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Accountants are dead. Long live accountants

16th Dec 2016
Co-Founder The Wow Company
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Accountants and bookkeepers seem to be top of the list for replacement by robots according to most reports you read, says Paul Bulpitt, UK head of accounting at Xero and co-founder of The Wow Company.

Mark Carney, Bank of England governor was also quoted last week as forecasting that 15 million jobs will be lost to tech over the coming years.

In a similar vein, research conducted by Xero this year, revealed that 59% of small business owners think that they won’t need an accountant in 10 years’ time.

So are the days of accountants numbered?

No. The accountant isn’t dying. In fact, their role is actually diversifying. Here’s why:

  • Today’s accountant is learning new skills and picking up different attributes that keeps them relevant for their evolving responsibilities. Strong percentages of the survey sample believed that business management, risk analysis, and computer science are skills needed to succeed in 2026. This signals a new era of accountancy, led by the accountants themselves
  • As long as there is complexity involved with running a small business, there will be a place for accountants. Small businesses don’t have finance teams or even quite often the expertise to handle the latest regulations. You just have to look at auto enrolment, and the roll out of Making Tax Digital
  • While much of the traditional work performed by accountants, bookkeepers and payroll managers is being automated, there is an important human element to the relationship a business owner has with their accountant that can’t be replicated by a robot

How accountants communicate with clients needs to change

Increasingly, business owners are turning towards non-traditional forms of communication to interact with their customers and vendors. This trend is reflected in Xero’s survey results, which found that only 42% of small business owners thought they would interact with their accountant face-to-face in the future. With the ‘anytime, anywhere’ connectivity we have at our fingertips today, the need for companies to change traditional working models and end the one-size-fits-all approach is more important now than ever. This means making ourselves available to clients through mobile messaging apps and virtual hangouts, which will not only improve client satisfaction, but boost productivity.

The role of the accountant changes

With the processing work automated and availability of various data feeds, the quality of financial information on hand for small businesses has never been better. The opportunity for accountants is taking this financial information and delivering relevant, timely insights to business owners. Imagine being able to let a client know in advance that they are heading for a cash flow issue - then being able to help them by arranging short-term finance through a P2P lender. Services not currently offered, but possible already. As the client-accountant relationship evolves to an ‘on-demand’ model, we’ll see a move from lengthy, bulky engagements to more frequent, yet higher value work.

Accounting firms have significant role to play

So there isn’t, and will never be, any dispute around the value of an accountant for a business. However, every modern business, regardless of size or age, needs a modern accountant who knows how to future-proof a business. Ensure you understand your client’s needs, your own needs and the tools and technology at your disposal in order to continue to provide excellent accountancy services.

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By [email protected]
19th Dec 2016 11:45

Right. Thanks for sharing.

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By Bob Harper
20th Dec 2016 10:23

Will every business may need an accountant?

Based on what's happening with Artificial Intelligence, technology could easily work out if there is going to be a cash flow shortfall and connect the business to a P2P lender. That's very similar to what the Xero chatbot is doing now.

Technology is reducing the amount of accounting resource needed. This trend will continue which means far fewer accountants will be needed.

What we are doing is focusing more on the client, not just the accounting work. In the cash flow example, this means coaching and mentoring clients through a cash flow crisis and coming up with ways to avoid and solve it before the loan is needed.

This does require knowledge and skill outside traditional accounting.

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By alan thornton
20th Dec 2016 10:24

The challenge for the profession is how we are going to be able to train good accountants for the future, when the compliance work which we all learned on no longer exists. There is a danger that today's trainees simply wont get an adequate grasp of the basics on which good advisory skills are based. What will then differentiate them from the thousands of "business consultants" already out there with no proper financial background, but a good sales pitch?

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Replying to alan thornton:
By Bob Harper
20th Dec 2016 10:47

@Alan - good question and I don't see many answers.

We are building our own knowledge and software.

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By RobertD
20th Dec 2016 10:26

... and still the adage remains......garbage in, garbage out.

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Replying to RobertD:
By Bob Harper
20th Dec 2016 10:43

@RobertD - Machine learning will vastly improve the quality of data - in Rod Drury's words the next phase of accounting software is "magical".

Would you bet against him?

