pandemic cuts profits at 42% of firms, client numbers off at 29%, and revenues down at 38%.
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by 卡塔尔世界杯常规比赛时间 research
like just about every other business in the world, cpa practices are hunkering down for a year of hard times. yet a third of them think they can buck the odds and see some increase this year.
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back in the bullish days of february, the 卡塔尔世界杯常规比赛时间 2020 busy season barometer was reflecting expectations of more clients, burgeoning revenue, and increased profit, with a medium-chance of more extensions.
but these bearish days see most practitioners expecting a year stagnant at best and quite likely worse than stagnant in all benchmarks of success.
in early march, 15 percent of barometer respondents were looking forward to an increase in clientele of at least ten percent. a confident 42 percent were figuring on an increase of five to ten percent.
and revenues were looking even better. almost 22 percent were ready to bank an increase of over ten percent, and just over half (51 percent) thought they were going to rake in five to ten percent more revenues. the figures for net profits were about the same.
happy days
only 12 percent were worried about losing clients or seeing revenue decline. virtually no one feared a significant decrease in net profit or revenue per client. happy days were there again, the skies above were clear again.
and then along comes little mr. coronavirus. clients see their revenues plummet. they have trouble pulling together documents for their tax returns. the irs extends everybody’s deadlines, giving everyone three more months to postpone the inevitable.
as one unnamed respondent put it, “too much uncertainty in the world, in general, makes people skittish about doing taxes. they don’t like to do it in the first place, procrastination sets in.”
rough times
it all adds up to rough times for tax and accounting practitioners.
take kenneth stafford, at maine’s stafford advisors, for example. he’s expecting significant decreases across the board. “we eliminated 75% of clients and closed the office in mid-february for quarantine,” he says. “no billing since mid-february despite working 24/7 to assist clients navigating dysfunctional governmental agencies.”
today, 21 percent of respondents are telling us they expect a five-to-ten percent decrease in clients, and another eight percent foresee a decrease larger than that. due to the decrease in clientele, a staggering 38 percent of respondents know their revenues are in for a dip (26 percent) or a drop (12 percent). due to the decline in revenue, 42 percent are planning for a drop in net profit.
but by no means, are all practitioners on the pessimistic side of the spectrum. back in early march, 71 percent sensed an imminent increase in revenue. despite the subsequent gloom, 45 still think this year will bring in more revenue than last year. ten percent expect a significant increase in net profit, though that’s down from 23 percent.
for once, it isn’t the irs
in the department of unprecedented complaint, no one is blaming the irs for their woes. accountants agree: it’s a covid thing.
in some cases, resistance to the disease is hurting efficiency as staff work from home, offices limit interaction, and precious busy-season time gets spent wiping down surfaces.
in other cases, some clients are disappearing, while others are either switching firms or not seeking assistance.
in lake forest, calif., marilyn blank, principal, and owner of m. blank & company, is seeing a lot of client turnover. “we have a lot of new clients but also a lot of clients for whom we have not heard from. in the past, we would have heard from them by now,” she says. “they are either waiting or have gone elsewhere or are doing it themselves.”
another practitioner, anonymous, sees a new kind of service developing, and also new clients in a new world. “current clients need additional assistance,” they say. “new clients will be ‘born’ out of this crisis. knowledge will bring on new clients for high-end services.”
rebecca neilson, of neilson bookkeeping, sees a continuing struggle underway. “clients that owe taxes are all pushing out doing returns till the last minute, she reports. “some business clients have shut down or are very slow, can’t pay for tax preparation services.”
lorena a. dodge is getting by but is already preparing for a drop in income. “adapting procedures internally will mean less initial efficiency which will lower margins that are already sensitive,” she says. “client cash flow pressure will mean some may not survive and we may lose some.”
clients dragging feet
last year robert jones, of r.c. jones & associates, did some groundwork that puts his firm in a good position despite the economic chaos. how did he do it? “we changed our business model to be advisory and maintenance based, transitioning to value pricing,” he says. “interestingly, small business clients are starving for advice and are willing to pay for that advice. we’ve had to increase staff, thus decreasing our profit per client (initially). once we dial in processes and job function our margins should grow exponentially.”
joe eckelkamp, the founder of e&a cfo group, is also set up for increases in clients and revenue, but the clients aren’t making it easy. “clients are dragging their feet getting info in because of the due date change,” he reports, “but our referral network is feeding us a lot of new work.”
it’s way too soon to know how and when this will all be over. clearly the tax and accounting industry is suffering, but it seems to be more resilient than many other industries. adaptation and flexibility seem to be the keys to survival.