Like many accountants my generation, I did my articles at a ‘traditional’ firm where being tech savvy meant you knew the shortcut keys for ‘copy & paste’. Some of us even knew our way around pivot tables (remember those?).
Seriously though, we were obviously more technologically advanced than that, but today cloud and automation technologies are shaking the industry to its core.
I asked a few forward-thinking accountants for their insights on their perception of the future of the industry. Xero’s recent research on the future of the profession also came in handy.
A common thread between what accountants from different parts of the world believe about the future of the industry is that technology will have a big impact on accounting, and that the role of the accountant will shift from compliance officer towards business advisor.
But even within this framework, most predict that not all accounting firms will look the same. Chris Hooper, CEO of Accodex, Australia sums it up nicely:
“The role of the accountant is going to split in two. On the one hand, you’ll have the client facing confidante who acts as counsellor, coach, confessor and sometimes advisor. On the other, you’ll have the accountant that counts everything, not just money. They will find out what activities drive performance and how to measure them and then bring them all together in one beautiful dashboard.”
Out with the Old, in with the New: Embrace Technology
Historically, article clerks were shipped off to the client once or twice a year to spend their time ticking and bashing and fixing mistakes. Then, the partner would meet with the client to hand over a report and/or financials and to tell them what they did right and what they should have done differently. Helpful? Not really.
It is hard enough to run a small business as it is, but not having up-to-date financial information available when you need to make crucial decisions can be a business killer. We’ve all seen first-hand how the right data a few months earlier could have avoided costly mistakes or even saved a business from closing down.
“With cloud accounting, there’s no longer any excuses why business taxes aren’t completed and submitted in time. Business clients have the power over their own data and no longer feel tied to their accountant, waiting for their taxes to be completed.” – Heather Smith, Xero expert and author of Xero for Dummies, Australia
Business owners want to know where they stand, in real-time, to enable them to make better decisions. Long overdue, artificial intelligence (AI), machine learning, and automation have started a new era in bookkeeping. It is now much easier and cheaper for businesses to always be up-to-date and to have the right data at their fingertips the moment they need it.
As the experts, it is now our duty to help our clients move onto the right platforms to utilise the best time-saving technologies.
“A major part of becoming a trusted advisor will be ensuring that both your practice and your clients have access to and are using the latest cloud software offerings. Technology is the gateway to creating a sustainable accounting practice as we move towards 2020. Making Tax Digital is forcing a lot of hands, but overall it’s a positive move for the industry. The good news is the ecosystem is maturing at a stupidly rapid rate, and there are experts offering advice from both the software and practice sides of the fence.” – Brendan Allen, Territory Manager at Practice Ignition
Many accountants are already taking the lead and are staying on top of changing technologies to give the best possible service to their clients:
- 83% of accountants believe that understanding technology is now as important to their job as understanding accountancy. (Xero)
Platforms like Receipt Bank take the manual labour out of capturing daily transactions, and machine learning (already implemented by Xero) accurately predicts where transactions should be allocated.
“The days of capturing and allocating transactions manually will disappear. Artificial intelligence will play a big role. Recurring transactions will, for instance, be automatically recorded without human intervention.” – Neil Murray, Director of Contador Accountants, South Africa
Accountants that ignore advancing technology will draw the shortest straw.
“Machine learning and AI will see compliance services automated with accountants who do not employ technology being unable to compete on price, service and value.” – Colin Timmis, Head of Accounting, Xero South Africa
Are You Wearing Your Business Advisor Hat Yet?
Although technology can help small businesses to stay up-to-date, they might not have the skills and knowledge to interpret the data and make the decisions they need to. That’s where accountants come in.
“The role of the accountant is changing dramatically and the pace of change will increase in the next 2-3 years in the UK progressing from a number crunching ’traditional’ role to a value-added trusted advisor role.” – Andrew Coulson, UK Business Advisory Partner at Accodex, UK
Since accountants won’t need to spend so much time on number crunching as they did before, business owners now want something else from their accountants:
- 56% of small businesses believe they’ll use accountants for help with tasks outside of accountancy in the future. (Xero)
Some business owners see advisory services as the only offering that they will need from their accountants:
- 59% of businesses don’t think they’ll need an accountant in 10 years’ time. (Xero)
It is clear that if accountants want to stay relevant, business advisory services need to be part of their repertoire.
“Accountants have to cast off the ‘numbers guy’ or ‘tax girl’ stereotype and champion the terms of ‘systems consultant’ and ‘business advisor’. Our technical knowledge is key, but our ability to enable businesses to thrive is our value.” – Jarrod Randall, Accodex Partners, Alabama US
The good news is that if you make the switch now (if you haven’t done so already), work will be plentiful:
- 30% of small businesses place their accountants at the top of their list of trusted advisors. (Xero)
- 42% of them ask for advice beyond accounting. (Xero)
“We’ve already seen it happening with the current leaders of our industry, but accountants have an amazing opportunity to work closely with their clients to advise on the future of their businesses, rather than looking retrospectively. This is the main factor that will divide the accounting profession and be the difference between a flourishing, valuable practice, and closing the doors.” – Brendan Allen, Territory Manager at Practice Ignition
Do You Have the Skills to Thrive in the Future?
Accountants have a backdoor into many businesses. Throughout our training, we saw from the inside how different businesses operate – what works and what doesn’t. We have learned how to interpret financial data, and although we didn’t necessarily study how to be a business advisor, we have picked up a lot of valuable skills and insight along the way.
“I think the accountant’s role will move from a compliance role to one of an advisor – what we were really trained for. We will provide valuable insights and advice that will empower clients in business decisions.” – Neil Murray, Director of Contador Accountants, South Africa
Technology is a different story, though. Most of us received little training in that department, so it is up to us to learn these skills ourselves. Younger accountants now entering the industry have a leg up on us – most grew up with technology and understanding new tech comes easier to them. For the rest of us, our CPD hours probably need to go into getting up-to-date with the latest tech.
“Accountants need to embrace change and technology to stay competitive and to survive long-term.” – Heather Smith, Xero expert and author of Xero for Dummies, Australia
For young trainee accountants, learning only about accounting and taxation is not good enough if they want to gain broader skills to keep relevant. Some accountants suggest that students should study additional subjects to prepare them for accounting careers beyond 2025 (Xero):
- 25% recommend computer science
- 27% recommend management consultancy
“Accountants will need a better understanding of business principles like growth, management, scale and most importantly digital strategy.” – Colin Timmis, Head of Accounting, Xero South Africa
Back home, SAICA (South African Institute of Chartered Accountants) launched their own research into the future of the accounting industry and how technology will impact the profession. They believe the way that they teach trainee accountants needs to change:
“SAICA is well aware of the need to change in order to remain relevant. This has a direct impact on the way we educate and train prospective CAs(SA) and assist our existing members in upskilling themselves, as well as on the role chartered accountants play in society.” – Mandi Olivier, Senior Executive: Professional Development at SAICA (From ASA Magazine, April 2017)
The role of the accountant is an ever-evolving one and the future of your accounting practice is a blank canvas – only you can paint its picture. No two firms will look the same. Look at the disruptors and innovative firms around you and take what you need from them to implement the changes that you think will help your clients. But, as long as you move forward, forge your own path and do what you think is right for your firm and clients.
Resources: Xero State of Accounts research 2016: Survey conducted on 1,000 accounting professionals and 1,000 small business owners in the UK. Note that Xero’s research was performed in the UK and opinions may differ from your country, but it is a good benchmark to work with.