I was asked this question in the context of the new talk I started presenting earlier this year: ‘The rise of Robo-accountants – and how to beat them’
In fact I don’t think I have ever said that I am ‘excited’ about the future for accountants and I have two problems with the question.
Firstly, what do we mean by ‘the future’? How far distant are we gazing? It’s one thing to be considering the next few years. It’s very different if we are considering a more distant time and I am doubtful as to the merits of thinking too far ahead.
And secondly ‘excitement’ is not the word I would use in this context – regardless of the time period we are considering.
We are at the start of a period of change in the profession, like no other I have experienced over the last 40 years. It makes me wonder whether I might have stayed in practice longer if I’d been 10 or 20 years younger.
When I look backwards and think about all of the changes and developments I have witnessed to date I see a huge difference from the changes we will see over the next few years – and beyond.
During my career:
We moved from telex to fax to phone, email and video.
We moved from comptometers to calculators and now to smartphones.
We moved from 16 column analysis pads to spreadsheets and now to online bookkeeping systems
We moved from research using physical books to online books to websites.
And so much more has changed.
When I started in practice every single set of limited company accounts had to be audited. Not any longer.
Of course there have also been new complications and changes both as regards corporation tax and the formatting and disclosure requirements of company accounts.
Many elements of the tax system are simpler than when I started. The taxman no longer issues numerous assessments for each client, with each assessment charging estimated amounts of tax on different sources of income. We used to have to submit formal appeals against each of these and make requests to ‘postpone the tax’. Then we filed tax returns and awaited amended and final assessments on each source of income and gains. Repeated appeals etc were not uncommon and the whole process meant it took much longer to finalise a client’s tax affairs.
Also, before the self assessment system put an end to all that nonsense, clients were also taxed under the preceding year basis of assessment. The time lag between them receiving income and paying tax on it was hard to explain (or justify). The move to a current year basis of assessment with all income aggregated to compute annual tax bills, is much simpler. This has been the norm now since 1997 so it’s no wonder many people don’t remember how crazy the system was previously.
From my perspective I think it’s fair to argue that each of the positive changes I have summarised above has increased convenience and made the life of most accountants easier. This has been an ongoing process of change in HOW accountants work over the last 40 years (possibly longer). And I believe this trend is set to continue into the future – with more changes impacting accountants’ work faster than before.
I can recall some commentators incorrectly predicted that the introduction of spreadsheets would reduce the need for accountants. More recently, but still back in the 1990s, there was a fear that accountants would go out of business following the introduction of the audit exemption for small companies in 1993. The pressure continued as the general expectation was that the simplification of the self assessment tax system in 1997 would reduce the demand for accountants.
And yet, the number of accountancy firms in the UK has continued to rise. This is why so many (older) accountants dismiss more recent warnings about their imminent demise.
We are now at the cusp of many predictable changes that will impact accountants as they adopt new technology and play catch-up with the trailblazers and early adopters.
Beyond this there is a lot of speculation as to exactly what impact future technology will have on the work of accountants. It would be easy for me to be cynical and to debunk such predictions as premature – as indeed many of them are. However, once we start looking forward 5-10 years (and further) I think all bets are off. It’s too early to strategise and plan for what feels like the distant future.
Two things are absolutely clear to me.
- These changes will not simply make the lives of most accountants easier. Each of the changes I referenced above only changed HOW accountants do their work. The focus of the work they did remained pretty much the same. The upcoming changes will prompt a change in WHAT services accountants provide – if they want to maintain or even increase their profits; and
- At some point in the future the next generation of accountants will compare what they do for clients with what we’ve been doing for clients. The bulk of the work they do will be very different.
Currently a typical general practice accountant focuses on providing a compliance led service. Accountants look backwards and audit the past, prepare/file historical accounts and prepare/file tax returns that report on the past. The next generation of accountants will be far more focused on the future when working with clients. This change will be most apparent once HMRC is able to extract more tax return data directly online, and when cloud bookkeeping systems have further reduced the need for an accountant’s expertise and input. Many such clients will not want, need or be prepared to pay for your advice.
Whether this shift in the focus of accountants’ work will be complete within the next ten years or so I don’t know. But I am absolutely sure that it will happen at some stage.
If I was still in practice I might find this all exciting….but more likely a little scary. It necessitates a move to develop new skills and expertise – what I term, in my talk, as ‘Key Business Skills’. Leave it too late and your clients will drift away to be supported by other accountants who have already built their new business models, pricing strategies and marketing campaigns.
Or, perhaps you are of the view that none of your clients will want, need or would be willing pay for advice. They will only ever want the most basic of a compliance support service. If this is the case I suggest you start planning now for a reduction in your income, an increase in your workload and additional stress over the next few years. Sorry, but I do believe you will need to become more entrepreneurial or be left behind. You cannot force fit the future into your current business model.