Top five accounting trends for 2024

This will be a busy Christmas for accountants. Anyone involved in payroll will have to get ready for early-January changes to National Insurance rates, while others will be rushing to make sure they meet filing deadlines at the end of December. But this is also a good time to take a step back and think through your strategy for 2024. With massive technological changes happening at pace, it stands to be one of the most transformative years the profession has faced. Here are the key trends likely to be driving that. One: Increasing use of AI and automation Accountancy has long been intertwined with technology, and automation of certain processes has been a key feature of many software packages already in use. But AI promises to be something different. A huge host of surveys and other research has shown that accountants believe the sector is likely to be totally overhauled by AI, with many repetitive tasks automated away from humans. There are open questions about what that might mean for employment in the field, with some forecasting doom and gloom and others suggesting the occupation will be resilient. What isn’t up for discussion is the need for accountants to get to know AI tools and automation. They may soon be using them for a large part of their jobs - indeed entire new jobs that consist entirely of manipulating AI tools are probably down the track, as well as other specialised roles where humans validate the work done by large language models. Greater automation should see accountants become more efficient at some repetitive tasks like basically pay runs, giving them far more time to think creatively and strategically. Two: Clients who want accountants to do everything As automation grows, client expectations will grow with it. It already isn’t that rare for clients to want accountants who can handle all of their financial affairs, from payroll to tax filings. As automation increases a perception that some of this stuff should be “easy” (even if it isn’t at all) and many businesses looking to cut costs where-ever possible, don’t be surprised if more and more ask to bundle in as many services as possible. Software that bundles in as many features as possible can help here. Three: Value-based pricing An obvious benefit of the increase in automation will be that some accounting tasks take far less time than they once did. There’s no inherent problem with that, but if you charge clients by the hour of stafftime it could result in an erosion of revenue, even if the service you are delivering is just as good. It’s likely that many practices will look to move to “value-based pricing” for services rather than simply billing a certain number of hours. This is obviously somewhat risky, as what might seem like a simple task always has the potential to eat up hours of time if something goes wrong. But it also protects your revenue from greater efficiency eating up revenue. Four: A push to break out of the monthly pay cycle Most employees in the UK get paid monthly, a system that helps keep cashflow predictable and manageable for businesses. But the rise of apps like Klarna, Clearpay, and Zilch show this system isn’t always working for employees. Big purchases come up that can’t quite wait for payday - so employees without credit cards end up paying slightly more for items that they will be able to afford, just not right at that moment. An option is “payment on demand” or POD services, also known as “earned wage accessm” which allow employees to access their forthcoming pay whenever they want. These services are already up and running at some businesses, typically places that hire a lot of casual workers who are the most likely to need their pay fast. But really they are still in their infancy, and are likely to grow well out of the part-time and casual space next year. Employment Hero will soon offer a similar product at no cost to the employers involved, aimed not just as casual workers but also the many full-time salaried workers who sometimes need their pay a bit early. Five: Clients wanting support for ESG The UK is very likely to see an election in 2025, and if current polls are to be believed Labour is likely to win. This change of Government is likely to bring a host of new reporting requirements for business, particularly around pay equity. Employers with more then 250 employees already have to report on gender pay gaps, but a Labour green paper suggests if elected the party will add ethnicity gaps to that requirement, and make the gender data more comprehensive. And regardless of who wins the election, the overall direction of travel within both regulationd and consumer demand suggests a bigger push into companies showing off just how sustainable they are. Boutique firms already exist to complete the fairly complex job of measuring a company’s carbon footprint - from direct “scope 1” emissions from normal business operation through indirect “scope 3” emissions from things like employee commuting. But with more and more clients asking for help with such measures, generalised accounting practices may well look to add this kind of accounting as a service of their own. All in all, sounds like a busy year. So enjoy the holiday!