean, North America and Australasia were the most optimistic as regards growth (for example, 66% of firms in Africa expected to see growth in tax-related services).
Top challenges for SMPs
While performance expectations decreased from a year ago, SMPs indicate that they rate their challenges as somewhat less acute than last year. As in 2014, the most pressing challenges experienced by SMPs in 2015 were:
- Attracting new clients (47% ‘high’ or ‘very high’ challenge),
- Keeping up with new regulations and standards (44%),
- Differentiating from the competition (43%), and
- Pressure to lower fees (41%).
There were some differences regionally, however, in terms of the principal challenges identified by firms. In Europe, the Americas and Australasia/Oceania ‘keeping up with new regulations & standards’ was the number one concern; in Africa it was ‘rising costs’; and in Asia it was ‘serving clients internationally’.
Top challenges for clients
The firms that responded to the poll serve, collectively, more than 800 SME (small-medium-sized enterprise) clients. The top challenges their clients faced were cited as:
- Economic uncertainty (61%)
- Rising costs (58%)
- Competition (54%) and
- Difficulties accessing finance (51%)
IFAC CEO Fayez Choudhury commented: “Collectively, this is a large and important sector whose views are important to hear. The health of the SME sector is a barometer of the vitality of a nation’s economy and of global trade and commerce at large. Listening to SMEs through their accountants—who know them well—is a critical exercise that allows IFAC and its member organizations to better support them, which in turn supports stability and growth more broadly.”
The 2015 IFAC Global SMP Survey received 6,725 respondents, representing 169 countries and more than 800,000 SME clients around the world, making it the largest survey of SMPs. The survey was conducted over October–November 2015 in 22 languages.
ICAS is a member organisation of IFAC.