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22-Mar-2021 By - team

This year’s Practice of Now report is built on a survey of 3,000 accountants from Australia and across the globe that identifies a cultural shift in accounting.

Put simply; things are changing in a way we haven’t experienced for perhaps 40 years since breakthroughs like the desktop PC, or deregulation of the financial markets.

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There’s a whole host of reasons behind this cultural shift, which we’ll explore below, but ultimately the Practice of Now reported that it’s occurring in response to changes that are going to come to light across the next decade.

Ask yourself: Do you really think your practice will be the same as it is now in 2030, given all the societal and technological changes occurring? What are you going to do to prepare?

Free research report: The Practice of Now 2020           

We surveyed 3,000 accountants from Australia and worldwide to reveal how the accounting landscape is changing. Discover how your fellow accountants are preparing for the next decade and learn what you can do now to keep your practice successful.

An evolving profession

A stunning 93% of Australian accountants agree there’s been a cultural shift in accounting. Only 7% disagree.

So, what’s going on? The survey data suggests the cultural shift is partly driven by clients and the marketplace, which are together demanding much more than the traditional number crunching and compliance work that’s historically gone accounting.

Giving the market what it demands

Arguably the least specific of the reasons quoted here, market demands refers to just about anything that an existing or new client asks of a practice. This could be taking care of year-end taxes, of course. Still, increasingly it’s taking the shape of consultative and partner-oriented services that are advisory in nature (and note how increasing client demands is considered important enough to receive its response and segment in our graph above).

Your practice was undoubtedly founded once upon a time to cater to market demands. After all, it wouldn’t have got very far if it didn’t.

But how suited is it to contemporary market demands?

Well, there’s an easy way to find out, and that’s to compare your practice to any new accounting firm that might’ve opened up recently in your locality. Partly this might be as simple as discovering what services they’re offering via their marketing materials. What’s their focus? Do they specialise? If so, why do you think they do?

But you also need to be aware of their approach to business, which is to say, their culture. For example, more and more new businesses nowadays operate almost mainly via social networking channels. Additionally, some even lack physical premises for the staff who work remotely. This sounds radical to some, yet is merely normal for others. But it lets the new practice save money, thereby slashing costs for clients – who themselves appreciate such a forward-thinking approach because they could be in the same position themselves.

Or you might simply ask yourself what an accounting practice would look like if it started-up today. It’s unthinkable that technology wouldn’t be central to every part of it. And in these days of tax and payroll digitisation, you might think twice about setting up processes with clients that revolve around paper-based processes and boxes of receipts delivered to your door. Would you anticipate a 100% digital client list?

Of course, this is all very radical, and retrofitting it to existing practice is unlikely to be sensible or desirable. But what nuggets of wisdom can you turn into practical changes in your practice? If nothing else, you might aim to start a discussion within your staff about the direction of travel over the coming years.

Responding to regulatory burdens

Most accountants are aware of a familiar chain of events: Governments create new legislation, which places further strains on businesses, which then turn to their accountant to at least help them understand it, and often to take care of it.

Is the regulatory situation getting worse? Recent decades have seen countless financial scandals, which have forced worldwide legislatures to respond. Yet, and perhaps ironically, many of the same legislatures in the larger western economies have simultaneously been attempting to reduce so-called “red tape”. The net result has probably been reshaping the regulatory landscape, rather than a reduction or increase.

Nonetheless, increasing or just differing regulations remain a core driver of business for accountants—and increasingly it’s a driver of innovation too, as the different types of regulation challenge accountants to stay on top of the situation. As demonstrated in this year’s Practice of Now report, accountants worldwide agree that it’s one part of the cultural change.

Your practice undoubtedly has specialisations in regulatory necessities, but is it keeping up with the changes your clients require? Is the training available for you and/or your staff to learn what they need to know? These are questions that the Practice of Now’s findings suggest should not only be asked regularly but investigated with the intention that changes are immediately made.

Making the most of ongoing digitisation

Technology and accounting have been tied together for nearly half a century now, with the electronic calculator bringing the industry into the modern era, cloud computing, AI and bots being the latest technologies to change the way accountants work fundamentally.

Yet technology adoption isn’t moving fast enough—or so the accountants we surveyed in the Practice of Now report. Ninety per cent of Australian accountants believe the profession needs to pick up the pace of technology adoption to remain competitive internationally.

When asked why firms are lagging, reasons stated include a lack of time and money to invest in digital transformation (12% and 34% of survey respondents, respectively). Although 34% of firms state a lack of expertise is holding them back.

