The entire accounting industry is changing. For some that means new opportunities for growth and diversification; but for others the change can be traumatic.
An accountant is having a hard time sleeping and goes to see his doctor. “Doctor, I just can’t get to sleep at night,” he says. “Have you tried counting sheep?” inquires the doctor. “That’s the problem,” replies the accountant, “I make a mistake and then spend three hours trying to find it.”
We love an old joke at APLYiD, but what’s happening in the world of accountancy is no laughing matter. Accounting firms around the world have been forced to drastically change processes, re-examine working environments, and support businesses’ economic recovery over the past two years.
But what major trends are causing the most sleepless nights? Here we unpack two of the biggest, and how accountants can best deal with them.
Artificially Intelligent Accounting
According to a 2021 survey by the Institute of Financial Accountants, the automation of accounting tasks by AI and the increased use of cloud-based accounting tools by clients are the technologies recognised as potentially having the most significant impact on the future of accounting.
John Edwards, CEO of the Institute of Financial Accountants (IFA), says: “Demand for AI-based accounting software has increased thanks to the sharp rise in digital payments, fuelled by the pandemic.”
ACCA, the global body for professional accountants, says: “A key issue raised by members in practice was understanding the skills needed by accountants in the future. Automation is pushing practitioners to assess the value they offer clients and may lead them to revise their service offering. This in turn affects how practices will be structured and the skills staff will need. The ability to hold on to key staff is therefore crucial, with firms seeing the need for flexible working practices as likely to be vital to the retention of talent.”
It's important that accountants accept the new role that AI and cloud software brings to the role – not least because of the continuing perils of Making Tax Digital in the UK. But we believe it’s not something to fear. Rather than replacing accountants, the rise of digital tools in accountancy will do more to empower them.
As Jim Scott, Managing Director for Accountancy, IRIS Software Group, writes in their May 2022 report: “Digital tools enable a practice to be nimble … but will never be able to replace the insight and guidance an accountant can provide. We must allow it to do its job alongside the accountant: not instead of it.”
To best manage the change to a cloud-based or digital workflow, accountants need to do the following:
– Make the change. While most accountancy practices have taken small steps to migrate to digital, it’s often piecemeal or to automate one specific task or other. It can seem scary at first, but it’s best to jump in and tackle the change in a short timeframe.
– Training, training and more training. There is a real skills shortage in accountancy, and it doesn’t look like it’s going away any time soon. So do more to invest in your existing staff through extensive training and development programmes. It’s much cheaper to retain good staff than recruit.
– Use the right tools. Automating simple tasks like client ID verification (hint hint) can be easily automated with clever technology (hint hint hint) such as APLYiD’s biometric process. Simple, seamless, and all done in less than 90 seconds.
Not counting numbers – making numbers count
Are you a second (or third) generation accountant? Maybe getting oh-so useful tips and advice from your parents about how to do the job? Unfortunately, they can’t’ really help you – you need an entirely different set of skills to become an accountant in today’s world compared to those you would have needed a few decades back. Modern accounting jobs involve more financial analysis and managerial operations. Today, accountants are increasingly involved in direct interaction with clients, decision making and strategy-making.
One major example of this is in environmental, societal and governance (ESG) issues, often lumped together under ‘sustainability’. The pandemic and COP26 have shown that ESG issues are fundamental to an organisation’s survival, with them becoming increasingly accountable not just for their finances but for the sustainability of their operations.
This is not just simply to ensure compliance, but increasingly, it is driving businesses short-term and long-term prospects. ESGs are both concerns, and a major attraction for global investors. Consumer demand for environmental sustainability is likely to outstrip government-mandated action, but both should, and will, drive business adoption of sustainable practices.
This offers the accounting industry a significant opportunity, as managing that sustainability requires risk assessment and reporting skills, things that they are ideally placed to provide. As sustainability efforts evolve, so too is the sector primed to innovate through offering eco-conscious services to help their clients measure the degree to which they are operating sustainably.
To tackle this, accountants should:
– Develop a wider knowledge base. It’s not enough for accountants to track the figures anymore. Being able to offer advice on risk and compliance issues, and even marketing and product budgetary decision-making, puts the right accountant far higher up the food chain in any corporation. Amass enough knowledge about how other parts of the business works and you can add real value to every department.
– Set the standard. When it comes to environmental, sustainability and governance there aren’t yet any defined standards – although there are global standards under development. Keeping ahead of this curve can give you real subject matter expertise and help your client’s business to thrive.