Trust in traditional financial institutions remains extremely low in the UK and yet accountants are still one of the most trusted sources of advice for the majority of businesses.
Major challenges driven by technological change could, however, threaten that cherished status. Three of the most pressing are the impact of technology at a strategic level, the rise of competition from unqualified accountants and the trend towards consolidation. All three are also accompanied by real strategic opportunities for accountants.
Competition from Technology
The emergence of new online technologies and a mobile internet culture has driven a proliferation of cloud-based accountancy software.
Bank statements can feed straight into online accounting systems that automatically reconcile the entries to electronic sales and expense transactions. Even HM Revenue & Customs is getting in on the act in moving to a “digital by default” strategy in which businesses and individual taxpayers will manage their liabilities in online tax accounts by 2020. The reality on the ground is that the government is deconstructing the audit and accounting regime that has sustained the accountancy profession for over a century, while adding inevitable new complexities to tax and reporting regulations. A potent mix !
Practitioners have long since resigned themselves to relying on commercial software to take care of their basic compliance tasks. As those activities become increasingly automated and margins fall, successful accountants need to compensate by promoting their personal and advisory skills rather than relying too much on commoditised services.
And this is the point. While business owners are now much more likely question why they need to solicit the services of an accountant when they can undertake a large number of functions for themselves, a qualified accountant offers expertise, the most accurate and least controversial way of working through those functions, tax planning and business advice along with a wide variety of other skills, but many small businesses simply do not realise this.
Over the next decade accountants will need to take a decisive lead in educating small and medium sized companies about the pitfalls of self-administered online accounting software, as well as anticipating and facilitating their requirements to access accounting information 24 hours a day. Accountants can help their clients avoid unnecessary and costly mistakes and at the same time maintain a healthy flow of business for their profession in general and their own practice in particular.
Competition from the Unqualified
It is now the easiest thing in the world to create your own website and start a business from home, and the rise of unqualified accountants taking advantage of these opportunities could potentially pose serious problems for the profession.
Since there are no regulatory laws in place for holding oneself out as an accountant, unlike say for solicitors, absolutely anyone is completely at liberty to call themselves an accountant without any form of training or professional qualification. It is not until accountants obtain professional qualifications and join a professional body that they become subject to any kind of professional conduct rules.
Unqualified accountants often have fairly narrow skill sets yet technology gives them the ability to compete and businesses do increasingly turn to them for help and guidance. The risk that businesses are taking in potentially receiving poor advice could reflect badly on the profession and lead to a deterioration in the trusted and reputable status accountants have earned as a profession.
Technology certainly has had a role in undermining the value of hard won accountancy qualifications but technology has also given the profession a huge armoury of tools to increase efficiency and do more with fewer people. This offers opportunities for distinguishing professionals from the rest of the pack.
Mergers, Takeovers & Consolidation
With rising costs in all sectors, reducing overheads and expenses, sharing valuable resources and expanding offerings to provide a more diverse selection of services to clients does make some sense. There are many in the accounting profession who would argue that mergers, takeovers and consolidation offer the solution to problems facing a number of accountants.
However, this somewhat superficial perspective obscures the real issue. Combining and consolidating two average and dated firms is never going to give birth to a single outstanding accountancy practice. Why should it ?
Instead of taking the easy route of expansion and growth, accountants might consider focussing on the real problems and identify precisely the services their clients want. Offering anything and everything as a one stop shop doesn’t necessarily inspire confidence in clients these days. If accountants focus on the real value that they provide to businesses, they can deliver above and beyond on that value and secure their future.
There is a countervailing trend too ! Technology has significantly lowered the hassles and obstacles to qualified accountants who are themselves starting up in practice. This is giving rise to a ‘counter-culture’ of younger, accountants who may not have the patience to wait around for their senior partners to retire, if they ever do, before they can take over and make their mark. In parallel there are a growing number of entrepreneurs who are looking for exactly the kind of hands-on advisory services that younger, cloud-driven accountants are beginning to deliver.
The good news is that perceptions of the accountancy profession in the UK remain that of a trustworthy and reputable body of dedicated specialists. Accountants are often the first port of call when practical issues and difficulties arise for businesses and that is something which is likely to remain the case for the foreseeable future. However, the next decade is also likely to experience substantial disruptive change from technology driven trends and the most successful accountants will be those who surf these trends, choosing their niches with care and keeping a hawk like focus on the immediate future.
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