The future of accounting

As the UK is slowly emerging from the pandemic, many businesses have come out on the other side with more streamlined business operations and services by having to adopt digital strategies to survive. According to an EY survey, digital transformation is a key priority with over 50% of UK CEOs using technology as their main strategic driver to improve margins, either through automation or technologies that increase customer engagement to develop new data-driven products and services. However, as noted by James Ashford, vice president of GoProposal by Sage, there is a difference between ‘digital’ and ‘digitise’, aside from the semantics of the words. “Digital was useful as it provided some additional help, it speeded things up and it automated elements, but I don't know how valuable it really was,” he explains. Ashford reveals that the concept of being digital only becomes valuable once a firm becomes truly digitised; as opposed to simply having digital services, firms must utilise that information in real time and use it to guide the business. He asserts: “A digital myth that accountancy firms believe is that if they just became a digital practice, life would be so much easier, hence why they've adopted all this digital technology but that’s just not the case. They are working harder than ever, the client still doesn't pay them enough, so it's still a challenge.” “Once a business becomes digitised, they get a helping hand in starting to move their business forward,” he adds. When a firm experiences a problem, Ashford highlights that businesses assume that adopting further technology to create a smoother, streamlined, faster service is going to solve the problem. He imparts: “This, however, won't solve a flawed process; firms have to figure out what the process should be in the first place. They have to figure out what they are trying to achieve. It’s often down to a human part of it, it never starts with technology.” Once businesses understand what they are trying to achieve, only at that point can they look to get the “right'' digital technology. On the other hand, businesses can sometimes “get sucked into this idea that everything needs to be streamlined and automated, but it doesn't”, Ashford asserts. “Often businesses want this constant flow of technology immediately when a client comes on board and they prefer to use that even if it doesn't meet their criteria of the process,” he adds. All in all, when firms systemise their products and services through technology, employees are elevated to be able to do their “best work”, and they are “freed up” to be able to capitalise on their creativity and client relationships. Why is it important to digitise? According to Ashford, the purpose of digitising a firm is to “connect us better as human beings in order to have better conversations with clients” so that accountants can “better understand” what their clients are trying to achieve in their business. By achieving this and obtaining the right data in real time, accountants can ultimately “push their clients in the right direction when they need it”. Ashford states: “Because we've got all that technology, we know how many members of staff need to be employed over a certain period of time, we know how much tax will have to be set aside, and how much a business’ revenue needs to increase.” Overall, the biggest challenges currently being faced by accountants surround the introduction of stricter legislations, meaning accountants “have to do more for their clients”. Particularly, throughout the pandemic, accountants had to increasingly cater to the digital sphere in order to help staff with furlough pay and help clients with pension contributions. “There's so many extra nuances accounts have to learn, particularly with Making Tax Digital on the horizon. They're constantly having to develop different ways of working,” Ashford says, including ensuring their firm updates client records on a more regular basis, and ensuring these standards are achieved in a timely manner. According to EY, UK CEOs identified Covid as a “significant catalyst for corporate transformation”, with over 90% of respondents saying that Covid-19 has affected their sector, and over a third expect this change to be “fundamental”. Additionally, Ashford highlights that another challenge accountants face is that they don’t charge enough money for their services. He explains that with all of these changes happening in the market, the workload of accountants is increasing but their pay isn't. “If they can't pay themselves enough, they can't deliver the level of service that the client will be happy to pay for. So they've got to get comfortable charging for it all and recognise they need to get paid not only for rewards, but to get money for more employees and staff training,” Ashford declares. He adds: “The biggest challenge is that they've got to know there are still turbulent times to come. We are not through this yet.” The economy is going to see the secondary and tertiary effects of Covid, he explains, and the workload on accountants is only going to increase. “They've got to recognise the value that they bring to their clients, and they must develop the skills to make sure they're charging for that,” he states. According to Ashford, this is vital not only to survive as an accountancy firm, but to provide the level of service that clients need. Reflecting on his own experience, Ashford’s previous business failed as he didn’t have access to real time data to advise on whether to employ certain members of staff, to know how much to charge clients or how much tax to set aside. “I was making all these decisions based on my gut instinct. You'll meet your accountant at the end of the year, and they will give this information to show you how you've done but that's no use to a business owner, they need to know what's happening now,” he notes. He highlights that having access to data through technology allows accountants to make informed decisions in real time about where they need to be in the future; “The best way to deal with the future is to put yourself in a position where you can adapt to any scenario as fast as possible,” he advises. What are the common mistakes accountants are still making? According to Ashford, there are “traps” that accountants fall into because they haven’t been given the skills that they need or should have, primarily surrounding the negotiation skills for demanding enough pay for their services. “As the client wants more from accountants, they don't adjust the price, and nearly all of their problems can be traced back to these things,” he remarks. Even if a firm has a recruitment problem or they can't get enough staff on board, or if they have a morale problem, it's “all down to money”. He adds: “If they can't afford to pay staff enough money or invest in staff training, or there’s a marketing issue and the firm can’t attract enough clients, that's a money problem again.” Ashford explains without sufficient cash flow, businesses are unable to spend enough on marketing, and they can't devote enough time to attract the “right” clients as there isn’t enough money coming in, creating a snowball effect. “If they don't address the issue, the problem gets increasingly worse, and it eventually becomes harder to fix.” “Governments can't affect the economy; they can pass legislation, rules, laws and taxes, but fundamentally, they can't change the economy. It's small businesses that affect the economy, because they're the ones who are employing people, the ones who are getting goods being bought and sold between each other, and so that’s the lifeblood of the economy,” Ashford reveals. He maintains that it's accountants who can operate at that level; they can create a “thriving economy” by becoming fully digitised. He says: “Get all of the data you need in real time, have courage to ask your clients tough questions to remove assumptions, forge strong relationships, and make sure you're charging for it.” "The value of an accountant has gone through the roof over the last two years. If businesses didn’t know how valuable accountants were two years ago, they know now,” he claims. Many businesses were placed in difficult positions because of the pandemic, leaving them struggling to find margins. However, Ashford believes that teaming up now with a smart accountant could help them find profits again, and grow their businesses. The "best" accountant will be one who knows their business thoroughly, and who can help them predict and prepare for the future. Businesses are less likely to face challenges with this type of support – and even if they do, they can face them from a stronger position. With all this in mind, how can accountants better serve the businesses of today? “The answer is that many accountants fail to connect as humans. Now more than ever, they need to have the courage to have real, honest conversations with the people and businesses they work with,” he shares. Once accountants forge those relationships, they need to then ensure they're getting all of the data they need in real time and use that information to “help guide their clients towards the goals that they're trying to achieve”. Although Ashford explains that SMBs haven’t done anything wrong, they need to choose the kinds of accountants who are equipped with the right tools to “serve them well”. Businesses need to team up with a “smart accountant”, one that knows their businesses thoroughly, and can help them predict and prepare. Ashford notes: “Businesses are less likely to face challenges with this type of support or if they do, they can face them from a stronger position.” Furthermore, he attests that there is only one firm that businesses need to compete with, which is themselves. “Businesses only need to stand out against their own firm from a month or a year ago in order to better themselves,” Ashford maintains. Looking to the future, he advises businesses to join a wider network and be part of a business community of like-minded people that can help guide them. Ashford adds that accountants should be “very careful” of the five people they spend the most time with, make sure they've got a “strong” group of people around them, who can challenge them and point out their blind spots, and who can help guide them toward helpful communities.

The future of accounting

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