4 Main Challenges Facing Accountants Today (No Mention of Brexit)
Since the introduction of the Abacus in 1600, the accountancy profession has experienced a constant but subtle technological evolution: calculators (1642), the typewriter (1870), fax machines (1964), mobile phones (1973), personal computers (1975), email (1978), the World Wide Web (1991) and smartphones (2007).
In the last decade, the pace of change has increased significantly and the accountancy profession is now at an inflection point. With the mass adoption of cloud-based software, development of Artificial Intelligence (AI) and utilisation of big data the landscape is dramatically changing – and so are client demands.
These changes are set to disrupt traditional practice models and pose a set of difficult challenges for the 21stcentury accountant. The most prominent of these challenges:
- Client acquisition and retention.
- Commoditisation and downward price pressure.
- Talent acquisition.
- Technological alignment.
Client acquisition and retention
Historically, attracting new clients and retaining existing clients has been the main priority and hardest challenge for accountancy firms in the UK.
The vast adoption of modern technology over the past 10 years alongside the revolution of cloud-based software throughout the profession has seen many traditional business development strategies rise and fall. Perhaps one of the biggest changes has been the removal of geographical restrictions and proliferation of platforms from which accountants can prospect, pitch and win new clients.
Today, clients expect the speed and elegance of digital retail. They are increasingly tech-savvy and able to compare services where they want, when they want, and using their channel of choice. Accountants who are able to keep pace with technological change and offer visible expertise for specific client will be best placed to grow and protect their client base.
Commoditisation and downward price pressure
The Financial Times definition of commoditisation: ‘when a product or service becomes so common – for instance due to efficiencies brought about by technological change – that it no longer confers an intrinsic competitive advantage’.
Arguably the most significant challenge behind client acquisition and retention is the anticipated downward price pressure on traditional compliance work due to the commoditisation of services and increased levels of competition.
Efficiencies brought about by technological change in the profession have contributed to the commoditisation of tasks such as bookkeeping, reconciliation and aspects of general compliance work. It is becoming increasingly difficult for clients to distinguish between accountancy firms and invariably they now view many services as easily interchangeable.
The antidote to commoditisation is differentiation. Accountants that are able to develop a niche proposition and stand out will be well placed to better communicate their value and minimise the effects of commoditisation – affording them more time to focus on offering expert ‘proactive’ advice to complement their technical compliance work.
Accountants that fail to shift their focus and redress the once traditional balance between compliance and advisory work will find themselves doing the same work but earning significantly less money…if they haven’t already lost the client.
The retirement cliff and ongoing skills shortage
The age profile of the profession is set to dramatically change in the coming years. ‘Baby boomers’ represent a significant proportion of the workforce and will soon be reaching retirement age, creating a ‘retirement cliff’.
In addition to the impending ‘retirement cliff’, the ongoing skills shortage within the profession continues to cause headaches.
The challenge for many accountancy firms is how to retain the wealth of expertise held by the baby boomers whilst managing the demands and expectations from Generation X and Y workers who will be filling these roles.
The move towards Software as a Service (SaaS) and cloud-based infrastructure represents an exciting time for the profession, but a confusing one also. The consumption-based, pay-as-you-go approach can be a mixed blessing for any practice.
Whilst cloud-based software delivers clearly defined benefits (ease of access, scalability, data sharing and fewer physical constraints) it’s easy for accountants to be overwhelmed by the sheer number of options available.
The upside of implementing the right technology is significant. Tasks become more efficient and easier to manage, putting accountants in a position to spend more quality time with clients. The challenge is to keep pace with the evolving technology landscape in order to determine which systems and processes can deliver the greatest benefit.
Despite it being widely acknowledged that the accountancy profession is undergoing a period of innovative disruption, embracing the challenges posed will help accountants remain relevant and get ahead of the competition during this interesting period.