The business landscape is changing faster than ever before — so what does this mean for accountants in the years ahead?
There’s no denying that our industry is in a state of flux, as tech advances and increased competition at home and abroad continue to disrupt traditional accounting services. Consumers have more choice than ever before — and in a post-GFC world, expect more bang for their buck. Also in Australia, there’s a degree of economic uncertainty as we grapple with our transition to non-mining-led growth.
All these factors present significant challenges for accountants trying to stay viable in a brave new world. But the good news is that things are looking up.
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Last week, Beaton Research + Consulting released its latest Accounting Market Pulse report for FY16. Commissioned by the Commonwealth Bank, the research captures the sentiments of a broad cross-section of 100 accounting firms nationwide.
According to the report, business confidence is rising across the industry, with 56% of firms across the board expecting conditions to improve over the next two years. Here are some of the reasons why.
Riding the tech wave
As we all know, technology is continuing to transform the way we do business. And accounting firms of all sizes are feeling the squeeze of narrowing margins, as clients turn to software and cloud technologies to take care of their routine accounting, ledger and BAS work.
But as the industry faces new levels of digital disruption, accountants are finding ways to harness technology so they can cut costs and be more efficient. The firms that will thrive in the digital landscape are those that view innovation as an opportunity, not a threat.
According to the Beaton research, large firms are leading the way — and are looking to increase their tech investment by an average of 40% over the next six months, compared to a 14% increase for mid-sized firms.
But that’s no reason for smaller firms to fall behind. With mobility solutions, document automation and data analytics software, firms of any size can save time and slash their operating costs. What’s more, investing in the right technology can significantly enhance a firm’s value proposition.
Here’s an example from the Verve Group, a Count Financial firm with offices in Adelaide, Darwin and Alice Springs. The Verve team have embraced online accounting platform Xero, allowing them to provide a faster, more responsive service to their clients. They can also access live data from clients around the country, analyse and benchmark it, and then provide detailed reports on their financial performance each month. Data can be easily shared between Verve advisers and their clients in real time — so there’s less need for face-to-face meetings.
The human factor
Today’s technologies also mean staff can now work anywhere, anytime. Seeing this as an opportunity is crucial — especially at a time when finding and holding onto quality employees are two of the main challenges facing accounting firms. Staff turnover can be costly, so it’s important to get the right people in the right jobs and to invest in training and development.
That’s why Australian accounting firms are expecting to increase their investment in staff development by an average of 54% over the next six months. Of course, this brings the additional challenge of keeping costs down for clients in an increasingly competitive and globalised market.
To overcome this challenge, firms are outsourcing more of their compliance-based and shared services work to lower-cost providers — often offshore. By freeing up capacity in this way, accountants can instead focus on and delivering higher-value services and strengthening their client relationships.
As margins become narrower and clients migrate to online platforms, another way to stay competitive is to find new, meaningful ways to engage with clients. For accountants, this means offering a broader range of services.
According to the Accounting Market Pulse, business confidence is growing for firms that are exploring new growth opportunities outside traditional accounting. In fact, of the firms surveyed, three-quarters of large firms are now deriving at least 10% of their revenue from non-accounting services like management consulting, recruitment and financial advice.
For professional services businesses, where the lines of separation are becoming more blurred, this diversification is essential. In the future, accountants won’t just be competing with other accounting firms, but with providers from other industries as well.
Clients today are looking for more than tax advice from their accountant. Even for the smallest firm, there are opportunities to be gained by offering clients broader advice services and wealth solutions. And what the edge accountants have is a deep understanding of their clients’ financial circumstances and needs.
As the year draws to a close, it’s a good time to reflect on how our industry is changing, and what the future will look like for accountants. And through innovation and forward thinking, we’ll be able to make the most of our opportunities to build a sustainable future for our industry.