Did you know that 92% of CPAs believe they are not future-ready? A further 67% of accountants feel the profession is more competitive than ever. The demand for quality accounting and bookkeeping services is growing. So much so that, within the next eight years, the global market for accounting software will have a value of $11.8 billion. So what does this all mean for accounting firms? How can they ensure they are up-to-date with new accounting software and technology to remain competitive? In this blog, we discuss how to future proof your accounting business and how having an innovative mindset and embracing smarter resourcing strategies can help lead staff and clients through uncertain times.
What does the future of accounting look like?
The past few years have been interesting for accountants, with their services still playing a vital role in helping businesses to navigate the impact of COVID-19. In fact, 54% of small businesses approached their financial or accounting adviser an average of 13.3 times each quarter, up from the average of 4.4 times pre-COVID. 82% who sought professional accounting advice believed it to have had a positive impact on their business.
Let’s have a look at the current state of the accounting market:
- The Australian accounting market is currently valued at approximately $21 billion
- There are around 33,281 active accounting businesses in the country
- The accounting industry is currently employing 129,574 professionals
- The average industry growth rate, as of 2021, is 0.9%.
As business confidence grows, and as regulations and processes come into effect to deal with fluctuating economic changes as a result of the pandemic, accountants will face improved trading conditions over the next five years.
According to Forbes, the finance and accounting industry is speeding towards a transformative period. The impact of COVID-19 has accelerated profound changes in business, work and life. Businesses held off on seeking costly advisory services from accountants at a time when cash flow was poor but relied heavily on them for guidance and compliance during the rollout of assistance packages such as JobKeeper and Cash Flow Boost.
The value of accounting practitioners has increased as these government support measures begin to end. Throughout this period, accounting firms will have a unique opportunity to establish stronger client relationships and remind clients of the value they can offer businesses - going beyond mere compliance.
Now is the time to capitalise on opportunities and move towards more strategic long term planning - becoming “crisis managers” with a long term view to lead staff and clients through uncertain times. Accounting businesses need to seek ways to keep up with trends, ensure their staff are engaging in upskilling opportunities and look towards technological innovation as the answer to stay at the forefront of their industry.
The past accountant vs the future accountant
Before we discuss how exactly you can future proof your accounting business, let’s have a look at what a future accountant may look like. Back in the day, accounting was structured around being simple and fixed. Main responsibilities included handling ledgers and some reporting. Clients had the notion that accountants were just number-crunchers and based their services on hourly rates.
In today’s modern accounting world, accountants are much more than that. Accountants are embracing technology, like cloud computing and automation, to help take care of the time-consuming, ‘number-crunching’ activities. This then transforms the idea that being an accountant means inputting financial data. Instead, accounting services are evolving into a more advisory model. The result, having the ability to provide more value to clients resulting in opportunities for account growth.
There will be many accounting firms who will be resistant to this type of change. However, the pressure to adapt to this new accounting world is not just coming from businesses and clients wanting more from their advisors, but technology is changing almost every field of business - no organisation or industry will go unaffected. This pressure to adapt and innovate is also affecting clients so standing still and remaining “traditional” is no longer an option to stay relevant in the accounting profession.
Ways to future proof your accounting business
To adapt to the future of accounting and drive success in your accounting firm, it’s crucial to start investing in measures to future proof your business, such as:
Upskilling and professional development opportunities
Upskilling your accountants, bookkeepers, accounts payable or receivable employees is a must. The business environment is continuously changing and as a result, new regulations are coming out each year. Legislation, accounting and tax laws and education requirements are changing year on year. If your team is not keeping abreast of these updates, you risk falling behind or worse, risk suffering significant legal or financial consequences due to the increased possibility for non-compliance or human error.
74% of employers were concerned that professional development and training would require employees to spend time away from work and 57% found it difficult to find the right training. In terms of accounting knowledge and skills, there are numerous accounting associations and industry recognised groups, like Chartered Accountants ANZ and Chartered Public Accountants (CPA) Australia for example, that offer CPD courses to amplify existing knowledge or introduce new concepts to accountants. Many of these are shaped around online learning experiences, allowing your team the ability to learn in their own time and work around schedules and deadlines.
It’s worthwhile to note that it isn’t just accounting-based training or upskilling businesses should focus on. It’s the digital age.. Ensuring your accountants are up-to-date with accounting technology or even commonly used software is crucial too. Workshops on how to use key accounting software such as Xero and MYOB, for example, to input and store relevant accounting data efficiently can save even more time handling client information is a great place to start.
We’re seeing professional associations such as the IMA emphasising the importance of continuous learning for accountants in such areas as data analytics so they’ll have the skills they need to compete in the new post-COVID world of work. The impact on the accounting sector will be huge, and the demand for data specialists will rocketeer.
Accounting professionals will need to step into the vital role of business advisor if they are to grow and meet the demands of their clients. Businesses will need this help if they are to continue operating through the COVID-19 and post-COVID business environment. Upskilling in areas of data analytics and strategic planning will be vital for accountants into the future.
Innovating through technology
Automation has relieved accounting professionals of tiresome and time-consuming manual tasks, equipping them with intelligent tools to manage every accounting task. What’s more, when asked about the tools required to deliver on plans in 2021, 35% of Dext’s survey respondents prioritised practice productivity features that have automation and AI at their very core.
Cloud computing just makes sense for accountants, from data storage through to more efficient software and communication technology. Data security is the main concern for cloud-sharing software. However, this means that organisations behind this technology place a large focus on ensuring this security is addressed. The advantages of cloud computing include lower IT costs and the ability to have your staff or clients access vital information and data from anywhere, and at any time.
In order to work remotely, considering the effects of COVID-19 on traditional work practices, cloud technology is essential and covers everything from accounting software and video conferencing to document sharing and productivity. Cloud-based software is not only essential for accountants but also for clients. In many cases, it’s clients who are driving the move towards the cloud, by utilising accounting software in conjunction with the many integrated applications such as point-of-sale, inventory management and online stores.
And accountants quite simply need to keep pace with the technological expectations of their clients and be able to advise them on how best to maximise integrations.
Embracing smarter resourcing strategies
With more companies moving towards cloud accounting, they are no longer constrained to do business locally. Both accountants and businesses are increasingly offshoring basic accounting tasks to locations such as the Philippines. This will allow accounting professionals to focus on more strategic work and advisory services which will also add more value to the firm’s bottom line.
At the compliance level, firms should be investigating outsourcing basic tasks in order to focus on their new direction of growth. Outsourcing or offshoring companies understand the significant business benefits that can come from cloud-based operations.
The global market size of outsourced services in 2019 was valued at U.S. $92.5 billion, with the leading driver for this growth being the 59% share of businesses that turn to outsourcing to reduce costs. Businesses can use outsourcing to help navigate sudden increases in demand, market changes, and to deliver on organisational goals.
Accounting businesses and firms need to embrace these changes and innovate in order to stay present, relevant and competitive in the future. It’s no longer an option. Without the right measures in place, many accounting firms will struggle to keep up with these changes or adapt efficiently. This will limit any opportunities to grow or remain viable.
For example, a mid-sized accounting and advisory firm offering niche advice to businesses and individuals wanted to provide high-quality bookkeeping and accounting services for their customers at an affordable price. They had previously tried to set this business model up in Australia using local staff, but employment and capital costs made this inefficient for their business. They instead turned to outsourcing as a solution and currently have 11 staff made up of team leaders and accountants. Outsourcing helped them scale and grow their accounting firm, and at the same time, helped keep them competitive and affordable in today’s market.