{"id":1576,"date":"2019-09-05T15:48:53","date_gmt":"2019-09-05T05:48:53","guid":{"rendered":"https:\/\/www.sage.com\/en-au\/blog\/?p=1576"},"modified":"2024-04-25T21:22:24","modified_gmt":"2024-04-25T11:22:24","slug":"accounting-is-evolving","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-au\/blog\/accounting-is-evolving\/","title":{"rendered":"Accounting is evolving. Here\u2019s what it means for you"},"content":{"rendered":"
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\n\t\t\t\t\t\t\tResearch<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t
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\n\t\t\t\t\t\tAccounting is evolving. Here\u2019s what it means for you\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

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\n\t\t\t\n\t\t\t\t\"\"\t\t\t\tKeir Thomas-Bryant<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n

This year\u2019s Practice of Now report is built on a survey of 3,000 accountants from Australia and across the globe that identifies a cultural shift in accounting. <\/span><\/p>\n\n\n\n

Put simply, things are changing in a way we haven\u2019t experienced for perhaps 40 years since breakthroughs like the desktop PC, or deregulation of the financial markets. <\/span><\/p>\n\n\n\n

There\u2019s a whole host of reasons behind this cultural shift, which we\u2019ll explore below, but ultimately the Practice of Now reported that it\u2019s occurring in response to changes that are going to come to light across the next decade.<\/span><\/p>\n\n\n\n

Ask yourself: Do you really think your practice will be the same as it is now in 2030, given all the societal and technological changes occurring? What are you going to do to prepare?<\/span><\/p>\n\n\n\n

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Free research report: The Practice of Now <\/h2>\n\n\t\t\t\t\t\t\t\t\t
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We surveyed 3,000 accountants from Australia and worldwide to reveal how the accounting landscape is changing. Discover how your fellow accountants are preparing for the next decade and learn what you can do now to keep your practice successful.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\tDownload Report<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\"\"\t\t\t<\/div>\n<\/div>\n\n\n\n\n

An evolving profession<\/span><\/h2>\n\n\n\n

A stunning 93% of Australian accountants agree there\u2019s been a cultural shift in accounting. Only 7% disagree. <\/span><\/p>\n\n\n\n

So, what\u2019s going on? The survey data suggests the cultural shift is partly driven by clients and the marketplace, which are together demanding much more than the traditional number crunching and compliance work that\u2019s historically driven accounting. <\/span><\/p>\n\n\n\n

Let\u2019s dig into the implications for your practice of some of these.<\/p>\n\n\n\n

Giving the market what it demands<\/h2>\n\n\n\n

Arguably the least specific of the reasons quoted here, market demands refers to just about anything that an existing or new client asks of a practice. This could be taking care of year-end taxes, of course, but increasingly it\u2019s taking the shape of consultative and partner-oriented services that are advisory in nature (and note how increasing client demands is considered important enough to receive its own response and segment in our graph above).<\/p>\n\n\n\n

Your practice was undoubtedly founded once upon a time to cater to market demands. After all, it wouldn\u2019t have got very far if it didn\u2019t.<\/p>\n\n\n\n

But how suited is it to contemporary market demands?<\/p>\n\n\n\n

Well, there\u2019s an easy way to find out, and that\u2019s to compare your practice to any new accounting firm that might\u2019ve opened up recently in your locality. Partly this might be as simple as discovering what services they\u2019re offering via their marketing materials. What\u2019s their focus? Do they specialise? If so, why do you think they do?<\/p>\n\n\n\n

But you also need to be aware of their approach to business, which is to say, their culture. For example, more and more new businesses nowadays operate almost mostly via social networking channels. Additionally, some even lack physical premises for the staff, who work remotely. This sounds radical to some yet is simply normal for others. But it lets the new practice save money, and thereby slash costs for clients \u2013 who themselves appreciate such a forward-thinking approach because they could be in the same position themselves.<\/p>\n\n\n\n

Or you might simply ask yourself what an accounting practice would look like if it started-up today. It\u2019s unthinkable that technology wouldn\u2019t be central to every part of it. And in these days of tax and payroll digitisation, you might think twice about setting up processes with clients that revolve around paper-based processes and boxes of receipts delivered to your door. Would you anticipate a 100% digital client list?<\/p>\n\n\n\n

This is all very radical, of course, and retrofitting it to an existing practice is unlikely to be sensible or desirable. But what nuggets of wisdom can you turn into practical changes in your practice? If nothing else, you might aim to start a discussion within your staff about the direction of travel over the coming years.<\/p>\n\n\n\n

Responding to regulatory burdens<\/h2>\n\n\n\n

Most accountants are aware of a familiar chain of events: Governments create new legislation, which places new strains on businesses, which then turn to their accountant to at least help them understand it, and often to take care of it.<\/p>\n\n\n\n