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By CW2012
20th Dec 2016 10:39

Following on from Robert D, part of our work scheme is to sift out the garbage from that which is tax deductible, it seems to me that without the intervention of somebody with a bit of skill and knowledge then the HMRC will just be receiving a dogs dinner every quarter, but I suppose that if they receive enough for the public purse the HMRC wont care.

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Replying to CW2012:
By Bob Harper
20th Dec 2016 10:46

Tax is ideal for AI and innovations are already happening in law.

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By Annehthr
20th Dec 2016 10:45

I totally agree with Paul,we must diversify and at Shirley Hollis & Co we have changed our strap-line to promote ourselves and a " Business Buddy". We feel that the more softer and friendly we are we can provide a full business partnership with our clients. They in turn will come to us at the first instance for advice about any part of their business be it marketing, HR or Finance. This is the way forward! So new skill sets need to be had.

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Replying to Annehthr:
By Bob Harper
20th Dec 2016 11:19

@Anne - I really like the "Business Buddy" idea.

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By AndrewV12
20th Dec 2016 11:01

Extract above
'In a similar vein, research conducted by Xero this year, revealed that 59% of small business owners think that they won’t need an accountant in 10 years’ time.'

What research, if the 59% is true, it includes those thinking of retiring or selling their business. Also why wait 10 years why dont they dispense of their Accountants right now, why wait.

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By raybackler
20th Dec 2016 11:33

What gets forgotten in all of this is politics. All the time politicians mess around with the tax system and create continuous change then our clients will never keep up and neither will computer systems. They analyse data and do not plan for the future. Name any system that is going to help plan the introduction of Auto Enrolment pensions across the rest of my client base in 2017? Sure the systems will crunch the data afterwards.

And who will hold the hand of each client as we progress through Making Tax Digital? The same accountants who helped them through RTI! Give a politician a ministry and a blank sheet of paper and none can resist making changes. There has never been a tax year without new rules to digest, communicate and assimilate.

How about the changes to the VAT Flat Rate scheme that are just around the corner or the tinkering with IR35 that will begin to filter through now for next April. Accountancy is not just about systems and data.

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Replying to raybackler:
By Bob Harper
20th Dec 2016 11:25

@Ray - there may always been a need for an accountant, just a lot less need so more competition, lower prices and margins.

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Replying to Bob Harper:
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By raybackler
20th Dec 2016 11:42

Hi Bob,

I don't agree, because if anything the need for accountants is expanding. The pace of change and the complexity in our legal system means that the accountant is needed more than ever.

Where I agree with you is that new technology does put pressure on margins. However, there is an offset because new technology also increases productivity.

In the future increased productivity could slowly evolve into less accountants being required, but they will be dealing with more complex issues, unless the politicians see the light. I don't see the Office of Tax Simplification making much headway. As I said in another post, I will begin to believe it when tax and NI are merged.

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Replying to raybackler:
By Bob Harper
20th Dec 2016 12:52

@Ray - this is just the start and there is a long way to go.

I agree, technology does increase productivity which can boost margins. But, it also creates an over supply of resource which reduces prices and margins. In the end there will be less work at a lower price...the technology and customer wins, not the accountant.

Accountancy is just a part of law and there are innovations like http://www.rossintelligence.com/. At the moment this is positioned to support lawyers but over time it will do more and more like DoNotPay.co.uk - here is a BBC article http://www.bbc.co.uk/news/technology-36650317

I can see this making its way into areas of tax work from compliance to planning.

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By In a Daze
20th Dec 2016 15:56

The technology available at the moment dose speed up processes however, it cannot read or interrupt anything. You need the knowledge in the first place.

For some areas of tax i use a product called tax planner interactive and it works fine however, if you don't understand the questions it asks you are going to be in trouble.

What software companies and HMRC don't understand is that most business owners do not want to do bookkeeping and accounts and companies like xero and others encourage business owners with no experience of bookkeeping to do it themselves. Have you actually seen the state of some of these records?

And if it is true that software can replace accountants most of HMRC will be made redundant as records and tax calculations will be perfect all the time. let's face it we have not even achieved a 100% paperless office at the moment.

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By North East Accountant
21st Dec 2016 08:43

Recent meeting with a client and we provided advise on a wide range of issues as a trusted advisor. No AI or robot is going to replace that.

