Results of the ICAS Practice Survey
The ICAS Practice Survey returns this year and its results show a sector that is adapting well to new ways of doing business, writes Laurence Eastham
The ICAS Practice Survey, conducted in August 2021 after a year’s absence, reflects how the sector – and business more broadly – is finding new equilibrium following the pandemic.
This year, 171 CA practices across the UK shared their recent experience and future expectations. Full details – including breakdowns of turnover, debtor days, charge-out rates and fees – are available to subscribers to ICAS Evolve, a bespoke offering for CAs in practice. Here, we share the key themes to emerge, focusing on technology, staffing and future challenges.
Despite digital acceleration, most CA firms (57%) do not expect to spend more on technology. A sizeable minority, particularly larger practices, are, however, planning a moderate or significant increase (37%) – with e-signature capability (14%) and client portal (10%) two areas highlighted. As elsewhere, video meetings soared in number, with 46% newly introducing them to clients.
Bookkeeping is deemed the key skill to drive firm growth (50%), ahead of technology (41%). Only 19% saw audit skills as vital. Despite economic uncertainty, restructuring and insolvency (2%) come bottom. Some 21% of firms expect to cut administrative and support staff.
The general sense is one of optimism. Asked to rate various challenges on a 10-point scale, only two – volume of work (5.8) and compliance and regulation (5.7) – emerge as significant. That the top problem is a nice-to-have confirms that this year’s survey shows a sector facing the future with confidence.
David Menzies CA, ICAS Director of Practice, says the 2021 survey results demonstrate the resilience of the ICAS practice community. He writes:
The ICAS Practice Survey provides deep insight into the world of practice. And what is clear from this year’s responses is that a diverse profession exists.
The survey was completed by CAs whose practice income ranges from £1,000 to £21m. Of respondents, 87% operate within a practice of fewer than three principals and more than half are sole practitioners. Profit per partner also varies significantly, averaging at just under £80,000. Average profit for sole practitioners is just over 40% of turnover. This percentage drops as firms grow in size: firms with 16-plus partners return 26% of turnover as profit.
Not only do smaller firms appear to be more profitable, but they also seem to have much greater control over their working capital. Seventy-five per cent of sole practitioners have average debtor periods of less than 45 days, while for 16-plus partner firms the figure is reversed, with 75% exceeding 45 days on average. For over half the firms in the survey, the average fee per client is between £500 and £1,500.
Turning to the specific focus areas in the survey of technology, talent and challenges facing the profession, a clear narrative starts to develop, underlining a trend we see in general at ICAS through our day-to-day conversations supporting practices.
While there are always exceptions, small and mid-sized practices are facing stronger headwinds. In comparison to larger firms, typically they are not investing as much in technology, have more diverse experiences in attracting staff and appear to expect less change post-Covid. More positively, where change has already taken place, the smaller firms seem to have experienced less cultural resistance and difficulty integrating new systems.
Looking to the future, none of the challenges listed in the survey appear to pose a significant threat to firms’ stability. Perhaps events of the past 18 months have served to reinforce the resilience of the ICAS practice community.
Access the full report by subscribing to the ICAS Evolve offering.
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