For as far back as I can recall the media has asked commentators and consultants to predict what the New Year will bring for accountants, says Mark Lee.
Naturally the ensuing predictions include well-publicised developments in tax and financial reporting. Typically the predictions also include variations of the same old warnings of other developments that will, so we are told, force accountants to make major changes to the way that they operate.
I don't doubt the sincerity of those who repeat these ideas. Some of their warnings are coming true at last but typically only many years after they were first aired. You could say the predictions were ahead of their time – which some of them were.
It was Bill Gates who said: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”
Typical predictions made as regards the accountancy sector in the UK have routinely over-estimated the impact of changes. And have also therefore over-stated the urgency for accountancy practices to change they way they operate.
Personally I have long favoured the gradual evolution of accountancy practices as and when this becomes necessary.
I have collated some of the most repeated ‘warnings’ below. How many will come true in 2014 do you think?
‘You will lose out as Indian accountants steal your clients’
I can date this back six years to when it was identified as a natural consequence of the facility to buy outsourced labour from India as cheaply as £10 an hour. Yes there are a number of providers facilitating the outsourcing of accounts and tax work to India. But I sense no big move to cut out the UK-based middleman accountant. Do you?
Has anyone lost loads of business clients due to the concerted efforts of overseas-based accountants offering lower cost alternatives?
‘You must move on as fees for compliance services will fall’
I recall this being predicted when we moved to a fixed tax filing deadline in 1998, then again as computerised systems took hold. And now annually due to the move to cloud computing and low cost online bookkeeping services.
In real terms this prediction probably has come to pass for many accountants. The recession contributed to this as much as did the related software and IT changes. And there are now ever more low-cost providers who are focusing clients’ minds on the how little they need to pay for what has become simply a basic commodity service. In this connection, just last year John Stokdyk collected insights and advice for firms that want to offer higher value business advice to clients.
‘You must embrace cloud and online accounting’
The growth of the cloud and online computing has been continuing for some years although it still has a way to go before it becomes ubiquitous. And the accountancy profession seems to be lagging behind wider Industry trends here.
Of all the repeated annual predictions this one seems most likely to be a matter of ‘when’ rather than ‘if’.
‘You must get to grips with social media’
Given my own extensive use of social media you might expect me to at least endorse this recurring prediction. In fact my views have only moved slightly from back in 2008 when I stated that accountants do not NEED to bother with twitter. And I have lost track of how many early accountant adopters have given up trying to make the time they spend on social media profitable.
Despite the constant promotion of Facebook I have yet to hear from any conventional accountant who can track a profitable amount of new fees back to their use of Facebook.
LinkedIn is very different and can easily be used to generate leads.
But, the bottom line, as ever, is that you only need to embrace those social media platforms where you can engage with your clients or prospects.
Despite the arguments put forward by so many marketing experts, social media advocates and others, you can still build a successful accountancy practice without embracing social media. Much as you could in the past without joining all of the real-life social, leisure and sports clubs where you might have found clients.
Social media can be fun. It can also be useful in so many ways but most platforms are still vastly overrated and inefficient if used by accountants primarily as an attempt to generate new clients.
‘You must stop complaining about the January rush’
The first self assessment filing deadline was 31 January 1998. Every year since then someone (often me) has encouraged accountants to take action to avoid a recurrence of the January rush.
I do not know if there are any stats as to whether things have improved in recent years – especially after the introduction of a standard £100 penalty for late filings even if there is no tax to pay.
I still believe that most accountants only have themselves to blame if they have clients who routinely leave things to the last minute in January.
‘You must move to fixed fees and dump your timesheets’
This old chestnut pops up almost every year. Here is Ron Baker talking about why it is necessary ‘for firms of the future’, back in 2005.
Many years later, more and more accountants are clearly making the move to fixed fees. They do this to compete effectively with the competition and to give clients what they want. The arguments to continue billing clients simply by reference to the time you have spent make less and less sense to me.
But there are still plenty of old-school accountants who continue to bill clients by reference to time-sheets. Why change something that’s working? As and when you start losing clients or failing to win new ones you may find it helpful to reconsider your resolve to retain timesheets. Until then, if it ain’t broke, there’s no need to fix it.
‘You must become more than just accountants’
Six years ago at the start of 2008 I echoed the views that had, even then, been expressed for many years that: “there will be a continuing and growing demand for by clients for more than ‘just’ accounts and tax return services from their accountants each year.”
My views have evolved over time. Is that demand still growing? I sense that while it is true for some business clients it’s not the case across the board, nor do I think it ever will be.
But there is equally no doubt that for many reasons your longer-term future will be more assured if it does not rely simply on the provision of increasingly commoditised recurring compliance services.
What other predictions for accountants do you recall seeing wheeled out year after year? And what is your view of them?
Mark Lee is consultant practice editor of AccountingWEB and writes the BookMarkLee blog and ebooks for accountants who want to save time and accelerate their success in practice, online and in life. He is also chairman of the Tax Advice Network of independent tax specialists.
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