Last editedJan 20204 min read
Accountancy is reinventing itself. Once considered a staid profession, with practitioners who apply tried and tested processes but rarely challenge status quo; it is now embracing efficiency, technology and automation.
The rise of cloud accounting has put accountants at the forefront of a new range of technologies, which empower them to streamline workflows and apply new layers of commercial insight to their work.
Adoption of these technologies is becoming mainstream: one third of UK firms now service over 80% of their clients with cloud accounting software.
These tools require a new breed of accountant – one with superior client-facing skills, a passion for technology and commercial savviness.
Historic skill set no longer fit for purpose
The compliance services most commonly provided by accounting firms (VAT returns, statutory accounts and corporation tax) can now mostly be automated using cloud accounting software and associated add ons. The shift away from compliance services has also been aided by the decline of the audit market, with the number of audit firms in the UK decreasing by 4.6% in 2015.
As a result, the historic skills associated with compliance services, such as bookkeeping and data entry, are less in demand.
Retaining technical accounting knowledge, once the preserve of highly paid finances professionals, is also now less relevant, since accountants can access online technical libraries and search through large data sets at speed.
Chris Conway, managing director of Accounts and Legal says:
“The role we play as professional accountants has changed and we recognise that innovation plays a key factor. There is a shift towards business partnering, driven from a multitude of cloud-based applications.”
The adoption of cloud accounting is likely to be bolstered by the roll out of Making Tax Digital, from 2019, which requires firms to provide quarterly reports to HMRC and keep the related data electronically.
Empowering firms to work more efficiently
Bookkeeping is now largely automated, with cloud accounting packages such as Xero, QuickBooks and Sage One seamlessly connecting to bank feeds to pull in live data from client accounts. Add ons like Receipt Bank also allow businesses to submit expense claims and receipts from their smart phones, with an increasing amount of associated coding performed by machine learning and artificial intelligence.
Adopting a best practice approach with cloud accounting software, means that it’s easier for accountants to forecast the cost of servicing clients, irrespective of the number of transactions. Because of that, many firms are changing their pricing model from billing time to flat monthly fees.
Practices can take advantage of payment software add ons like GoCardless to set up and manage fixed and variable recurring payments from clients.
“We use GoCardless to automate our collection of payments which saves us a heap of time and no need for credit control either. This seamlessly integrates with Xero which supports us through the reconciliation process,” say Wes Rashid, co-founder of the Accountancy Cloud.
With such an arsenal of technologies at the disposal of accountants, it’s no surprise that KPIs related to bookkeeping are increasingly based on effective use of automation, as opposed to the number of transactions or clients a practitioner serves.
Mastering the delivery of advisory services
Accountants are taking advantage of real-time information offered by cloud technologies by rebranding themselves as business advisors, providing forward looking advice around access to finance, growth and cashflow forecasting.
For many practitioners this is a change in mindset, requiring them to spot commercial opportunities and place themselves at the centre of their clients’ businesses.
The Accountancy Cloud offer regular decision support and forecasting for their early stage clients to try and maximise their chances of survival.
“Our software enables us to delve deep into the data and bring the numbers to life, in a way that is easily understood. We can create actionable insights to measure metrics like monthly recurring revenue, customer acquisition costs, loan to value and cashburn, to inform much better outcomes for our tech startups,” says Wes Rashid.
Whilst there has been some speculation that automation and AI could put the roles of accountants under threat, most generally see upsides to these changes - with a new survey indicating that 84% of accountants agree that technology will enable them to focus on higher value work.
New opportunities to help with fundraising
The popularity of debt and equity crowdfunding platforms are creating new opportunities for accountants to assist in the fundraising plans of their clients, by providing advice around the different facilities available and assisting in creating financial models.
Between 2011 and 2016 the size of the debt crowdfunding market in the UK increased from £92 million to £3.5 billion, according to data from AltFi.
Accounts and Legal work with their clients to refine their business strategy and key drivers prior to identifying the right funding source and value.
Chris Conway says: “The key to helping clients successfully raise finance is ensuring that you understand the fundamentals of their business. Before speculating on what type and quantum of funding is possible, we help clients develop a robust business plan and financials which are commercially realistic, evidenced and defensible as far as possible.”
Hiring plans are changing
These technological changes have started to affect recruitment processes. While training firms still hire old-style trainee accountants, with a strong eye for detail, they also look for accountants who have a flair for IT and soft-skills which enable them to communicate the underlying commercial impact of their work.
Alex Laurent, a consultant at Talent Edge, a recruitment company which specialises in placing accountants in technology companies, has found that there is an increasing appetite from clients seeking candidates who are able to demonstrate strategic thinking.
“They need to be able to tell the story behind the numbers and bring them to life,” he explains. “Whether they are in a pure reporting or commercial role, accountants will have a direct stakeholder requiring them to interpret, translate and often simplify complex financial information into business focussed recommendations.”
Carpenter Box, a forward thinking 90-year old firm based in Worthing, have specific members of staff who purely focus on software integrations.
“We have two dedicated people to look after the main cloud software and the various add-ons so they can integrate the two, both of which have no portfolios to manage in the traditional sense,” says director Jeff Huggins.
It is likely that over the next decade there will be a growing need for accountants to have a skill set at the intersection of technical ability and software development.