What the people pushing this stuff fail to understand is that it is a lonely place to be the head of a OMB and quite often the only person that the owner can talk to about any issue is his/her trusted advisor, his/her accountant, who knows their business inside out and has been alongside them through many adversities.

No doubt the basic book keeping will be more and more automated but people buy from people and the trusted advisor is hear to stay.

The hard part is there are many clients who don't utilise the trusted advisor bit and as the compliance work falls off, is the trusted advisor bit going to pick up the slack.

If you cant put the clients interests ahead of your own, don't even bother trying to become a trusted advisor.

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By Glenn Baboolal
23rd Dec 2016 04:16

Aeroplanes can now land without a pilots help but like pilots we still need Accountants to supervise or have oversight..my fear is dependancy on computers can lead to loss of technical ability as some pilots had great difficulty in manually landing planes when it became necassary..however in the Accountants case ....computers can act like simulators ..to help keep our competences..

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By johnjenkins
09th Jan 2017 16:29

Hey Bob, glad I missed this one before Christmas. Good to see you're still number crunching and have no idea what being an Accountant is all about.
Hey Paul "future proofing business" wow that certainly is something I've never heard of. Mr Carney? isn't he the bloke that Andy had to apologise for because they "got it wrong". Why did they get it wrong? Well apparently they had a Michael Fish moment. Yes with all the IT and AT the so called experts can't get it right.
MTD - you must be joking.

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Replying to johnjenkins:
By Bob Harper
09th Jan 2017 17:58

@JohnJenkins - it will be interesting to see how MTD is rolled out.

My guess is that there's going to be a lot of work getting businesses into bookkeeping/accounting software. There may even be some carnage along the way but after a while it will settle down.

If it were me it would be making cash accounting compulsory for small businesses so they wouldn't suffer the costs of GAAP and then tax adjustments, just to pay some tax.

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Replying to Bob Harper:
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By johnjenkins
10th Jan 2017 08:57

Hey Bob,
I have a feeling that MTD in it's present form will not be rolled out. Compulsory 1/4 accounts will never happen.
When something isn't right, no matter what "experts" say people will not participate. Couple that with an air to disrupt the "establishment" you have a cocktail that will "future proof" a nasty taste in the mouth.

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Replying to johnjenkins:
By Bob Harper
10th Jan 2017 14:05

@John - I don't think 1/4 accounts is part of MTD; I thought it was 1/4 updates with one annual amendment.

If you have a look at what Xero are doing with AI we're fast moving towards a time where software will check data and correctly allocated to nominal accounts.

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Replying to Bob Harper:
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By johnjenkins
10th Jan 2017 14:58

Bob, stop mincing words. Updates, statement, income & expenditure, call it what you will, it's all the same crap with no point, as yet. Of course we all know that once this is up and running (but I doubt it) the small self-employed will be on RTI monthly basis and paying monthly tax and nic. Then onto the bigger fish.
I will admit that some software can pick out what you have posted before and then duplicate. We have that in VT and it does save considerable time but that's when complacency steps in and mistakes are made. You've only got to look at someone buying from a builders merchant, the diversity of what can be bought there.
I've said this before and no doubt I will say it again and again. We have high techies and low techies and the low techies need to catch up, but at their pace not HMRC's penalty based pace.

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Replying to johnjenkins:
By Bob Harper
10th Jan 2017 15:10

@John - I'm not mincing my words, there's a big difference between 1/4 accounts and 1/4 filings of data like a VAT return.

The point is people knowing and paying their tax earlier and less cost in terms of accounting fees.

Artificial Intelligence (AI) is very different to what's been done so far with software "rules".

I've done a fair bit of research and participated in a Google Accelerator with AI developers and the tech can read invoice lines.

My take is that MTD will be hard work for some but the pace of change is speeding up.

However, I would start at the top and work down for a few years.

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Replying to Bob Harper:
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By johnjenkins
11th Jan 2017 15:04

Bob the business that wants to have 1/4 figures (in whatever shape or form) already do it. The tax liability dates aren't changing so business know what they have to pay and when to pay. Business can reduce payments if profits are lower than expected. Also there is nothing stopping business paying more if they want to.
Bob, I forecast Brexit and Trump (I'm actually thinking he might not even take the job) and I forecast 1/4 crap figures will not come about.

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