The Changing World of the Accounting Industry
The accounting industry is continuously transforming as technology evolves and client demands shift. This state of flux was confirmed by a research conducted by independent global market research company Ipsos and commissioned by accounting software company Common Ledger.
It has shown the changing world of the accounting industry for Australia as Ipsos surveyed 50 small to medium accounting firms across Sydney and Melbourne. Accountants live in a rapidly-evolving environment with a raft of new software and technology available to them to improve efficiency. At the same time, their clients are increasingly looking to accountants for guidance and advice as they navigate a fast-changing world.
Nudge Accounting, a leading Australian firm that offers online accounting for small businesses and start-ups, is an early adopter in leading the way to reinventing accountants’ relationships with clients. Nudge Advisory Partner Trevor Schmitt says features of its new approach include regular interaction and contact with clients, monthly reporting and support for a range of cloud-based software.
“Continuously assessing and improving our strategic advice services is a high priority for us. We realised early on that this is what clients are demanding. We are focused on understanding our clients and their businesses,” he said.
Some of the major findings of the research are the following:
Compliance Work Consumes the Most Time
The bulk of accountant’s time (62 percent) is spent on compliance while only 38 percent is spent on giving advice. Ipsos account manager Janet Cheng found this unfortunate because it is the advice that really adds value to clients “whether it is helping them achieve tax efficiencies or information about running their business.”
“Many accountants know they risk losing clients or becoming a compliance service only unless they adapt. There is a wealth of software out there to help them streamline their businesses and free up time for advisory work, but many accountants don’t know what to choose, are risk averse and reluctant to change.”
Common Ledger CEO Carlos Chambers maintains that the reality is that advisory services are not well understood by many accounting firms. He said, “It’s a complex area — they are being asked to become trusted advisers across the business spectrum.”
“‘Advisory’ means different things to different people, accountants and clients. One goal of the research was to help understand this more deeply and share the insights with industry,” he added.
Majority of Value Added Is Through Analysis, Advice, and Efficiencies
68 percent of accountants adds value to their clients through tax efficiencies, 44 percent through providing business advice, and 26 percent through providing business analysis. Only 6 percent of them add value by providing advice on technology and software.
Advice Becomes a Key Need
Accountants believe that the needs of clients will evolve in the next three years. 18 percent of accountants sees ‘advice on changes in compliance regulations’ as a key need. 16 per cent considers easier access toinformation while 14 percent sees more in-depth advice as important.
Schmitt said, “They will need different tax advice as laws change and will require different advice as the clients want to grow their business.”
To address these needs, accountants plan to “educate the client and work with them rather than waiting for them to come and ask, i.e. be more proactive.”
At Nudge Accounting, they try to procure and upgrade to the best software available in order to communicate with clients easier. “We can go into the clients’ accounts and data to explain things to the client easier. We can also use the technology to help prepare reports,” said Schmitt.
Technology Helps Meet Client Needs
Technology will play a big role in helping accountants meet their clients’ needs. 34 percent believes that it will save time and create efficiencies, while 26 percent claims that it will increase reliance on software to support their clients’ needs.
According to Schmitt, “It minimised time because of the direct data feed. With the cloud, we can always have real time accounting and communication with the clients. We pick up errors in real time.”
Meanwhile, 18 percent trusts that technology will let them access information immediately. “The technology allows us to dig deeper into the information at hand. Technology has a large role and not a limited role,” he said.
Chambers claimed that the research will open up big opportunities in the industry as there are challenges that need to be addressed. “We call it the ‘Accountant’s Dilemma’,” he said. “It’s a very exciting time for the accounting industry, with plenty of scope for firms to grow, but it’s a challenging time too.”
The Outsourced Accountant supports Australian and New Zealand accounting firms by helping them understand and implement outsourcing solutions to help them become more proactive and truly add value to their clients. If you want to know more about outsourcing, call us at 1300 896 522/0800 452 853, and download our e-book.