What’s the role of an advisor in 2021? The scenery has certainly changed, even before the pandemic, and the role of an advisor must evolve with it.
Basic tax advice and routine compliance now only represents a portion of the essential functions of an advisor. It’s time to expand into alternative services that add extra value to clients and consultancy avenues.
Navigating the storm
At least in Australia and New Zealand, the COVID-19 storm may seem to have passed overhead, as businesses have their imposed government restrictions relaxed and consumers’ confidence bounces back.
We know, however, that for many businesses (especially small businesses) the fight for survival and profitability isn’t over.
This fight is now squarely in the domain of the business advisor. Formulating strategies that will mitigate the effects of the pandemic and create stability and profitability will be key in 2021.
End of JobKeeper
JobKeeper, as we know it, has now come to an end. The lifeline that was tossed to flailing small businesses has been cut and the repercussions are now being felt.
Small businesses now need more extensive assistance in being able to manage cashflow, pay staff and keep themselves afloat without that government safety net.
Accounting software assistance and support
While Australian small businesses have steadily adopted cloud accounting software over the years, there’s a surprising amount of business owners out there who have neglected this advantageous solution.
Surprisingly, shoebox and Excel accounting is still common.
The mission is clear: introduce and recommend cloud accounting to all clients (current and potential).
More than simply pointing them in the right direction, many small businesses will need advisory services around setting up and maintaining that accounting software.
Be sure you’re adept at recognising which features are necessary for each client and provide consulting around the best set-ups and methods of managing and utilising cloud accounting.
Indulging in some self-education around the current forms and functions of accounting software will be highly advantageous for advisors.
More than taxes
In a realm populated by accounting software (if, of course, your clients are using it), the nuts and bolts of tax time have been reduced and an expanded mindset toward advising small businesses must be reached.
Small businesses need an advisor for much more than mere tax advice. As accountant Angela Bichler, founder of Sydney West Business Services says:
“Yes, you help clients with the numbers and tax, but there’s so much more to running a business than just accounting. There’s a lot of layers to an advisory role like marketing, strategy, direction, and succession planning.”
This means, that while you may not be a marketing expert per se, you can still provide financial advice around where cash will get businesses the best return on investment (ROI).
Clients need strategic advice
With the weight of 2020 bleeding into 2021 and a host of government support winding back, business strategy should be at the forefront of your advisory services.
Reaching out to clients and offering strategic services is a prime way to deliver value to potentially ailing businesses.
Advice around the following would be well received in 2021:
- cashflow maximisation
- debt reduction
- forecasting and planning
- accounts receivable and bad debt advice
- new business models
Instant asset write off advice
The instant asset write-off scheme has ballooned through the events of 2020, with an expansion of both the limit and the business turnover threshold.
The current scheme as announced by the ATO:
For assets used or installed from 12 March 2020 until 30 June 2021, and purchased by 31 December 2020, the instant asset write-off:
- threshold amount for each asset is $150,000 (up from $30,000)
- eligibility extends to businesses with an aggregated turnover of less than $500 million (up from $50 million).
There are also changes to temporary full expensing from 6 October 2020 until 30 June 2022, which clients should be consulted about.
Many clients may be now able to take full advantage of the IAWO scheme to purchase equipment that will help grow their business.
In the same vein, advising certain clients not to take up the IAWO scheme, if their position doesn’t benefit from purchasing equipment, is equally important.
The role of the advisor in 2021 will entail more tailored business advice over mere compliance and tax advice. Not only will that boost your own service delivery and bottom line, but simultaneously acts to add real value to your clients’ businesses.