Yet if there’s one thing accountants can be sure about, it’s that technology is a game-changer. Generations of accountants have experienced this. To offer-up excuses rather than adopt new technology is a backwards move.

Once again, the solution is to keep digitisation in mind at all times simply. It shouldn’t be something that’s done once and then forgotten about, because technology is evolving at such a pace that new and useful products come to market regularly.

For example, what do you know about blockchain and the switch to decentralised ledgers? What do you know about how machine learning is fundamentally changing the low-level admin jobs within the profession? If all of this sounds like gobbledygook, then you have a major problem—and it’s something that will only get worse as time goes on.

Read-up on technologies and try to envision how they will affect your existing processes and tools. Look for how the technologies are starting to be implemented within businesses for examples. You might even make some cautious investments in training and technologies, but be sure to take your clients on the journey with you because ultimately it’s they who will benefit.

Adapting to generational changes

Much has been said about the millennial generation, born between 1983 and 2000. The year 2018 marked the first year that those born in the 21st century came of age.

Millennials were born into a world of technology, instinctively turning to it without thinking about all their life activities. Not only that but, according to a report by Sage (Walking the Walk), millennials have a unique set of values, unlike previous generations. For example, 62% of millennial entrepreneurs say they have sacrificed profit to stay true to their values, while 66% say they prioritise life overwork. Two-thirds of millennial entrepreneurs believe they’ll start more than one business in their lifetime.

The fact they’re now out there creating businesses is why they’re impacting the profession of accounting and helping make the cultural shift. They need accounting services, but they know enough to take care of the day-to-day stuff by themselves. They value accountants more as service-oriented business partners to guide them through the processes and pitfalls of business life. Can your practice provide that? If not, how can you make the necessary changes so you can do so—and therefore remain relevant?

But it’s not just a change in the type of clients. Increasingly millennials are entering the profession of accounting too. Yet here there are again substantial benefits. What better way to encourage millennial-run businesses to become your clients than to have your millennial employees who they can identify with and who share their values? Ensure you make use of millennials because research shows that they have high expectations for career progression—and little tolerance for low-level work.

Conclusion

There’s a perfect storm of challenges occurring at the moment that’s profoundly affecting the world of accounting, in a way that we haven’t seen for decades. Indeed, it might be that we’ve simply never seen anything like this before.

The pressure is on all accounting firms to adapt and evolve. This might involve making radical changes. It will almost certainly involve a root-and-branch evaluation of your processes and attitudes. But as our research shows, there’s simply no choice if you want your practice to be ready for the next decade.

How business intelligence can enhance your practice’s performance and client services

If you’re a practice manager who’s aware of business data’s intrinsic value, you likely know about the hoo-ha surrounding business intelligence.

You can most probably recite the promises of greater business visibility and the reassurances that a better view of your practice data will help it thrive.

But by the time you’ve finished reading this, you’ll be able to go beyond the generic business visibility line.

You’ll understand why business intelligence is such a buzz term, where it can genuinely impact your practice and how you can overcome the many challenges encountered in adopting it.

Ready to get to the nitty-gritty of business intelligence? Let’s get right into it.

What’s the big deal with business intelligence?

Over the past decade or so, ‘business intelligence’ has become synonymous with data-driven business management.It’s a term that most software providers and retailers use to draw people in, with promises of valuable insight and visibility into your practice.

But why are these insights so necessary nowadays, and why is it so important to have that visibility you’re constantly told you need?

An increased need for faster, better decisions

Clients are becoming increasingly demanding. According to Sage research, 87% of accountants believe clients expect more flexibility and better service levels without increasing their rates.

Your practice’s survival depends on it being agile enough to deliver the service level clients expect.This includes rapidly identifying and addressing problems within your practice and taking advantage of any opportunities that come up. Therefore, the need for better, faster and more fact-based decisions is more relevant than ever before.

In the midst of these increasingly competitive market conditions, business intelligence promises to provide you with the depth of insight you need to carry out these decisions.

According to a survey by professional services firm Accenture, 89% of business leaders believe business intelligence and the big data associated with it will revolutionise business operations much like the internet did a few decades ago.

What’s more, just over 70% of those leaders also believe businesses that are slow to adopt the technology may struggle to compete in the years ahead.

Availability of data and affordability of new technology

Thanks to a flood of ever more affordable technological advances over the past decade, many practices are continually collecting and processing enormous amounts of data in small amounts of time.

