How datafication and automation are changing the future of accountancy

The Covid-19 pandemic has driven many accountants to bedroom bookkeeping and number crunching; not to mention becoming an around the clock support line for SMEs. Yet the industry’s transformation far pre-dates the pandemic. This is largely thanks to advances in and the emergence of technology as a driver of exponential change across all businesses and industries. In the world of accountancy, there are two digital trends causing a major impact - datafication and automation – with both presenting their own challenges and opportunities. But looking to the future, accountants must learn to adapt to those challenges so that they can reap the benefits of emerging technologies. An invisible transformation – global datafication Datafication is a well-established trend; it has turned every detail of our personal lives and the businesses we run into data points. And as more information is generated, there is even more scope for it to be tracked, analysed and acted upon – decisions in the accounting world are increasingly made on this basis. Finance firms are already leading the way here, particularly in the burgeoning fintech sector. For example, by collecting and analysing data about potential business customers can determine whether offering them a loan will be a secure investment. Accountants can learn from this and work with their small business customers to put data at the heart of their decisions. As the world becomes more data-driven, the onus has been on governments and regulators to develop policies that give everyone better access to and control over their data and how it is shared with third parties. This is partly due to increasing privacy concerns as more data than ever is collected on individuals and businesses around the world. For example, open banking regulation provides a good example of data sharing in practice. It mandates that financial service providers must regularly share transaction data with each other, with the goal of promoting competition and providing individuals and businesses access to tailored financial services from a larger range of providers. This presents a potential hurdle for small businesses and their accountants. If the former will have to consort with a greater number of providers, the latter will be required to help clients navigate their options. But there is great opportunity here too. One advantage is having greater access to data sources, which when paired with advisory tools, can provide accountants with deeper insights to drive client success. This is particularly evident when non-financial and financial customer data are linked – the outcome can result in far better analysis of cost drivers and improved forecasting accuracy. The mechanised wheels - industry automation Tech-sceptics may view day-to-day activities completed by machines as a nightmare vision of robot rule. But for workers and accountants alike, the reality is far less apocalyptic. At a basic level, automation will remove administrative burden. But ‘doomsday’ notions aside, it can be used as a competitive differentiator, driving positive change and efficiency. Crucially, automation enables the timely delivery of insight into a client’s credentials, whilst allowing accountants to provide more informed advice, with more information and more time available; the result is a client who makes better decisions thanks to expert advice. Tasks that previously took hours can now be completed within just a few minutes, with automated end-to-end bookkeeping. In the UK, the introduction of Making Tax Digital mandated the use of automated software to eliminate the strenuous task of manual data entry and complicated calculations. For accountants, encouraging small business clients to embrace technology and automation in this way means they can stay on top of their finances, pay taxes on time and more importantly, make sure they are being paid on time. The future belongs to us The rapidly increasing role of technology can be a daunting prospect for an age-old industry like accounting, let alone the small businesses they serve. But it also provides an opportunity to polish processes, improve efficiencies and supercharge client outcomes. At a time where small businesses are struggling more than ever, there is a fantastic opportunity for accountants to champion the positive role of tech and help clients deliver real, impactful results. However, it takes two to tango. Accountants have a role to encourage and embrace data-driven and automated processes themselves if they want to keep up with a rapidly changing digital infrastructure and advise their clients on it. The world may be changing, but by changing with it, the opportunities outweigh the risks. By Stuart Miller, head of UK Product Compliance, Xero