Why Accounting Services for the Professional and Consultancy Sector Are in Strong Demand Following Forecast Growth

Discover how James Todd & Co provides specialist accounting services for the professional and consultancy sector to support growth, cash flow and tax planning

Following several challenging periods for many professionals and consulting businesses, last year saw a positive shift, with an estimated 5% revenue growth across the sector.

While growth is, of course, always welcome, it also brings with it more complexity, with professional service providers facing myriad pressures, from higher taxes and increased regulatory oversight to flexible working models.

To clarify the role of specialised accountancy assistance and explain why there is such significant demand, we’ve recapped some of the areas that may be affecting your business, and that our experienced in-house teams can help with.

Factors Contributing to Rapid Growth in the Professional and Business Services Market

Part of the reason for notable improvements in the size of the professional services market is due to the changing requirements and objectives of the business clients who hire consultants. 

There is a greater need for support with ESG compliance and digital transformations, higher levels of cybersecurity risks and the ongoing need to develop modernised HR strategies.

Generalised bookkeeping and accounting services simply aren’t able to address the financial management challenges that this demand for consultancy services brings, where providers are often simultaneously dealing with project-based revenues and billing, fluctuating cash flows, and cross-border clients.

The current-day business climate is also changing quickly, with some of the aspects professional firms need to tackle as follows:

• Flexi and hybrid working, with devolved teams, remote workers and hybrid working arrangements.
• Changes to tax and regulation, from IR35 rules for off-payroll working to accounting for VAT on international services, claiming R&D tax reliefs and planning for corporation tax alongside the relatively recent tapering scales.

Most consultants and professionals have long needed to manage complex cash flows due to seasonal spikes and troughs in revenue. This, combined with the above factors, means specialist accounting is regarded as an essential tool to smooth out cash flow blips, create realistic forecasts, and budget for each tax liability before it arises.

Niche Professional Services Areas Anticipated to Expand Further and Faster

Although we’re concentrating on consulting and professional services in general, there are several newer, emerging markets that are thought to be on an even faster track than the sector as a whole, with much of this growth tied to the adoption of new technologies.

The government’s Modern Industrial Strategy focuses on specific segments within the industry that are due to expand at pace, with expectations that, for example, environmental consultancy services will grow 2.1% year on year, increasing the 12% contribution to Gross Value Added (GVA) that professional and business services already account for.

Legal Services

The UK’s legal sector includes seven of the world’s 20 largest companies and generated £51.9 billion for the economy in 2024. It also manages 40% of corporate arbitration cases internationally and £20 billion in mediation cases, and attracts considerable volumes of overseas clients, who comprised 64% of all litigants between 2023-24.

Changes in demand for legal advisory support around ESG initiatives are a major growth driver, particularly from organisations that need to comply with evolving climate legislation and net-zero targets.

Lawtech

Lawtech is projected to reach a UK market value of £22 billion by the end of this year, and with 44% of European lawtech start-ups based in Britain, the government projects that annual investment will reach £2.2 billion.

In contrast to conventional legal services, lawtech concentrates on providing alternative forms of legal support through technology, from AI and automation to applications, most often targeted at SMEs, to make access to professional assistance easier.

Consultancy

Consulting, of course, covers a wide range of areas, and with revenues reaching £91.9 billion in 2024 and professional services exports worth £46.8 billion, demand is expected to rise. This is down to higher volumes of firms in need of advisory services to support digital transformations, AI adoption, and climate transitions.

The AI assurance subsector is already valued at just over £1 billion. It is expected to reach £6.53 billion over the next ten years, driven by additional demand for cybersecurity, risk management, and compliance consulting.

Emerging Niches in the Professional Services Sector

Finally, property tech (proptech) and regulatory tech (regtech) are both novel markets, similar to lawtech in that they adopt advanced technologies to provide traditional services digitally, automatically, or through AI-based systems.

The proptech UK market is the largest in Europe, forecast to grow 19.7% over the next four years, while regtech is predicted to grow 18.5% in the same period, both of which mean more specialist providers, greater complexity, and increased demand for professional assistance.

Targeted Accounting Support for Professional Service Providers

After fluctuations in demand from around 2021 onward, the main priority is often stability and predictability, ensuring consultants have reliable financial controls and properly managed risk.

While we collaborate with a wide range of clients, from individual professionals to larger multi-office firms and nationwide consultancy practices, most want more from their accountancy partners than standard year-end reports and tax filings, emphasising:

• Strategic financial insights, forecasting and modelling, ensuring decisions are made based on accurate figures rather than assumptions or historic data.
• Clear reporting on margins and profitability, down to the project, client or service level instead of based on overall business turnovers.
• Dedicated growth planning, whether looking for help accessing and evaluating financial options, deciding how best to restructure, or scaling sustainably.

Given recent reforms to the UK tax system, including the extensions of frozen tax bands, we’re also conscious that many consultants and partner-owned firms are keen to check whether they are remunerating themselves in a tax-efficient way and managing their personal and business finances optimally.

Learn More About Expert Accountancy Support for Professional Services and Consultancies

As professional and consultancy firms continue to navigate changes and reforms, access to specialist guidance in accountancy and financial management is a strategic and necessary advantage. 

Our role is to ensure each client has the tailored advice they need to grow, capitalise on demand, and manage their financial position.

You’ll find more information about the professional and consultancy services offered by James Todd & Co on our dedicated sector pages, or you can get in touch if you’d like to arrange a time to talk.