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Impact

Getting professional services back to business

04 June 2020

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.”

We are contacting our customers and are sharing experiences within the sector. It's not just about financial support – we’re also offering broader sector knowledge while everyone’s in lockdown

Sarah Collins

Head of SME, South East London and Kent

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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.

Clients should make sure that they are able to replicate whatever payment and internal controls they had as a firm, under 'normal times', under the more remote working set up

Mark Leadley

Relationship Director

“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.”

Coronavirus and professional services: your questions answered

Sarah Collins, Mark Leadley and Andrea Delay share some of the most frequently asked questions from professional service clients about the coronavirus crisis.

  • One of the most common questions that clients ask us is what we’re seeing from others in the sector. Whilst many professional services firms have fairly healthy cash reserves, there’s obviously been a big focus on managing costs.

    A number of clients have needed support in several different areas. Others are fine in terms of cash flow, but think it would be good to have a capital repayment holiday for the next nine months or year. We’ve also seen a number of firms weighing up activity levels in different practice areas and in some cases furloughing fee earners, trainees and support staff where necessary – but fewer of the larger firms seem to be taking this option. As some of the restrictions are lifted, we may start to see some of these furloughed workers return.

  • We have the Bounce Back Loan, the CBILS for smaller professional services, and the CLBILS government loan for businesses with a turnover of over £45m. We can also offer capital repayment holidays on existing debt and increased overdraft support.

    We work with a wide range of national and international firms, so have also been using our industry knowledge to assist in navigating the challenges posed by the pandemic.

  • It’s critical to the success of our professional services clients and the wider economy that Barclays continues to provide its fullest support. The Barclays team is well connected to the key industry bodies and advisors to the sector, and our planned Professional Services Conference in October 2020 will provide an opportunity for senior leaders in the sector to discuss the changes required to allow firms to recover and thrive in 2021.

Backing UK professional services through coronavirus: Aticus Law

Despite a successful start to the year, Aticus Law, a UK solicitors firm specialising in commercial and private law, faced sudden challenges when the pandemic hit. Three of its staff contracted coronavirus – and clients, who were experiencing their own financial issues, were unable to pay invoices.

“The only option we had was to close the doors of Aticus Law,” Founding Partner Edward Judge explains. “Since then, all of our staff have been furloughed and our cash flow has reduced by around 75%.”

Working closely with Judge, Barclays Relationship Director John Darkes quickly helped obtain a £200,000 CBILS loan to support cash flow and salary payments.

“Safe in the knowledge that we have the backing of Barclays, I look forward to continue helping our clients when this is all over,” Judge says. “Whilst no doubt there are still difficult times ahead, having a relationship manager who understands your business and works hard for you is a vital component in ensuring business survival in an uncertain world.”

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