Chairman of the Tax Advice Network and BookMarkLee
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Predictions that recur year after year

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6th Jan 2014
Chairman of the Tax Advice Network and BookMarkLee
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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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Replies (23)

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By JCresswellTax
06th Jan 2014 14:02

Laughable

"

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."

Very general and insulting...

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Mark Lee 2017
By Mark Lee
06th Jan 2014 15:36

1 - Most NOT all
2 - sorry but who else is it down to if clients do it year in, year out?

Mark

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By dynamo1227
06th Jan 2014 16:15

errrrrm....

The clients?

You can lead a horse to water, but you can't make it drink.

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Replying to nick farrow:
By JCresswellTax
06th Jan 2014 16:49

Agreed

dynamo1227 wrote:

The clients?

You can lead a horse to water, but you can't make it drink.

Unless your a superhero like Mark appears to be...

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Man of Kent
By Kent accountant
06th Jan 2014 16:29

Only a January rush?

Agree with most of those points.

January rush - I don't mind admitting that I do around half of my personal tax returns in January. Those being the straight forward one's.

I tend to get the complicated one's done during the rest of the year.

Why most done in January? Well I'm busy the rest of the year as well - doing accounts and CT returns, its just the way most of my work is done.

So January rush - I'm not complaining. I'll probably finish 3 sets of limited company accounts together with 40 (give or take a couple) SATR's this month.

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Jennifer Adams
By Jennifer Adams
06th Jan 2014 17:19

Is this year worse?

I always thought I could nag my clients into submission but this year has proved bad - many more have not sent their stuff in. It is our own fault. Because every year we do save clients a lot of money by burning the midnight oil and getting the returns in on time.

Ohhh...I've not submitted mine yet!

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Locutus of Borg
By Locutus
06th Jan 2014 17:33

We have a degree of choice

I'm sympathetic with the comments that you can't make clients do things - you can simply only advise. I'll be busy with tax returns in January, like many other accountants.

However, we do have a choice about which clients we keep and the terms on which we act for them.

I sent an e-mail to a client today to tell him that if the records arrive in the second half of January then he will probably get a penalty.  I intend to stick to it and am really not fussed whether he is still a client in February.

I have read a few accountants on Aweb use differential pricing to good effecrt - the later the records come in the higher the fee.  I've never tried it myself, but certainly would if I had more tax return cases.

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Teignmouth
By Paul Scholes
07th Jan 2014 03:19

Nail on head Locutus & Mark

If you have a band of clients who always provide their information so late that you have annual grief then there are two choices 1 put up with it and stop moaning or 2 don't act for them.  Both choices are yours.

As far as persuading clients is concerned, just tell them your deadline is 3 months after the tax or accounting year end and remind them on a couple of occasions.  It's worked for us for the past 5 years and, again, if it doesn't, and the clients don't have a reasonable excuse, they only do it once.

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Richard Sergeant
By Richard Sergeant
07th Jan 2014 12:29

End of the local accountant

Haven't heard too much about the "End of the small practice" and other slightly patronising predictions for a couple of years. Has this one finally done a death?

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By JDBENJAMIN
07th Jan 2014 12:49

The paperless office is the future

This one has been around since the 1980's. Very few accountants have gone genuinely paperless, as it vastly complicates umpteen simple tasks, and hugely increases costs. So what's the point?

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By kellyanstee
07th Jan 2014 13:03

Social Media Convertions

Hi Mark, I would like to introduce myself as someone who has made thousands of pounds of new clients from Facebook AND Twitter. I'm sure I'm not the only one either!! Anyone else out there? Please respond!

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Mark Lee 2017
By Mark Lee
07th Jan 2014 14:29

How could I forget The rise of the paperless office?
Thanks @JDBENJAMIN

We may have less paper but I doubt many are paper free. Nor do I think that will come to pass anytime soon.

Mark

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By [email protected]
07th Jan 2014 15:12

‘You will lose out as Indian accountants steal your clients’

This should really be seen as an opportunity for Accountants to improve fee recovery and have more valuable time to offer business advice to their clients. That's what clients are really looking for, not a set of year end accounts.  Why not outsource the compliance and technical work? We have spent a number of years researching, visiting and talking to Indian accounting firms and as a result, have developed partnerships with organisations that are reliable and expert at what they do. Its not a case of 'cutting out the UK based middleman accountant', but providing them with access to a service that can free up time, help with deadlines and improve margins. Might even make January a bit easier.. 

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Locutus of Borg
By Locutus
07th Jan 2014 15:32

The paperless office prediction is the closest one that I have seen coming true.

I doubt whether paper will be completely banished in my working life, but I'm down to a few folders of the stuff, compared to the vast filing cabinets that a similar practitioner would have had a couple of decades ago.

... And I post about one letter per week.

That's progress in my view.

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Replying to atleastisoundknowledgable...:
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By Caber Feidh
08th Jan 2014 15:23

Electronic documents can be searched, unlike paper ones


In my experience, the great advantage to the electronic storage of documents is that they can be searched electronically, providing optical character recognition has been applied to scanned documents.

For about a decade, I have been using X1 to index all the categories of my files that I select. It can process and preview just about any format imaginable. The result is rather like being able to "Google" my own files but with far more options for defining searches. Even when documents have been correctly filed X1 can often find them more quickly than working through a directory structure and it is admirable for locating all the email correspondence with particular people or organisations.

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Steve pipe
By Steve Pipe
07th Jan 2014 15:53

My 2014 prediction...

... is that the gap will widen between practice.

You can see why in my Accountingweb article "The gap between firms will widen in 2014" from earlier today (7 January)

 

 

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By Vaughan Blake1
07th Jan 2014 17:12

Partnership Successions?

