Accountex 2017: How accountants must meet the new digital reality
For those looking to transform and revitalise their accountancy practice, Accountex 2017 was the place to be this May. Held at the ExCel centre in London’s Docklands, the cream of the UK’s accounting world came together to discuss everything from the latest tech to the future of the industry.
What did you miss? In short, one very simple buzzword featured heavily across all the presentations, panels and exhibitor stands at this year’s event...
...and that word was ‘Digital’.
Whether it was strategies for switching to online accounting systems, or advice on planning for the imminent arrival of HM Revenue & Customs’ (HMRC) ‘Making Tax Digital’ legislation, everything came back to making firms more aware, prepared and optimistic about the new digital reality of zeroes and ones.
Here’s our summary of the main takeaways from the conference, and how these digital themes may affect your firm.
1. Digital transformation and moving across to online systems
There was a real focus this year on providing practical advice on the transition to digital. A third of UK accountants are already using cloud software in some form, so ‘the Cloud’ is no longer a far-distant item on the practice to-do list: it’s here and many firms are already reaping the benefits of the digital way of working.
The challenge for the remaining two thirds of UK firms is to make that digital transformation happen as quickly and efficiently as possible. With that urgent need in mind, many Accountex speakers focused on the practical steps and strategies for switching across to digital and cloud-based systems.
We caught up with Michael Office, Global Product Marketing Director for Sage after his talk on the implementation of digital transformation:
“Right now, everyone in the market is talking about digital, but really what we need is an elevation of this message about making everything automated. It’s all about automating the end-to-end, and who cares if it’s desktop software, an Excel spreadsheet or a messaging app.”
To make your firm truly ‘digital ready’, there’s a strong drive to reach that automation angle, and to source the software tools that help you get there. What are those initial steps your firm must take to make digital work for you and your clients?
According to the panelists taking part in GoCardless’ own ‘Living in the Cloud’ panel session at Accountex, these are the key steps:
Find the online accounting platform (or multiple platforms) that best suit your firm and your clients’ specific accounting and business needs.
Build up a selective and relevant system of apps, cloud solutions and digital tools that integrate with your platform of choice and provide key automation.
Aim for ease of use, speed and automation with your choices, and help clients to tailor their systems to meet the exact requirements of their business.
2. Making Tax Digital
The big elephant in the room at Accountex was ‘Making Tax Digital’ (MTD). This is HMRC’s initiative to move all self-assessment and business tax returns over to a digital system by an ambitious 2020 deadline. A representative of HMRC was due to speak at Accountex re MTD, but had to pull out due to the General Election being called and the restrictions of ‘purdah’.
Over the course of the conference, there was plenty of conjecture on how MTD may work, but details are currently sketchy on the actual implementation and software integration of HMRC’s planned online tax portal. We’ll know more once the Finance Bill is enacted after the election and more detail on MTD is released.
We spoke to Ed Molyneux, founder and CEO of FreeAgent, the cloud accounting solution for micro businesses, to gauge his views on MTD:
“We’ve had to think about Making Tax Digital before a lot of other people, because it’s such a simple proposition for contractors, and then other providers will be able to follow that lead. In real terms, it doesn’t add any value to the business, it’s just a hurdle. So a) digital tax should just be automatic and b) it shouldn’t cost anything additional.”
Should you be worried about MTD? The overriding feeling is that MTD can be dealt with, but that both providers and accountants want more detail around the ‘how’ element of submitting client data. So what were the key learnings from the MTD sessions on both days?
The big accounting software providers are ready to integrate with MTD (Xero, QuickBooks, Intuit, Sage, FreeAgent etc.) but will need time to integrate their APIs and data with the specifications of the new HMRC system.
Clients, on the whole, are not engaged with the MTD issue – and there’s no real imperative for them to be concerned at this stage.
Your role, as their accountant or tax adviser, is to ensure your clients’ systems are digital-ready and prepped for when MTD becomes a reality over the coming year.
3. Artificial intelligence and machine learning
As Xero UK founder and MD, Gary Turner, pointed out in his keynote speech, “It’s hard to open a newspaper at the moment without coming across an article on artificial intelligence (AI) and how a robot is going to steal your job…”
But the clear message coming from the leading providers like Xero, QuickBooks, Sage and FreeAgent is that AI and machine learning are not a threat to accountants – in fact, AI presents an amazing opportunity to transform the accounting service model.
And Gary Turner clearly believes we’re at a critical point for accounting, as he underlined in his presentation in the Keynote Theatre on day two of the event:
“We’re in a golden age for smart service businesses. AI won’t kill accounting but will open up new possibilities, and that means accountants need to step up and not fear the implications of machine learning and smart software.”
With the basics of bookkeeping, tax and compliance done by AI and software, the accountant can focus on the elements that humans are good at – relationships, empathy, emotional impact, innovation and creative solutions etc.
How, then, are the main software providers working AI and machine learning into their propositions to add real value for you, as an accountant?
Building on research around their ‘Find & Recode’ function, Xero are already beta testing machine learning algorithms to improve the accuracy and speed of coding of transactions and bank reconciliation processes.
FreeAgent are looking at ways to apply AI and machine learning to systemise and automate the key processes in micro and small business bookkeeping.
Sage are already aiming to deliver ‘invisible accounting’ through applications of AI, machine learning and automation of the basic accounting elements.
4. Expanding your advisory and business support services
The impact of digital systems and AI/machine learning is going to be transformational on the accounting industry. As many speakers highlighted, digital will provide more time to build relationships with clients and give genuine value-driven business support, and FreeAgent’s Ed Molyneux was clear that this provides a huge opportunity:
“If bookkeeping and compliance is taken care of by an algorithm then business support for the client can be many different and value-driven things.”
To fully grasp this opportunity does entail change, however. It means rethinking and restructuring your practice so the low-level accounting basics are done as standard by the software, leaving your team free to focus on building a long-term working relationship with business owners and their teams.
Doing this effectively means instigating real change within the practice, and moving your people and processes over to a new way of working, including the following recommended action points:
Specialise in the areas where you add real value – real-time reporting, cash-flow forecasts, growth planning, business performance and tax efficiency etc.
Move away from charging by the hour towards monthly packages – adding different levels of support and value, depending on the needs of the client.
Focus on the right clients – those you work well with - share your digital mindset and deliver the best revenues.
Get ready for change!
Digital is here to stay, was the overriding message for anyone visiting Accountex this year. In the coming decade, successful firms will recognise the inherent opportunities of digital change and work them to their advantage.
The key to success is to revisit, revitalise and reinvent to become the perfect digital accountancy firm. It’s about making digital work both for you (as a business and as a team) and for your business clients – as the conduit to a more efficient, more supportive and more insightful kind of accountancy.
We’re on the cusp of a giant wave of technological change. You can either learn to surf and ride it out, or you’ll sink and end up on the bottom.
If your firm needs the lowdown on all things digital, download our free ‘A-Z of Cloud Accounting’ guide.