Is the regulatory situation getting worse? Recent decades have seen countless financial scandals, which have forced worldwide legislatures to respond. Yet, and perhaps ironically, many of the same legislatures in the larger western economies have simultaneously been attempting to reduce so-called \u201cred tape\u201d. The net result has perhaps been a reshaping of the regulatory landscape, rather than a reduction or indeed increase.<\/p>\n\n\n\n

Nonetheless, increasing or just differing regulations remain a core driver of business for accountants\u2014and increasingly it\u2019s a driver of innovation too, as the different types of regulation challenge accountants to stay on top of the situation. As demonstrated in this year\u2019s Practice of Now report, accountants worldwide agree that it\u2019s one part of the cultural change.<\/p>\n\n\n\n

Your practice undoubtedly has specialisations in regulatory necessities, but is it keeping up with the changes your clients require? Is the training available for you and\/or your staff to learn what they need to know? These are questions that the Practice of Now\u2019s findings suggest should not only be asked on a regular basis, but investigated with the intention that changes are immediately made.<\/p>\n\n\n\n

Making the most of ongoing digitisation<\/h2>\n\n\n\n

Technology and accounting have been tied together for nearly half a century now, with the electronic calculator bringing the industry into the modern era, and cloud computing, AI and bots being the latest technologies to fundamentally change the way accountants work.<\/p>\n\n\n\n

Yet technology adoption isn\u2019t moving fast enough\u2014or so the accountants we surveyed in the Practice of Now report. Ninety percent of Australian accountants believe the profession needs to pick up the pace of technology adoption to remain competitive internationally.<\/mark><\/p>\n\n\n\n

When asked why firms are lagging, reasons stated include a lack of time and money to invest in digital transformation (12% and 34% of survey respondents, respectively), although 34% of firms state a lack of expertise is holding them back.<\/p>\n\n\n\n

Yet if there\u2019s one thing accountants can be sure about, it\u2019s that technology is a game changer. Generations of accountants have experienced this. To offer-up excuses rather than adopt new technology is a backwards move.<\/p>\n\n\n\n

Once again the solution is to simply keep digitisation in mind at all times. It shouldn\u2019t be something that\u2019s done once and then forgotten about, because technology is evolving at such a pace right now that new and useful products come to market on a regular basis.<\/p>\n\n\n\n

For example, what do you know about blockchain and the switch to decentralised ledgers? What do you know about how machine learning is fundamentally changing the low-level admin jobs within the profession? If all of this sounds like gobbledygook then you have a major problem\u2014and it\u2019s something that will only get worse as time goes on.<\/p>\n\n\n\n

Read-up on technologies and try to envision how they will affect your existing processes and tools. Look for how the technologies are starting to be implemented within businesses for examples. You might even make some cautious investments in training and technologies, but be sure to take your clients on the journey with you because ultimately it\u2019s they who will benefit.<\/p>\n\n\n\n

Adapting to generational changes<\/h2>\n\n\n\n

Much has been said about the millennial generation, born between 1983 and 2000. The year 2018 marked the first year that those born in the 21st<\/sup> century came of age.<\/p>\n\n\n\n

Millennials were born into a world of technology, so instinctively turn to it without thinking for all their life activities. Not only that but, according to a report by Sage (Walking the Walk), millennials have a unique set of values unlike previous generations. For example, 62% of millennial entrepreneurs say they have sacrificed profit to stay true to their personal values, while 66% say they prioritise life over work. Two thirds of millennial entrepreneurs believe they\u2019ll start more than one business in their lifetime.<\/p>\n\n\n\n

The fact they\u2019re now out there creating businesses is why they\u2019re impacting the profession of accounting and helping create the cultural shift. They need accounting services, but they know enough to take care of the day-to-day stuff by themselves. They value accountants more as service-oriented business partners to guide them through the processes and pitfalls of business life. Can your practice provide that? If not, how can you make the necessary changes so you can do so\u2014and therefore remain relevant?<\/p>\n\n\n\n

But it\u2019s not just a change in the type of clients. Increasingly millennials are entering the profession of accounting too. Yet here there are again substantial benefits. What better way to encourage millennial-run businesses to become your clients than to have your own millennial employees who they can identify with and who share their values? Ensure you make use of millennials because research shows that they have high expectations for career progression\u2014and little tolerance for low-level work.<\/p>\n\n\n\n

Conclusion<\/h2>\n\n\n\n

There\u2019s a perfect storm of challenges occurring at the moment that\u2019s profoundly affecting the world of accounting, in a way that we haven\u2019t see for decades. Indeed, it might be that we\u2019ve simply never seen anything like this before.<\/p>\n\n\n\n

The pressure is on all accounting firms to adapt and evolve. This might involve making radical changes. It will almost certainly involve a root-and-branch evaluation of your processes and attitudes. But as our research shows, there\u2019s simply no choice if you want your practice to be ready for the next decade.<\/p>\n\n

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