It’s quite impossible to accurately predict what’s going to happen in this fast-paced industry but you can spot patterns in the accounting trends that have surfaced over the past 12 months, which you can use to improve your firm practice this 2019.
Here are some key trends we should watch out for:
Rise of open banking
Open banking gives the power to customers—allowing them more convenience and the freedom to do whatever they want with their data. Open banking makes it possible for consumers and businesses to have personalized services in a secure way.
What is open banking?
Essentially, open banking makes your financial information available to third parties electronically and securely—under conditions that you approve of. This should provide customers a more holistic view of their financial status, helping them track and manage their finances a lot more efficiently.
How can open banking impact accountants?
Since consumers are now more in control of their spending, it’s easier for accountants to do their jobs, like monitoring cash flow. They will also be able to easily advise clients on advantageous financial decisions.
Accountants can also provide seamless support and advice because data is easily accessible.
Increasing power of the cloud
The cloud was a big thing in 2018. There’s practically a virtual version of everything. Firms have started to move massive amounts of data to the cloud for enhanced security and improved efficiency.
The switch has made it possible for accountants to become more proactive and establish a more collaborative approach to their jobs. Now, clients can also access data whenever and wherever they are. This also makes it easier to create reports, analyze data and formulate strategic financial advice a lot more quickly.
Cloud-based solutions have also enhanced security and quality controls for businesses and by the looks of it, virtualization is getting bigger. In fact, by 2026, the global market for accounting software will be at $11.8B. That means more cloud solutions for businesses.
Investments in cloud computing are also expected to spike by 50% over the next four years. As such, more companies will migrate to the cloud because many believe “it goes hand-in-hand with innovation.”
There’s no question about it: the cloud is where the future’s at but it’s equally important to make sure you’re doing everything possible to minimize the mistakes, especially if you’re trying to play catch up.
Avoid the following:
- Thinking that migration will automatically result in cost savings.
- Getting on the bandwagon expeditiously without due diligence and only because thought leaders said so.
- Not taking the time to understand the risks and costs associated with switching to the cloud.
A few things to consider:
- Check if you’re going to be locked into a contract for a certain period of time with the provider.
- Identify who among the team has the necessary skills to handle possible issues.
- What support will the provider offer?
- Check for hidden data fees.
Here are more reasons why cloud accounting is beneficial for your firm:
- Companies that fully utilize cloud accounting experience a 15% year-over-year growth in revenue
- 58% of big companies are in the cloud
- Firms that exclusively use cloud accounting obtain clients five times more than those that don’t
- Cloud accounting can slash labor costs by as much as 50%
Related read: How to win the accounting practice with cloud computing
Thrive in the era of automation
Artificial intelligence is one of the many key trends in 2018 for the industry. Automation has resulted in most firms expediting certain processes, improving workflows, and enhancing efficiencies.
Tedious tasks that have bogged down accountants for years have been automated, freeing up their time and empowering them to focus on more revenue-generating tasks.
Working alongside AI has resulted in employees working smarter. Advances in technology have provided opportunities, especially to accountants.
Firms that have embraced automation last year are in better shape than those who didn’t but it’s important to know that it’s not enough to survive. More than being abreast with the latest tools and practices, accountants can stay ahead by focusing on the things that make them indispensable to clients.
Since human empathy and ability are still required to navigate through the industry, accountants must create more valuable relationships with clients.
Here are some helpful automation statistics:
- Accounts payable automation can save $16 per invoice (or more, depending on your firm’s size)
- More than half of C-level executives foresee that automated accounting systems will have the biggest impact over the next 3- 0 years
- Automating invoice capture and payments will save accountants an average of one hour per day
- Accounts payable automation will pay for itself within 6-18 months on average
- 79% of executives believe AI will help improve productivity
- 55% of accountants intend to use AI in the next three years
‘Return’ of compliance
While compliance hasn’t really left, many accounting firms have eased a lot of burden of compliance thanks to automation. Accountants have more time to be client-facing and do actual accounting work because of the enormous amount of time they now have.
Compliance is more than just a to-do; it’s now evolved to a powerful tool for businesses.
To address one common concern from accountants, technology won’t take away jobs. This article shows how converging technology and compliance has actually improved processes and created more jobs along the way.
The focus on improving workflows and processes through technology and automation resulted in making compliance less of a burden for firms, tremendously helping businesses be on top of their affairs.
And with the updates in tax systems in the US and UK, for example, firms will need to pay more attention to data processing to ensure accuracy so they can adhere to the new guidelines. Thus bringing compliance back to fore.
That being said, it’s important for firms to invest heavily in their staff so they can develop the necessary skills to integrate compliance technology in the business.
Related read: Winning the war against productivity
Evolving expectations in the workplace
The changing customer expectations have been a major disruptor for the profession. Clients are expecting more and more from their accountants—and for good reason.
Data is easily accessible, which means getting financial reports and should be easy. There’s no more barrier to communication. Even when it’s not possible to meet face-to-face, it’s so easy to start a Skype call or through any other online web conferencing tool.
According to a global study, 83% of clients are demanding more from their accountants today than they did 5 years ago. This means accountants need to step up their game to continuously provide value services.
By taking advantage of technology, for example, firms can nurture and develop accountants who can do more than crunch numbers. Since the demand for leadership and management skills is reported to rise by 24 percent, firms are at a better position to remain relevant and stay ahead by ensuring their staff has these.
Related read: Ways to improve client experience
Offering additional services to clients is one of the organic results of technology’s impact on the accounting profession.
With more time to be client-facing, firms, now, more than ever, need to start offering advisory services because:
- It fences clients in. By offering other services they need, you can prevent clients from taking their business to a competitor.
- The need for proactive advice is one of the reasons clients leave. Being unavailable will frustrate clients, and, eventually, make them want to leave.
- It can generate more business for the firm.
Related read: Are you adding value to your clients?
Intensified people strategies
All these are seen to, in one way or another, impact the accounting industry and contribute to making our jobs more efficient.
Utilizing technology, for example, to improve processes free up time to be more client-facing can have tremendous benefits for the firm. But it’s not going to work without the most important asset of any enterprise: people.
You are going to need someone to make sense of everything: automation tools, new learnings, industry best practices, etc. And that’s where people come in. This is where firms need to heavily invest on.
Accountants who generate more business are the ones who are proactive and client-facing. That goes to show that actual interaction with clients matters a lot to become successful in this profession.
Focus on relationship-building—both with clients and employees.
Strengthen your people strategies. Having the right strategies will help firms retain motivated staff and ensure they continuously provide quality services to clients.
People are your firm’s most important assets. When you take the time to invest in your team, the benefits can be tenfold.
The Outsourced Accountant specializes in setting up and effectively managing offshore teams so you can free up time and focus on more revenue-generating, client-facing tasks. If you want to know more about how we can help, schedule a consult with our global team specialists today.