As we witness the rapid rise of robots, as we watch the unfolding crisis and chaos at Westminster over the Brexit saga, and as we see the demands of clients and staff constantly evolving, the dizzying rate of change is enough to send our heads into a collective spin.
Keeping pace with our ever altering world is essential, however, if you want to stay competitive.
And the risks, if you ignore the events unfolding around us, have the potential to seriously impact on your accountancy practice. Below, we look in more depth at some of the hottest topics that you need keep tabs on and adapt to.
Let’s start with technology. There are two things we want to focus on here – artificial intelligence (the so called rise of the robots!) and digitisation.
Most people are familiar with the term artificial intelligence (AI) now. But still, the images that it conjures for many is more about Arnold Schwarzenegger, the Terminator, or Hal from Space Odyssey, not so much the practical applications that already exist in today’s world. You could argue that accountancy has been a little slow in considering its benefits and adopting machine learning to help their businesses.
But over the next few years, firms should keep a very close eye out on emerging technologies and consider how to integrate AI into their practice to provide growth opportunities and insights.
The ACCA, for example, recently released a report: “Machine learning: more science than fiction” which highlights some of the applications of machine learning, including:
- Intelligent book keeping
- Improving fraud detection
- Making sense of complexities in taxation
- Effective non-financial reporting
Meanwhile, Maxing Tax Digital, has firmly placed its feet under the table. It’s here now and there’s no turning back.
It’s part of a wider move for tax and accounting systems in the UK moving online. When it comes to accountancy and taxation software, there has been an even bigger development that accounting firms should be aware of – cloud-based software.
Popular accounting and bookkeeping software, including Xero, KashFlow, QuickBooks and FreeAgent, make use of the cloud. Accounts and tax return preparation solutions, such as Taxfiler, are also frequently cloud-based. So, if you offer traditional bookkeeping and tax compliance services to clients there’s almost no avoiding it.
Due to the cloud’s popularity, clients are also likely to expect firms to be familiar with these systems as part of their compliance offering. As a result, firms that fail to embrace the benefits of cloud-based technology may run the risk of losing out to competitors.
Clients’ changing demands
…which brings us nicely on to this. There’s no question that client demands are changing. As stated above, there’s an expectation that practices adopt certain tech. And for many, the amount of work clients demand from accountants is not only on the rise, but the nature of the work is changing as well.
The days of accounting firms simply offering bookkeeping and run-of-the-mill tax compliance services are starting to fade. In their place, clients want more advisory services, whether that’s assistance with migrating their internal accounting systems to the cloud or understanding how best to grow their business.
Enticing top talent
While clients’ demands are changing, the same applies to staff. Recruiting is, of course, always a huge task for any business and it seems that finding and keeping the best employees is becoming more difficult within the accountancy profession. But not only do firms have to contend with a workforce that appears more willing to switch jobs than ever before, but there’s also the fact that the way in which people work is changing.
Increasingly, job seekers and existing staff are looking for more flexible working arrangements, whether that involves remote working, job-sharing, or a change in working hours during the week. As such, any firm looking to employ the best and brightest should consider whether it’s doing all it can to appeal to and incentivise both potential and existing employees.
Of course, in terms of the wider world, there’s only one winner in terms of issues dominating the national news – Brexit. It’s been over three years since the Brexit referendum, and we’re still no closer to knowing how exactly the UK will leave the EU. If indeed it does. Second referendum? A Brexit-based General Election? Exit with no-deal? A new deal that overcomes the Irish backstop dilemma? Any of these possibilities and many more are still in play.
Since Boris Johnson became Prime Minister, speculation has increased that a no-deal scenario is the more likely, given his comments that the UK will leave the EU at the end of October should no deal arise in the meantime. Whether this rhetoric plays out as the October deadline approaches however, we will have to wait and see.
Amidst all this uncertainty, accounting firms have several Brexit-related challenges to face. On the one hand, firms may see a strain on their fee earning potential. This could be from clients that face a downturn in business during the Brexit process or from larger clients that are considering relocating as a result of Brexit.
To offset this, firms may see more work come through in the form of advisory services, such as advising clients of the potential impacts of a no-deal scenario, and explaining how taxes such as VAT are likely to operate once Brexit happens.
We’ve seen in recent weeks two new pieces of VAT-related legislation being disrupted by Brexit. The domestic reverse charge for the construction industry has been delayed for a whole year, with the impending EU exit being cited by officials as a major cause. HMRC has also mentioned Brexit by name when explaining why it’s taking a lenient approach to issuing penalties for missed deadlines for the first phase of MTD, saying businesses have enough to contend with preparing for our break up with the European Union.
Don’t go cold on hot topics
All in all, there’s a lot to think about. But as long as you’re keeping your ear to the ground, an eye on the news, and you are willing to be agile to adapt to changing circumstances, you’re going to have the best chance possible to stay competitive and thrive.