The enormous strides made by these new technologies (from both a hardware and software perspective) are also reflected in their pricing models, leading to a continuously reduced cost in the ownership and use of such systems.

In addition to all-out ownership models that often involve prominent, upfront costs and fees, the software as a service (SaaS) vendors offers the opportunity to rent business intelligence solutions through the cloud for a more affordable, regular fee.

Three reasons why your practice may not have jumped on board

Despite the advantages of adopting business intelligence, you still might be hesitant to jump on the bandwagon. Here, we address a few concerns you may have:

1. A resistance to the management culture shift

Evolving from a traditional management style that had to rely more on intuition to a more contemporary one backed up by newly available data-based evidence can be a disruptive process.It may also be difficult for you to relinquish your control over making decisions without potentially being challenged by data or information that contradicts what you feel.

However, as you begin to adopt data-driven decision-making and realise the benefits, the cultural shift will naturally begin to take shape.

2. The integrity of big data

The data that practices collect today is not just big, it’s also unstructured and messy. And as the amount of it increases, the traditional means of collecting and processing it become more difficult (think about a spreadsheet, for example).It quickly gets to a point where you may be overwhelmed by the amount of data in your practice.For your practice to succeed in this data, you need a way of handling it to be converted into actionable insights while maintaining its accuracy and integrity.

By delaying the adoption of business intelligence solutions, your practice will risk having an overflow of incorrect data that is mostly keyed in manually, without being able to act on it effectively.

3. Security and privacy concerns

You might be hesitant to trust cloud-based business intelligence solutions with your practice data. Perhaps you still prefer private networks or offline solutions because you think they are less vulnerable and will help you avoid the nightmares of data breaches you hear about in the news.

Most of the security and privacy concerns surrounding online solutions are born out of misinformation or a lack of knowledge. There are also incredibly strict protocols to ensure software companies encrypt and secure their customers’ data. They carry hefty fines if they’re not followed.

And with secure backups in place and the ability to access the system from any place, at any time (and no set physical location for the data), the significant risks of information theft, loss and damage is also negated.

In fact, according to a report by Grand View Research, more than 46% of small businesses who have adopted business intelligence use cloud-based tools as a core element of their business strategy.

Top benefits of business intelligence platforms for practices

The purpose of business intelligence isn’t to simply give you more visibility into your practice. And it isn’t just to provide you with distant views of your data so you can figure out how to make it more successful. It goes much deeper than this.

Business intelligence will give your practice a competitive advantage by equipping you with insights into your clients’ business that enable you to make swift, data-driven decisions.

Cloud-based business intelligence platforms that are designed specifically for practices can help you:

1. Deliver better client services

They can help you transform your clients’ data into critical insights about their business. With these insights, you can deliver proactive advice that goes beyond traditional tax and compliance.

2. Save time with automation

Complex data challenges can be simplified with automated processes that accelerate time-to-insight. You can also optimise workflows by replacing lengthy, manual processes with simplified dashboards and automation.

3. Gain insights into your practice

You can gain instant access to data and insights via intuitive dashboards and visualisations to make data-driven decisions. And effectively monitor internal practice data to improve staff productivity, job management and meet your KPIs.

4. Stay informed and manage by exception

Business intelligence platforms can help you stay instantly informed on critical events within your practice or clients’ business. For instance, you can receive alerts for breaches in financial thresholds, or variations in operational performance.

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THIS WEBSITE CONTAINS GENERAL ADVICE ONLY AND IS NOT PERSONAL FINANCIAL OR INVESTMENT ADVICE. ALSO, CHANGES IN LEGISLATION MAY OCCUR FREQUENTLY. WE RECOMMEND THAT OUR FORMAL ADVICE BE OBTAINED BEFORE ACTING ON THE BASIS OF THIS INFORMATION. INFORMATION CONTAINED HEREIN HAS BEEN SECURED FROM SOURCES EWM ACCOUNTANTS & BUSINESS ADVISORS BELIEVES ARE RELIABLE, BUT MAKE NO REPRESENTATIONS OR WARRANTIES AS TO THE ACCURACY OF SUCH INFORMATION AND ACCEPT NO LIABILITY. WE SUGGEST THAT YOU CONSULT WITH A TAX ADVISOR, CPA, FINANCIAL ADVISOR, ATTORNEY, ACCOUNTANT, AND ANY OTHER PROFESSIONAL THAT CAN HELP YOU TO UNDERSTAND AND ASSESS THE RISKS ASSOCIATED WITH ANY INVESTMENT.

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