In the most enduring and effective professional relationships, the provider understands what keeps his clients awake at night. Now, cloud technology is rearranging this symbiosis by allowing interaction with clients in real time, rather than quarterly. That lets accountants proactively offer ways to lift profit, growth, cash flow and ultimate business value.
US accounting consultant Doug Sleeter believes that in 2014 and beyond, cloud technology will let the accountant reconnect to day-to-day business, transforming the accountant–client relationship.
Keith Hardy, the national leader for Deloitte Private’s tax division, calls it simply a new opportunity “to get closer to your clients”.
Accounting performance coach Rob Nixon, CEO of the Proactive Accountants Network, argues that savvy business people actually want more help from their accountants. He’d like to see many more accountants responding, listening to client concerns, calling to explain issues in their business and offer solutions. “They have to, to thrive in the future.”
2. Everyone wants your job
The accounting profession collectively will face increasing competition from other professionals who want to seize the attention of its best small business clients.
“What’s at risk is the business that accountants should own: consulting on how to run their clients’ businesses better; how to manage their finances; how to improve their IT; how to collect their debts,” says
David Smith, principal at consultancy Smithink 2020. “The accountant should be winning this work hand over
fist, because they have the trusted relationship with the client, but they don’t know how to sell it and they don’t have the time.”
This failure, he warns, has left the door wide open for business coaches with sales skills. “They’ll come in with some franchise process and sell it to the client.”
Robert Powell, a private business expert at Grant Thornton, notes that bookkeepers are also impinging on accounting’s territory.
And Rob Nixon adds that financial planners and lawyers are also seeking an adviser role.
3. Offshoring breaks out
As head of Odyssey Resources David Carter told Public Accountant earlier this year, once accounting infrastructure is placed in the cloud, “it lends itself to a lower-cost solution provider”. Such providers will make huge inroads in 2014 and beyond.
Smithink 2020’s David Smith says there’s now a “well-understood” model where work is packaged up and sent electronically to a processing centre in Asia, then sent back electronically to the Australian firm for
checking. Those workers can even become part of the firm. “You can have a seven-to-10-year
chartered accountant working for you for $20,000 per year,” says Smith.
While Carter believes that offshore accountants will be mainly allocated “the mundane bookkeeping” and locals will keep “the clever stuff”, others are not so sure. Thomson Reuters tax and accounting managing director ANZ Paul Brindle cautions that offshore accounting work will keep moving up the value chain, and he urges accountants to build and maintain stronger business relationships.
There’s also concern about the consequence of ill-considered offshoring. The managing director of Reckon’s professional division,
Sam Allert, notes that offshoring requires practices to have their systems and processes understood and optimised.
4. Slow growth drives efficiency
The Australian economy in 2014 will most likely grow as it has since 2010 – slowly.
NAB chief economist Alan Oster warns that current growth is not enough to stop unemployment rising from late 2013’s 5.8 per cent. He sees it reaching as high as 6.75 per cent by the end of 2014, and slow world growth doesn’t suggest to him a pick-up after that.
CommSec chief economist Craig James likewise can’t see employers hiring workers in large numbers, though he predicts a less gloomy 6 per cent unemployment rate in 2014.
A turnaround in housing and construction could put large numbers of workers back in jobs. Paul Bloxham, HSBC’s chief economist for Australia and New Zealand, expects that to happen in 2014, boosting the economy in general and small business in particular, and perhaps even pushing unemployment down.
He thinks the post-election change in sentiment will have a “tangible impact”. What no-one expects is a new boom.
As Reckon’s Sam Allert notes, that will keep accounting practices under pressure to improve their own processes and wring more out of every resource.
5. Tax advice endures
The stream of revenue from tax work is under threat from digital disruption, just like so many other pieces of the public accountant’s business. Yet tax advisory and even tax compliance work remain among the strongest growth areas for accountancy businesses, according to a survey by BRW. And while new software tools may automate some tax compliance work, demand for tax advice seems set to keep rising.
Deloitte Private’s Keith Hardy says the new technology is creating competitive pressures – but that those pressures “will lead to more timely information flow, and that provides the opportunity to give better-quality advice”.
Every twist of tax law presents additional opportunities. Grant Thornton’s Robert Powell, for instance, expects tax advice revenue to flow from a flood of business sales by ageing baby boomers. Hardy also argues that the judgement required in many tax situations will protect much tax work from the offshoring threat.
