Accounting trends for 2023: Expansion on a budget

Accountants have long served as a trusted source of advice for businesses in the face of adversity. 

With the new year set to bring increasing uncertainty, accountants are uniquely positioned to prepare their clients for economic headwinds, and place them on the path to sustained growth.  

With this in mind, we surveyed 500 businesses to establish their top priorities and concerns for the new year. And we’ve teamed up with Xero to learn how accountants can best support their SME clients in achieving those goals. 

Read on to see our predictions for the three top accounting trends in 2023. 

International expansion 

According to our survey, 70% of UK SMEs plan to expand their business into, or further into, foreign markets in 2023, despite the economic slowdown.

The benefit of scaling into new regions is twofold. Firstly, businesses that are experiencing attrition in their domestic market can reach millions of new customers by expanding abroad. Secondly, venture capital backed businesses can access funding opportunities from international investors by proving there is demand for their products overseas.    

Darren Buckley, Founder and Managing Director at Finzo says, “What I’m finding at the minute is that the UK [venture capital] market is extremely anxious. Whereas if you look at the US and Canada VCs, they are still looking to invest in UK businesses with strong trade links to other markets overseas.”  

When it comes to expansion, most UK businesses (81%) are setting their sights on Europe and North America. Whilst 60% are looking to scale in Asia Pacific, Latin America, Africa and the Middle East within the next five years.

42% of businesses surveyed plan to source new customers abroad, 37% want to expand their international marketing activities and 36% are looking to hire additional staff. 

We asked John Coldicutt, Marketing Director at Xero what accountants can do to support their clients as they expand internationally. 

“Most businesses have two key financial concerns as they move into foreign markets,” says John.“ The first is how to reconcile their accounts across currencies, the second is how to manage money globally whilst hedging against fluctuations in the forex market and avoiding unnecessary fees. Accountants can support their clients by recommending solutions that enable simple multi-currency reconciliation, and allow clients to safeguard against currency volatility.” 

Replacing legacy banks with fintech solutions 

The good news for cloud accountants is that businesses are turning away from traditional financial solutions towards digital platforms. 

42% of SMEs plan to move away from legacy banking services and onto fintech platforms next year, and 33% have already done so. Within the next five years, the data suggests that 85% of UK SMEs will have adopted fintech solutions over traditional banking services. 

The days of persuading reluctant clients to upgrade to digital may be coming to an end as businesses wise up to the benefits of embracing technology. 

Most businesses cite cost reduction and efficiency improvements as key reasons for switching to digital solutions next year, with 71% claiming they are investing in tools to optimise workforce productivity so they can better navigate the predicted market slowdown.

For SMEs that are looking to grow internationally, technology will play a key role in enabling cross-border financial management. A quarter of the SMEs surveyed say they do not yet have adequate software in place to enable their expansion, and 65% say they need the agility of a fintech platform to responsibly manage growth across borders. 

By recommending and implementing the right financial infrastructure next year, accountants can facilitate their clients’ expansion whilst helping them keep a tight hold on their profit margins.

Lee Kaznowski, Partner at Ascentis Accountants, says: “Our main advice whenever you deal with international trade is to limit the amount of times you have to convert currency. Because every time you convert currency it will always cost you, even if you get a good rate. So setting up international bank accounts — and Airwallex is a great platform for setting up a number of international bank accounts — you can control the cost.” 

Balancing growth and cost efficiency 

Growth is a priority for most businesses in today’s market. But SMEs are also looking to keep a tight control of budgets as they navigate rising production costs, currency volatility and the threat of inflation.  

Over 70% of SMEs surveyed are prioritising investing in people, technology and expansion in 2023 in order to achieve sustained growth. 

69% agree that employee retention is currently a greater priority than hiring new talent. And 71% agree that the economic environment makes it more important than ever to reduce unnecessary expenditure. 

Accountants should prepare for an uptick in employee wellness schemes (and the tax implications that come with them) as clients push to retain staff. They should also prepare to advise clients on how to maximise available budget and avoid waste by switching to digital solutions. 

Juan Diego Farah, Head of Growth, EMEA at Airwallex says: “A key challenge for UK SMEs will be navigating the rising inflation and higher costs impacting all businesses. If SMEs are to continue driving expansion during the economic downturn, they need to be equipped with tools and technology that offer true flexibility over domestic and international payments, managing funds and expense management. By avoiding unnecessarily high banking costs and FX fees, more revenue can be invested in employee retention and sustainable business growth across borders.”

How Airwallex and Xero can help accountants support their clients in 2023

Airwallex is an all-in-one financial suite that enables businesses to manage money globally. 

With our financial infrastructure in place, businesses can open 11 foreign currency accounts in under 60 seconds, with no bank branch visits, monthly account fees or lengthy paperwork. This enables SMEs and their accountants to collect, hold and spend money in multiple currencies whilst avoiding unnecessary FX conversions. 

Airwallex syncs hourly with Xero, and Xero Ultimate users can create bank feeds for each currency they operate in, ensuring multi-currency transactions are automatically reconciled in their chart of accounts.  

Additional Airwallex features include borderless company cards, high-speed transfers and an online payments API which enables eCommerce merchants to collect multi-currency customer payments whilst saving on FX fees.

By using Airwallex and Xero in tandem, accountants can support their clients as they scale internationally, whilst cutting unnecessary costs, reducing admin, and protecting against currency fluctuations.   

Pranav Sood, GM EMEA, Airwallex says: “We’re proud to support Xero accountants and their clients as they expand internationally in 2023 and beyond. Xero’s multi-currency accounting features make it the perfect companion to Airwallex, allowing businesses and their accountants to reconcile their accounts across currencies efficiently as they push into new markets.” 

To find out how Airwallex can help your business or your accounting firm, sign up today or sign to become an Airwallex partner. 

This report from Airwallex – carried out by Censuswide between 11th-17th September 2022 – surveyed 500 business decision makers in UK SMEs (companies with 50-500 employees).