Try to imagine the accountancy practice in 2030. It might seem far away, but in reality, it’s the not-so-distant future.
Think back to how you worked a decade ago and compare it to how you work today. By drawing that comparison, you might feel that you can determine the rate of change going forward. Because 2010 doesn’t feel so long ago, you could think that the rate of change will be gentle.
According to the latest Practice of Now report, which surveyed 3,000 accountants globally, 90% feel that the profession is undergoing a cultural or evolutionary change. This is certain to have a significant impact in the coming decade.
In short: things are changing.
This is because numerous external forces are affecting the profession at once – everything from increased legislative burdens and heightened client demands, to generational changes.
The business landscape is also changing in response to these influences. For example, the Gen-Z and Millennial generations, as the predominant demographic, are increasingly coming to the fore as business owners, bringing with them a unique value set. Is your practice prepared for this?
Drawing conclusions from the report, we have made five predictions about how an accounting practice might look in 2030. These are:
Manual data entry will be a thing of the past
This means: Data will move automatically from clients and their bank accounts into the accountant’s systems. Manual data entry will be a rarity. For some modern accountancy practices, this is already becoming the norm.
There are two driving factors. The first is the digitally native Millennial and Gen-Z business owners and operators. Technology is second nature to them. Their processes of forming a business starts with technology. They are equally likely to create social media pages as they are to incorporate their business with relevant authorities.
They also have an inherent understanding that accounting is best done digitally. When invoicing, the first thing they are likely to do, is download an invoice-creation app on their phones or tablets. The app will most likely be cloud-native, which allows for the free-flow of data.
The other driving factor is the growing number of demands that legislation is placing on businesses, including the digitisation of payroll and tax. Governments have awoken to the fact that technology is a useful way to ensure compliance and avoid tax shortfalls. Therefore, businesses globally have had little choice but to use accounting software for at least some aspects of accounting, and they generate the necessary data by default.
How to prepare: Make sure that the software you’re using in your practice is ready to plug into the various data sources that businesses are making increasingly available. If, by 2030, you are not using some kind of cloud accounting solution, you could lose customers daily.
This means: Accountants will have a real-time overview of client matters and will be able to interact with clients in real-time. Accountants will become trusted partners, or ever-present companions.
Accountancy has, until now, been prone to long delays. For example, if a client wanted to see a list of debtors over 120 days, they would ask their accountant to draw up a report. In a busy practice, this might take anything from a couple of hours to a couple of days. This meant that businesses lacked the agility they needed to respond to matters timeously, and accountants lacked the opportunity to be of much assistance.
The instant flow of data has fundamentally changed the relationship between a business and its accountant. For the accountant, the new level of visibility can provide a whole host of new service offerings that will alter the perception that an accountant is only needed for tasks like compliance or auditing. If accountants are ready to take advantage of it, a whole new world awaits them.
How to prepare: Equip your practice with the right skills and experience to build these kinds of relationships. You can train your current staff or recruit new skills. The Practice of Now study found that 82% of accountants have considered recruiting from a non-traditional background. A further 43% found that new accountants joining the profession should have a diverse industry background.
Now is the time to start considering the necessary changes to your practice.
Practice of Now 2019
The latest research reveals evidence of a cultural shift within the industry as it prepares for the coming decade. Recruitment, skills and training, business practices, service offerings and technology are all evolving.
Proactive alerts and responses
This means: Accounting software will instantly alert the accountant when anything changes for a client – be it something opportune or dangerous – 24/7. For example, the accountant would be alerted if the client suddenly incurs a bad debt resulting from an order placed by a customer whose credit rating is low. The benefit to alerting a client that the order they’ve just received comes with caveats, and what the best course of action to follow from a financial standpoint would be, is priceless.
Proactive intervention provides huge value for clients and is another non-traditional path that accountants can offer as a value-add.
How to prepare: This would result in a fundamental shift in relationships, which would mean ensuring all staff are able to help clients on an ad hoc basis. Your client management software should be able to record all client/staff communications. Traditional processes of assigning clients to specific accountants should be done away with to allow staff to help clients as needed. Clients should also be made aware that they will be helped by the first available staff member. Ultimately, these are cultural changes within your organisation, so be sure to introduce them to your staff in the best possible manner.
Pre-emptive problem solving
This means: Business problems and errors will be pre-emptively spotted by accountants who are proactively looking for them before they manifest into year-end error corrections.
This is the most obvious benefit of having a trusted advisor.
Consider contacting a client to inform them that they will be in a negative cashflow position in a few weeks’ time, and then telling them how they can avoid it. This kind of observation might seem like magic to a client, but it is simply a leveraging of the experience nearly every accountant should have gathered over time.
This is more than a value-add for clients. It can also create a more fulfilling working life for accountants. Few accountants enter the profession hoping to simply hit the grindstone at year-end. If an accountant has the opportunity to be a superhero, then why not?
How to prepare: These predictions indicate that communication with clients is set to change drastically over the coming years, and this needs to be built into your processes. It’s worth trying these processes with existing clients to see how receptive they might be to this kind of intervention. You could also issue surveys or add it on to traditional communications. When taking on new clients, these service offerings should be an integral part of your value-add discussions.
Bigger fees but better value
This means: Accounting fees will increase due to the value added by advisory services. While the fees might not increase by all that much, accountants will be able to better monetise their services.
Even though businesses watch their expenses closely, they tend to be willing to pay for the value they receive. If you start to offer more value, and then increase your fees, you stand a bigger chance of realigning them with the services you offer.
It might make sense for you to switch from once-off fees to a monthly or yearly retainer. If the fees match the perceived and demonstrated value, no client will think it’s a bad idea. Discussing fees once you’ve saved a client a large amount of money is obviously the best timing.
How to prepare: Look at what your competitors are charging for services and consider what your pricing should be. If you are surveying your clients, build in some sensitive questions about what kind of deals they are most drawn to. Remember that they cannot be drawn to services that they have not experienced the value of.