6. Commoditisation of compliance
The price of basic compliance and transaction recording will keep falling in 2014, pushed down by technology and globalisation.
Performance coach Rob Nixon estimates that compliance provides many practices with more than
80 per cent of revenues. But all this data checking and form lodging is vulnerable to automation and “can bypass the need to have the accountant”, says Nixon.
Russell Evans, CEO of Wolters Kluwer Asia Pacific, which includes CCH, says SME owners “are doing much more for themselves, especially basic bookkeeping and payroll work”.
At the government end, new Tax Commissioner Chris Jordan has told Public Accountant he wants to work with software firms to take accountants off “the treadmill of filling out forms”.
Evans is concerned that this process is likely to move further up the line to high-value activities,
such as management reports and cash flow planning.
Reckon’s Sam Allert also sees a squeeze on compliance work, but he sees it as primarily the result of accountants’ own desire to be more productive, cut costs and focus on adding more value for their clients.
Either way, as consultant Doug Sleeter notes, “if all you’re doing is providing compliance services, you’re very replaceable”.
7. Online service explosion
Where a business might previously have had just a few solutions, it may now have dozens of internet-based services from dozens of vendors – and it’s far better connected than ever before.
The job of synchronising online services is being helped by the growth of application programming interfaces (APIs) that greatly simplify the process. At its simplest, firms like Zapier and OneSaas now offer dozens of links between online services as diverse as Xero, PayPal, Gmail and Salesforce.
The result is that accountants and their clients can pick the individual apps that best suit their needs and tie them into their accounting system.
Doug Sleeter believes accountants should lead this process, learning new skills or hiring people who have the skills and taking on a role he calls “digital plumber”. Research by his firm, Sleeter Group, shows IT is one of the services US clients most want from accountants, and designing and managing new online services is becoming a major IT challenge.
8. Deal with data
It used to be big business that collected and stored most commercial data. No longer: now data is being democratised. Automated tools like SurveyMonkey and Google Analytics collect data for businesses of any
size; online payment systems can feed customer profiles into databases at an almost trivial cost.
The new challenge for SMEs is the same one many big businesses have long wrestled with: how do we extract meaning from all this data?
Rob Nixon argues accountants have the numerical skills to interpret this data and recommend actions. Doug Sleeter agrees; indeed, he sees the potential for accountants to go even further and link up disparate data sources to create better reporting of business activity. But Sleeter admits that, so far, “I’m not really seeing that from the profession”.
9. Brace for more regulatory complexity
In the run-up to the 2013 federal election, the Coalition made much of its plan to cut “red and green
tape” and therefore save businesses $1 billion, but released few details.
Joe Hockey, now Federal Treasurer, also promised a moratorium on new banking regulation, pending a review of existing rules – essentially a promise not to add more regulation just yet. There’s little confidence, however, in an end to the long trend of greater complexity.
Says Grant Thornton tax partner Brett Curtis about tax laws: “I think history is going to be repeated, and we won’t see any simplification any time soon.”
Rather than a plethora of new laws being introduced, we may see existing legislation being enforced far more effectively. As CCH chief Russell Evans points out, the ATO has invested heavily in technology in recent times, buying itself a powerful set of business analytics tools.
Add to that the pressure from other rules beginning to bite, such as the Future of Financial Advice (FoFA) legislation, and 2014 is already shaping up as another year of regulatory challenge.
10. Learning blends online and offline
In September 2013, the prestigious Pennsylvania-based Wharton School began teaching its first online accounting course to 76,000 students, through a privately run online education platform called Coursera.
For accounting, this is the biggest example yet of a MOOC – a massive open online course – with lectures and tests all internet-based. But to date, the success rate of people completing such modules is low.
The trend is, indeed, to move learning out of the classroom, but the internet is only part of the change.
John Grech, senior lecturer and manager of innovation and strategic development at the Northern Melbourne Institute of TAFE, describes the future of accounting education as “blended learning” – a combination of traditional education, workshops and sophisticated online interaction.
Grech, an expert on learning practices, is keen to move accounting education closer to industry and to provide more “just-in-time education” for business. Research suggests most students also want traditional,face-to-face education at an institution. Technology may be changing education, but people still value human interaction.
