After many years in practice, I now find myself being faced by a world of cloud accounting systems, artificial intelligence and apps.
And I hear that many in practice are now making a rapid exit for the door in the face of MTD, downward fee pressure for compliance work, and the emerging consensus that said cloud accounting packages can now pretty much do for free what we have historically made good money doing.
What does the future hold?
I confess to being highly impressed with the technology behind the supporting apps to Xero and equivalents, and with Xero etc. themselves – and the fact that with correct set up and client training, hardly any manual data entry is required.
With all this automation, is there no more (or very little) bookkeeping income in future?
Once the cloud accounting bookkeeping is sorted out for the year, then the direct export link from that to the accounts production package will make redundant most of the effort previously required to input the data to prepare the accounts. And as we already have now, the information for the tax compliance falls directly out of the accounts production module.
It seems to me that once these systems are properly implemented, then this end-to-end seamless data processing will only require human intervention to shepherd the data through the system and check that the results at the end are correct, and make any adjustments needed.
We are not quite there yet, but I believe this is only a short way off being the norm for accounts production, and already is the norm for front edge firms. This raises some interesting questions:
Surely this means the hourly billing model is broken and so what will be the basis of billing in future?
If in future there is very little effort involved to deal with the compliance affairs of the client, do we have an ethical obligation to charge less than now? If not, then what are we actually charging for?
What if Xero and similar products add an app to output statutory accounts and file direct to Companies House, in much the way they do for VAT returns now? What do we do then?
From experience these cloud packages do not have a high level of functionality and are not ideal for large and more complex clients where there is a need to export large data sets for detailed analysis. But for the typical client, then it’s a real game changer.
I do wonder what the future holds for those firms intent on clinging onto the ‘traditional’ old-world model and not prepared to address the above points. What would a client say if someone else agrees to produce their accounts within three weeks of the year end and for less than half the price they are currently paying?
I believe in a very few years, the accounting landscape will be unrecognisable from where we are now.
What can we do about this?
Is this a threat to our livelihood or a major opportunity? Over past months the accounting mentors are telling us we must move the goalposts and replace lost revenue with ‘advisory’ work. But what actually is this ‘advisory’ work and how does it differ from what we already do?
To be honest I thought I had been advising clients all my working life. The big difference now, though, is that we have instant on-going access to real time client financial information – and we can keep an over-watch on each client’s financial health, and alert them to any imminent cash flow or other issues. This certainly beats the client being in a flat panic on the phone, when the crisis has already hit, and they have walked straight into it with no prior warning.
So we can certainly add genuine value there. Whether that ability, and the spin-offs arising from it, will be enough to fill the income gap, we will have to wait and see – but there are certainly interesting and challenging times ahead.
The Secret Accountant practises in the heart of the UK