The accountancy market is being disrupted by massive technological change and shifting consumer trends, which demand a new approach to how the industry operates. Those technologies include cloud/SaaS, big data, AI, process automation and RPA (Robotic Process Automation).
Traditional Accountancy market
Traditional:
- The role of accountancy businesses has been to help businesses maintain accurate and timely records of their finances.
- Professional accountants in business assist with corporate strategy, provide advice, and help businesses reduce costs and improve their top line.
- An accountant's primary role is to collect and maintain financial data related to a company or firm.
- Accountancy businesses typically sell themselves by highlighting their expertise in the field and emphasizing the value they can bring to a business.
Now and the future
Accounting has evolved rapidly over the last decade or so, with changes in technology and how businesses are conducted. This has been an accelerating trend in recent years, and it is set to continue. Process automation, Robotic Process Automation (RPA) and Business Intelligence have both been central drivers to this.
Process automation is changing the nature of accountancy work, reducing processes that might have taken two weeks to two days, and from two days to two hours. For routine tasks such as data entry, bookkeeping and compliance it is completely removing the need for human involvement. These technological advances within accountancy and finance continue to increase efficiency, reliability, and accuracy.
RPA has become rapidly adopted because it quickly delivers cost reductions and efficiency improvements, however it is limited to simple repeatable tasks.
Artificial Intelligence will quickly drive forwards both RPA and process automation. This is likely to happen at an accelerating pace. With AI we will be able to deal with complex tasks that are not obviously repeatable, including building of automation processes. New automation process work will look at the automation of entire processes not just tasks, including process orchestration. The entire “order to cash” business process, for example, including the use of unstructured data such as emails or voice calls from customers.
The Accounts Payable Market Example
The Accounts Payable (AP) market highlights these changes. There is a long history for AP that has been ongoing for several decades but has accelerated recently, especially for SMEs, with the rise of cloud ERP and payment processing such as Vipps and Zettle. Paperless processing and automation for SMEs has grown but still has a long way to go to match the capabilities of larger enterprises, this is expected to become more prevalent in coming years. We can expect to see even greater automation in invoice and payment processing becoming available for increasing numbers of businesses.
The top trends for AP in then next year are predicted to be a continued transition away from manual processes, increase in virtual card payments, growth in online billing management & e-invoicing, matching and workflow automation. On top of this the rise and persistence of remote working has intensified the pressure to automate. Traditionally an accountancy could charge hours for process work like AP, but this is a rapidly disappearing incoming stream in which we can still expect acceleration as AP process improvements that take advantage of AI become the norm to the extent that AI becomes core to AP processes.
A side note here (which might be another blog article) is that there is a significant skills shortage in this area.
Accountancy professionals should be preparing now for advanced technologies that are poised disrupt the profession.
Accountancy Disruption
Automation disruption
The market for accountancy is going through a disruption as it shifts to increasingly larger automation across the board. Already automation tools are becoming commodified. Automation tools for AP will become more efficient and more capable as they take advantage of AI.
Market disruption
Added to automation disruption is the market disruption this enables. Already, virtual accounting services and free lance accountants are using SaaS accounting and automation to compete with traditional accountancy houses. Virtual accountants typically charge a flat monthly fee is charged instead of hourly rates.
Regulatory disruption
- Changes to accountancy standards for money laundering laws have already had a wide reaching effect,
- Insurance accounting and financial reporting with IFRS 17 became mandatory in Europe 1st Jan 2023 and will dramatically increase insurance financial reporting requirements,
- Sustainability reporting is becoming increasingly integrated into financial reporting including annual reports. European regulations (NFRD) requires businesses with over 500 employees to disclose and report on sustainability factors as part of their annual report. Accountants are being asked to provide assurance on sustainability reporting for accuracy and quality and becoming required to think beyond financial reporting and to work closely with other professionals such as sustainability experts and environmental auditors.
Market Growth
The global market for accounting is expected to grow significantly by 2030 expanding at a predicted 12.6% CAGR (https://www.regionalresearchreports.com/industry-reports/global-accounting-firms-market/FC-1009 ). As the accountancy market grows the requirement for traditional accountants will shrink. Automated accounts receivable and payable services will streamline and remove the need for data entry and manual bookkeeping. Efficient, timely and accurate data advisory and data security will become increasingly important and will become an expected accountancy function by business.
