Getting professional services back to business

Professional and business services make up 25% of UK businesses, with a combined turnover of £399bn – but lockdown has posed a number of challenges to legal, architecture, accountancy and consultancy firms. Three professional services experts from the bank share how they’re helping clients through the coronavirus pandemic, and how the crisis could impact the future of the sector.

Sarah Collins, Head of SME for South East London and Kent at Barclays UK, says that professional services industries vary widely – and that legal, architecture, and accountancy firms may all be impacted by the coronavirus crisis in different ways.

“There are different pressures in the sector,” she says. “There are some areas that haven't been impacted, and others that are seeing real cash flow problems.”

Mark Leadley, Relationship Director at Barclays, adds that the impact of lockdown can vary even within the same industry. “If you're an employment law specialist, then you're possibly quite busy at the moment because there's been work around furloughing staff and redundancies.

“Conversely, if you are a property conveyancing lawyer, business has stalled because it’s been difficult to get valuations made on properties or view them – although this is now beginning to change as the restrictions are starting to lift.”

Professional and business services companies, which encompass law, accountancy, architecture and consultancy firms, make up 25% of UK businesses, adding £190bn to the economy. The sector employs 4.6 million people – 13% of the UK workforce – two-thirds of whose jobs are outside London. And it offers vital business to business services, as well as accounting for 27% of the UK’s services exports worth £66bn to the UK economy.

The key challenge facing the sector right now is cash flow – often because their clients  are trying to delay or defer paying fees because of their own financial situation.

And while some clients have not been immediately affected, they may see a medium-term impact, says Leadley. “From a funding perspective, some of their pipeline of work will slow down.”

To help see these professional services through the current crisis – as well as backing their recovery – the bank has a broad range of options for clients, through government-backed schemes like the Bounce Back Loan, CBILS and CLBILS loans, as well as via capital repayment holidays and increased overdraft support.

But Collins points out that communicating with firms is just as crucial: “We are contacting our customers and sharing experiences within the sector. It's not just about financial support – we’re also offering broader sector knowledge while everyone’s in lockdown.”

Future proofing your firm

Andrea Delay, UK Head of Business and Professional Services at Barclays Corporate Banking, recommends the firms in the professional services sector take time to work out which form of support will be best for them.

Making sure that employees stay informed is also essential, she says: “Deferred tax payments will still need to be met at the start of 2021, so disciplined cash flow forecasting is vital. The outputs should be shared with the firm’s wider leadership team, allowing everyone to understand the importance of controlling costs.”

It’s hard to predict what is in store for the professional services sector in the long term, but Collins suggests that companies may see a shift from the traditional “paper-based, office-based” approach.

“I think there may be more dynamic work and electronic records, like DocuSign,” Collins says. “Some law and accountancy firms have very expensive rents, so they may give people a bit more flexibility with working from home.”

With this in mind, Barclays innovation in fraud prevention is vital, both now and in the future, says Leadley.

“Because there is a lot of money being held by our law firms and accountants which we represent on behalf of their clients, they are a target for fraudsters,” he says. “Clients should make sure that they are able to replicate whatever payment and internal controls they had as a firm in 'normal times', under the more remote working set up.”

Delay adds that the bank is ready to support clients through potential changes to the professional service workplaces: “Developing new technology and implementing new ways of working will have a cost. Barclays is well placed to support its professional services clients wishing to innovate, with a range of financing solutions, like the Partner Capital Subscription Loan.”

Whether it’s through catch-up phone calls, sharing useful resources, or preparing for the sector’s future, Leadley says supporting clients remains Barclays’ top priority: “We're making sure that clients are aware of all the options available to them.”