At a glance
- Capture institutional knowledge in shared, accessible systems.
- Automate and standardise processes to reduce dependency on key individuals.
- Formalise continuity and succession plans for compliance and future security.
Small accountancy practices tend to operate with lean teams, loyal clients and well-honed systems.
But that very efficiency can conceal a critical vulnerability. When so much client knowledge, relationship capital, and operational control sits with one or two individuals, the firm’s continuity and even its valuation can be put at risk. Illness, sudden absence, or resignations can expose gaps that no amount of last-minute planning can bridge.
This danger, known as key person risk, is particularly acute for sole practitioners, who make up around 65% of the IFA’s practising members.
Regulatory safeguards, such as the IFA’s requirement for practising members to nominate an alternate, help firms manage immediate disruption. But true resilience requires firms to think beyond temporary cover and consider how knowledge, systems, and relationships can be structured to ensure continuity under any circumstances.
Chris Anscombe, director at Shore Accounting, has seen first-hand how small firms can reduce key person risk through structured processes and systems. The firm’s approach underscores five critical steps that help practices move from dependence to durability.
1: Capture institutional knowledge – not just information
Many practitioners think of documentation as an administrative exercise: file notes, passwords, and process checklists.
But what truly protects a firm is institutional knowledge – the nuanced understanding of client preferences and decision-making rationale that underpins advisory work.
Shore Accounting’s secure digital Customer Relationship Management system records not only contact details and passwords, but detailed notes on each client’s business operations and circumstances. Although such a CRM is designed for this task, it is also possible to use a well-secured network file system for the same purpose. The key is to securely record operations and circumstances and share them with only the people who need to see them.
The firm also uses documented procedures and checklists for every engagement, ensuring consistency across staff and services.
“These are accessible by all team members and are standardised so our team knows where to look for answers to queries for any client,” says Anscombe.
2. Reinforce shared accountability
Knowledge-sharing across a small firm isn’t merely about coverage; it’s about reinforcing a culture of shared accountability. When staff understand how their work connects to the firm’s broader processes, they become more attuned to risk and better equipped to maintain service levels under pressure.
Putting this into practice can take several forms. It might involve alternating ownership of recurring compliance jobs, rotating staff through client review meetings, or pairing junior and senior staff on advisory projects.
Shore Accounting also has a centralised system for storing all client and procedural information, which has made its knowledge-sharing more flexible and less dependent on any individual.
“It means that a colleague can pick up the work of anyone who is off sick or on holiday if needed,” says Anscombe.
“[A]ny team member can pick up a piece of work, familiarise themselves with the client … and get started.”
Chris Anscombe, director, Shore Accounting
3. Institutionalise client relationships
The most serious form of key person dependency is often relational. When clients identify their accountant more than their firm, continuity becomes personal rather than professional.
Shore Accounting counters this by deliberately broadening client engagement.
“We involve multiple team members in key client contacts such as requesting records, requesting queries or confirming submissions. This way, clients get to know our team members,” says Anscombe.
“Each client does have a nominated contact, but knows that the other team members they have interacted with will also be able to help them if the nominated contact is not available.”
4. Automate, standardise, and audit your systems
The recent artificial intelligence (AI) boom has led to an influx of low-cost, accessible AI tools promising to change many accounting processes accounting. For many small firms, the challenge isn’t a lack of technology, but a lack of systematisation.
Files, workflows, and correspondence may all be digital, but processes remain largely person-dependent, governed by habit rather than design. De-risking requires technology to do more than store information: it should embed structure, accountability, and transparency into the firm’s day-to-day operations.
Modern practice management systems can do more than centralise data – they can expose the gaps that make firms fragile. Many systems can provide a live view of capacity, deadlines, and workflow dependencies, highlighting where processes rely too heavily on a single person. Integrations with aspects like tax and payroll can turn fragmented routines into traceable workflows.
Automation has never been more accessible. And it can provide a control framework that allows the firm to operate as a system rather than a series of individual efforts.
“We have spent a lot of time automating and standardising our processes which means that any team member can pick up a piece of work, familiarise themselves with the client and their business and get started,” says Anscombe.
For sole practitioners, even basic automation systems that integrate email, workflow management, and document storage can significantly strengthen continuity.
5. Formalise continuity and succession plans
Succession planning is not only essential for business continuity, but also a key point of compliance for accounting firms.
The mandatory standard APES 325 Risk Management for Firms requires all practices to document a succession plan as part of their risk management framework. IFA also requires practicing members to have a formally nominated alternate to step in if the practitioner is unavailable.
Beyond these obligations, a good continuity plan can include other measures. It might involve a buy-sell agreement with a trusted peer for an orderly transfer of ownership, or key person insurance to offset the financial impact of an unexpected absence.
Having these structures in place not only ensures compliance, but also protects your firm’s future, your clients’ confidence, and your family’s security.
From dependency to durability
Key person dependency isn’t a sign of poor management; in fact, it’s often the legacy of success. The habits that allow a firm to thrive in its early years – personal relationships, founder-led decision-making, flexible workflows – can later become structural weaknesses.
De-risking your firm is not about diluting personal service, but about codifying it – translating the skill, judgment, and trust that clients value into systems and structures that endure.
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