By Janita Kapoor
UK’s Inflation is at its highest since the early 1990s – 6.2% in the latest data.
The rapidly rising prices is expected to become embedded in the economy, causing a self-perpetuating wage-price spiral. Experts warn that prices will continue to rise and further push up the already sky-high inflation.
What is the UK’s inflation rate and why is the cost of living going up? – BBC News
Staff shortages are a particular problem in the UK, which is prompting some employers to raise wages.
As future expectations about inflations persist, demand for higher wages continues- this again induces further price rise- this spiralling effect can lead to prolonged inflationary pressure in an economy.
So how does this affect Accounting Firms?
Inflation affects margins. This means firms will have to increase their fees which is not always welcomed by clients.
Even if wages increase in the economy, the economy doesn’t need to run into an inflationary trend. There are ways to help this with cost effective solutions.
Cost control – Analysing your business’s overall expenses and reduce project costs to increase profit.Planning a budget for each project and focusing on higher revenue generating work can increase your business’s financial performance.
Outsource – Outsourcing certain accounting functions can be an ideal solution for supplementing your team and scaling up the business. Apart from increased capacity, efficiency, and profitability, you’re able to employ highly skilled professionals who are trained in the latest tech, can automate and enhance your accountancy delivery, leaving you and your team to focus on strategic high-margin work.
Adoption of Automation – Advances in tech are taking accounting to new heights. Cloud accounting, automation, making tax digital, all these digital transformations have already changed the playing field for the accountancy profession. These systems remove the least efficient aspects of an accountant’s work, leaving more time for high value projects.
With careful capacity planning and strategic resourcing your accounting firm can keep up with efficiency and profitability even during turbulent times.
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