I keep reading about and seeing so many accountancy partnerships with succession issues.  I suspect many up and coming accountants,that in years gone by would have 'bought in', are from a generation struggling with home mortgages and don't like the look of borrowing even more.  Given interest rates are at rock bottom it is only likely to get worse.  My prediction is therefore a 'polarisation' of accountancy firms with a reduction of the smaller partnership firms.

'Embracing' the latest technology is not usually most accountants forte.  The phrase 'kicking and screaming' is possibly more apt in most cases.  We will inevitably creep towards increased use of cloud technology and the like, and one day wonder how we coped without it.  I like to tread well worn paths and not be the guinea pig. I well remember trying to get a computer to do tax returns back in 1988 and don't want to repeat the experience.

I still remember back when 'Pay & file' was first on the horizon.  The great Philip Hardman said at a lecture that it was the start of a whole new era and that we would not believe the changes that were coming.  I often wonder if he was privy to some great secret HMRC master plan back then, or just very perceptive.  I suspect the latter!

Paperless, as in less paper has to come.  I remember looking at an archive of client files for a ltd company.  Back in the seventies the correspondence files covered four or five years (maybe they were flared).  Now it is a file a year!

Remember that bogeyman HR Block and the end of compliance work?

It is so tricky to separate the Cassandras from the Chicken Lickens!

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Mark Lee 2017
By Mark Lee
07th Jan 2014 17:39

@kellyanstee

Well done you!

Am now following you on twitter. Always pleased to hear about someone bucking the trend. And, for the record, I note that you are attributing thousands of pounds to your activity on twitter despite not having thousands of followers and even though you don't have a photo for your avatar. Seriously impressive!

The vast majority of accountants who try it out then give up or stick with it simply posting a series of promotional messages and wondering when they will start to generate some business.

I have written about this many times, as your experience is so atypical (sadly). 

Thanks for sharing your success

Mark

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Replying to Chekin:
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By kellyanstee
08th Jan 2014 19:03

Twitter Ava

Hi Mark - just to let you know, that's only my Avatar in January! LOL

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Teignmouth
By Paul Scholes
09th Jan 2014 11:06

Natural inertia

In terms of attitude to change in our industry, we have come a long way since I started in practice and, if accweb is anything to go by, this has accelerated in the past 5 years.

There is however still significant inertia amongst number-crunchers that means that any predicted change, no matter how logical and sensible, will take a while to enter all the dark corners of the industry.

Paperless is a typical example, we decided to do away with our own 7 years ago and, whilst I agree that 100% paperless is not yet feasible, this is only because 3rd parties like HMRC continue to send it to us.  For those who use significant quantities still, I'm guessing you do because it's your choice not because that's "how it is".

This is even more apt when looking at Cloud facilities, although I don't like the expression, this really is one of the biggest "no-brainers" when it comes to predicting where we are all going. Many dispute this and still see it as "new" and risky, but have they tried it?

The development of new technologies has always brought the biggest pressure to change and provides many predictions but, again, if you close your eyes, or are wrapped up in numbers, then you and your client base (who will, in all probability, match your own inertia) can perpetuate existing practices, well passed their sell by date.

This is not to say any of this is wrong, I have a low boredom threshold to accountancy & tax and so anything that speeds up & streamlines the process, enabling me to do other stuff, is great.  Others don't feel like this, that IS "how it is".

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By Chris Maslin
12th Jan 2014 13:18

A bit late to this but...

Outsourcing to India - IMHO this won't happen on a big scale mainly as the human input required to run an accountancy firm is dwindling as software improves.  Why outsource to someone a bit cheaper in India when you don't need people at all?

Cloud/Online Accounting - I imagine those who haven't will find on the whole that their practice has stagnated, whilst early adopters will have done well.  When I say early adopters, I mean within the accountancy sector...the main reason being end users have "adopted" in droves already.

Social media - we've done brilliantly in the past from Twitter, though I feel that's largely behind us (as our "novelty" of using FreeAgent is disappearing).  I don't in anyway think this means all firms should do it, most won't get anything from it.  Not really tried Facebook for business purposes.

January rush - I largely agree with Mark despite the aggressive responses above.  Recurring monthly fees I think are the main reason we don't have much of an issue.  If your client pays you when you've done the work, there's a cash flow incentive for them to delay you doing it as long as possible,

More than just accountants - well, my personal view is that compliance for the smaller business is a doomed marketplace.  It's only a matter of a couple of years before cloud bookkeeping packages enable you to submit statutory accounts/CT returns online, together with VAT/payroll which some already do.  At that point, many clients will feel they don't need an accountant anymore.  Whether HMRC like this or not is another matter, as I foresee a lot of tosh figures being submitted by clients with a "how hard can it be" mentality.

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Mark Lee 2017
By Mark Lee
12th Jan 2014 17:15

@Maslins

Thanks for adding your views here - your point re annual billings is a good one. Although equally those who pay fixed monthly fees have no obvious incentive to supply data early unless the total fee they pay will reflect this. 

All other points are well made too. Nice to see we agree on so much now. I recall Dennis Howlett encouraging you to make fun of my view re twitter a few year back. Seems we're now on the same page ;-)

Mark

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By Chris Maslin
12th Jan 2014 19:07

I think clients want to know their tax bill (and get the tax return out the way) early...but they also want to hold onto their cash.  Take away the latter and most are keen to get it done sooner rather than later.

Re Dennis...I was merely a pawn in one of your "who's the best accounting blogger" arguments! ;-)  Maslins definitely did very well out of Twitter (to some extent still do, but I think they heyday is behind us).  Hard to pin an exact "I got £100k fees from it" type figure, but it's one of a few things that were key in our expansion.

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