Accountancy work will shift focus from bookkeeping to financial & business performance including sustainability, and tax guidance.
Advisory or Nothing?
Greater, more accurate automation that has AI at it’s core and provides more business data than ever before will enable accountants to better focus on the bigger financial and business picture and increase their value by supplementing financial bookkeeping information with higher level business analysis and planning.
Financial advisory will be used to uncover behavioral patterns in markets and customers and provide more meaningful advisory together with financial forecasting. It will be able to elevate the role of the accountant and help business gain insight, predict future outcomes as well as automate non-routine tasks. Meaningful advisory will be able to examine the present and look to the future to provide advice on how to achieve goals.
The highest value accountancy services will be advisory services.
The ways in which advisory is delivered will change and will not be as it was in the previous decade. Faster more dynamic BI analytics reporting will continue to change the way intelligence is used in the business process deepening digital transformation. In turn this will increase the amount of business data available for BI which will start to transform what advisory can be delivered.
BI reports will be used daily or even hourly to make better decisions, it will no longer be sufficient to deliver a single financial performance report each month. Business owners and manager will expect access to fresh dynamic reports that react to their business. Financial performance will be only one part of this.
Financial performance must be delivered with advisory about behavioral patterns and deeper meaning if it is to be of greatest value to business owners. Accountants are ideally placed to deliver that advisory.
Key Advisory Tools for Accountants
Business intelligence (BI) software is critical for increasing advisory business and delivers advantages in several areas, including finance, HR and CRM working from a trusted single source of truth. Breaking down relevant data to individual managers and other stake holders enables teams to work better and more efficiently by enhancing their knowledge of the business. Additionally the provision of BI tools helps make better strategic decisions and take action to mitigate risk and reduce productivity constraints. Any accountant who can deliver BI tools to their customers to enable these things will elevate their status as a trusted strategic advisors and set themselves ahead of their competition.
We can summarise some specific areas as:
- Data Integration (financial, payroll, POS, etc)
- Customisation
- Predictive analytics identifying trends, patterns and outliers
- Collaboration tools for accountants and their clients and stakeholders to ensure everyone is on the same page and advice is actionable
- Mobile and timely access to financial data and advisory services when it is needed from anywhere
- Security so that BI tools should have robust and compliant security features to protect sensitive data
- Easy to understand dashboards and reports to deliver insights and visualisations in an easily digestible format delivered in a familiar and intuitive way
- Self-service BI to enable accountants to access and analyse their clients data on their own, empowering them for greater data-driven decisions.
Intelligent Solutions
Intelligent Solutions brings this all together a single solution addressing today many of the key advisory tools accountants need to enhance the competitiveness of their advisory. As of today, in our pilot phase, Intelligent Solutions brings:
- Data integration
- Collaboration tools enabling dynamic, timely up to date, report sharing to clients and stakeholders with different stake holders able to see different data
- Easy to understand dashboards, available through the familiarity of a web browser, no BI tool knowledge or license required
- Timely on-demand access to financial data and reports
- Security based around Azure Active Directory
- GDPR Compliant data policy
- Coming soon:
- Self-service BI data for accountants
- Mobile access
- Integrated reports offering combined insights across more than one set of data
Take Aways
Businesses still need accountants and will continue to do so.
The role of the accountant will change in ways we are only just starting to see today and there will be new accountancy jobs that do not exist today.
Accounting practitioners need to develop new skills and enhance existing skills to keep up.
Increasing automation and RPA will will further lower AP costs, including much smarter and more completed process automation - there is a skills gap in this market.
Advisory will become the highest value accountancy service.
Intelligent Solutions delivers tools in BI Analytics to provide accountants with the tools they need to enhance their services and thrive as the accountancy market changes.
Intelligent Solutions and TheVIT deliver process automation solutions that feed BI Analytics and make business accounts more efficient.
New technologies in accountancy will not take over from accountants but accountants that embrace and develop new skills to use new tools will take over from accountants that do not.