How the digital age is changing accountancy
As our personal and working lives continue to move online, what do accountants and their firms need to do to remain relevant and competitive?
We’re living through what the World Economic Forum has termed 'The Fourth Industrial Revolution’, a shift towards digital working, online interaction and software automation that has impacted all industries. It’s a time of unique transformation in the business world, and is driving significant change in the accounting sector too.
In recent years accounting has seen an increasing dependency on technology, and specifically software, within the accounting firm and their clients. This has brought with it a host of benefits to the efficient running of a firm, but it can also add complexity.
The key technological shifts we’ve seen that have driven change are:
- The move from paper to digital – traditional ledgers and paper files are fast becoming relics of the past, with most firms already moving to a mixture of desktop, cloud and enterprise software to run and manage their practice.
- Direct integration with clients’ systems – to carry out your work, you need to connect with the software platforms, data and solutions used by your clients, with many using industry-specific or specialist tools, and the latest in mobile business apps, to manage their company.
- Working from mobile devices – your clients, and your staff, are increasingly used to ‘working on the go’, using smartphones, tablets or laptops to access the software tools they need 24/7 from anywhere that has an internet connection.
Efficiency and the need for speed
Finding ways to continuously improve the efficiency of your business, your workflows and your team’s productivity is key to success. And that’s not just driven by the capabilities of new technology, but also by responding to the needs of your clients and your desire to make the firm more profitable.
The need for ‘everything to be faster and easier’ manifests itself in a range of ways – but in our experience, for the accountant, this generally breaks down to three core objectives:
- Increase your workload. Do more with less so your team’s productivity is maximised.
- Deliver your work to clients faster. Get your clients the important numbers they need to manage their business and minimise the effort taken to complete compliance tasks.
- Complete more jobs. Make it easier for the firm to service a greater number of clients, and a greater number per accountant.
Charging for your work used to be simple. Time was recorded against each job, then charged out to the client at an agreed hourly rate for each member of staff on the project. But there’s an emerging interest from clients in ‘value pricing’. What your clients are willing to pay is no longer defined purely by the time taken to complete their basic compliance work but by what they feel is of most value to them – compliance accounting is the starting and not the endpoint for any client relationship.
Value is now more likely to be measured by:
- The range of services you offer the client, usually within a defined package model.
- The amount of support you provide and the depth of your client relationship.
- The insight and added value you bring to the client i.e. how integral you become to their success.
Changing client expectations
Clients expect to be getting (and paying for) advice from their accountant – and that, in turn, is having an impact on the nature of the services your firm must supply. 37% of small and medium-sized business owners think accountancy is becoming more automated and that they can complete a range of tasks themselves, according to the The State of Accounts report from Xero.
More worryingly, the same report found that 59% of small businesses don’t think they will need an accountant in 10 years’ time. Client interest in just getting compliance services from their accountant is in decline. Many clients now expect bookkeeping, accounts and tax returns completed as a matter of course. They want it done quickly, painlessly, faultlessly and for the best price.
But if compliance is a core service that’s becoming price-sensitive what other higher-level or advisory services do clients want where greater value (and profit) can be created?
Key areas where business leaders want advice
- Business and financial performance
- Management accounts and KPI reporting
- Managing cashflow and cash forecasts
- Debtor tracking and reducing aged debt
- Spend management and expenses
- Software and systems advice
- Strategic planning and goal setting
- Access to finance and funding
- Outsourced financial director (FD) services
- Business coaching and mentoring
As client demand shifts the landscape of accounting towards advisory services, so the rules of accountancy need to shift to meet these new expectations.
Want to learn more about the new rules of accountancy, and how connected accounting will transform the way your practice operates? Want to see how you can build the accountancy firm of the future? Download our eGuide to get the full picture.