Taking the Red Pill: Top Challenges In The Accounting Industry
“I imagine that right now, you're feeling a bit like Alice. Hmm? Tumbling down the rabbit hole?”
Morpheus, The Matrix
It’s fair to say that, just like Neo did when he was unplugged from the Matrix, accountants might feel they’ve snapped out of a dream. The industry is changing rapidly, and accountants seem to be facing more challenges than they ever have before.
And while it’s unfair to say it’s completely to blame, more than a few accountants might see technology as something like the violent, near-unstoppable force of the robotic Sentinels.
We did a small survey of 157 accounting firms in Australia which revealed that technology is shaping the problems they face. Let’s
“plug in” and take a closer look at the top 5 challenges accountants believe will shape the industry over the next few years
1. Price Pressure and Commoditisation
The Accounting industry has struggled with the perception of commoditisation for some time.
Technology and automation are playing a part in that (we’ll get to that in a moment), but many businesses themselves have taken up an unwittingly leading role in promoting this image.
When one business looks the same and offers the same things, price - much like oil or orange juice - becomes the only differentiating factor.
For accounting businesses who aren’t been able to set themselves apart from the pack, this puts pressure on them in a “race to the bottom”.
2. AI on the Horizon
It’s no secret that keeping up with technology is a challenge. But being entirely replaced by that technology?
That’s a big concern for many accountants.
The reality is that the automatons are still a long way from being ready to “take over”. In the relatively simple area of data entry, one firm’s study of automated cloud-accounting software showed most solutions needed much more work to avoid accounting errors.
Even still, the speed of these advances has left a lot in the industry nervously watching over their shoulders.
Not Quite the “AI Apocalypse”In a 2017 Report prepared for CPA Australia, it was noted that labour shortages over both the short and medium-term indicated an urgent need for MORE accountants in the industry.
3. Security Threats and Data Security
With the Australian government cracking down on data breaches, it’s now mandatory to report any breaches your business suffers (under certain conditions). And while coffee shops and retailers have less to worry about, accounting firms that store sensitive client data may have to re-think their position on data security.
There’s good reason for this tightening around data security. Cyber-security threats have exploded over recent years, and can come at you from almost any angle:
- Malware, such as the infamous CryptoLocker
- Human error, which is behind more data breaches than malware
- Automated attacks, such as bots constantly hacking your website and internet router
- Human intrusion, be it from hackers, industrial spies or terrorists
4. Onboarding with New Technology
When looking at this list of challenges, it’s easy to think “technology” is the problem. The truth is, technology delivers fantastic opportunities to businesses willing to embrace it.
Sometimes, it’s actually people that can prove one of the biggest obstacles. A significant challenge for progressive accountancies is often trying to get their clients to jump on board with them.
Technology can come with massive investment, so failing to get clients onto a new platform can be a time-consuming, frustrating and
financially costly exercise.
Face-to-face: a thing of the (soon-to-be) past?A study from Xero revealed that 58% of small businesses surveyed don’t expect they’ll talk to their accountant face-to-face in the future.
5. Business Continuity and the Cloud
Over the past decade, cloud technology has swept through the technology and business world like a hurricane. If you weren’t “in the cloud”, your business was lagging behind.
But the rapid popularisation of cloud technology led to several potentially risky misconceptions that still survive today. Ideas like:
- Everything, from apps to data, should now be in the cloud
- The cloud is “on” 24/7, so you can always access anything you need
- Cloud data is automatically backed up if something goes wrong
While all of these points aren’t necessarily true, the last point is especially dangerous, as it leads to blissful ignorance that data is
safely stored away should anything happen (it isn’t). Without a clear understanding of what cloud technology can and can’t do and how it
works in supporting productivity and business continuity, accounting firms may be putting themselves at the risk of a data “wipe-out”
such as these 4 ways to lose
your Office 365 Data.
Auditors, Company Secretaries and Corporate Treasurers
Financial Investment Advisers and Managers
Management and Organisation Analysts
There’s no doubt that technology has thrown a raft of challenges at the accounting industry. But where there’s problem, there’s opportunity. Let’s take a look at how each challenge could be transformed into a way that lets you build your business a little better.
1. Create New Value-Adding Services for Clients
Accountants who aren’t able to show clients they’re different or offer “just accounting” will struggle to compete on anything other than price.
But, if you can provide something more valuable to the clients you serve, such as comprehensive advice, you become more than “just another accountant” you become the advisor that they are looking for.
We’ve talked about adding technology services into your product mix, but in an age where technology is all-pervasive, it makes sense. By partnering with the right business, you can add the neccessary technology advice and services to your offerings without having to learn anything new, work any harder or shell out extra cash.
By bringing technology into the mix, you can develop into a “one-stop shop” for your clients’ total business needs, making you a far more
valuable partner for them.
“Expect More Now”In Sage’s “Practice of Now” report, 83% of accountants said their clients expected more from them today than they did 5 years ago.
2. Free Time For More Valuable Tasks with Tech
While enterprise-level “robo-auditors” may still be a while away for most Australian accountancies, there are plenty of other opportunities to leverage technology in your firm.
Cloud solutions such as Hubdoc help reduce the bookwork for some businesses, especially smaller ones. But they still need the advice and guidance an accountant like you can deliver. This frees you from having to deal with administration as frequently and help focus on more valuable services for both you and them.
Integrating their platform with yours can also create efficiencies in how you review their activities and provide that guidance.
3. Comprehensive, “Set and Forget” Security
With data security a top priority, it’s difficult for accountancies to judge how much security is “enough”. This can result in too much (or worse too little) being spent, and all without knowing whether your business is truly safe.
Talking to a technology firm who specialises in working with accountancies is the first step to securing your systems, data and business. With the right protection in place, your exposure to attacks or malware is dramatically reduced without spending unnecessarily.
At FortiTech, we provide everything your business needs for security, from firewalls, anti-spam and anti-virus measures, realtime
protection, 24/7 monitoring, and security awareness training for your staff (which are often your “weakest
4. Educate Your Clients
If clients don’t know how to use it, investment into technology that makes things easier for them is almost like flushing money down the toilet. Even if you email them instructions, it’s highly likely they won’t ever bother to utilise their improved systems.
The reason is simple. It seems like a lot of hard work.
But what if you got someone to educate both you and your clients on how to make best use of the new software (and why it makes sense to use
it at all)? With short education sessions from the FortiTech intergration specialists who understand the software, you can quickly
validate the investment, and start getting a solid ROI from the tech.
5. Use The Cloud The Right Way
If you’re already on the cloud (and if you’re even just using Gmail or other online mail, you are), it’s possible you’re not taking full advantage of it. This might mean:
- Using software like Office365 SharePoint, Pinch Payments or Synergy8 Ecommerce,
- Backing up your cloud data in the case of a data loss
- Securing your cloud assets without worrying about security hacks regardless of who makes them
If you’re not sure about how things are configured to work as well (or as safely) as they could, FortiTech can help you. If you want to
move to the cloud but aren’t sure where to start, get in touch. We help accountancies and their clients migrate safely and ensure they’re
set up the right way from Day 1.
By the end of The Matrix, Neo hadn’t merely survived it, he’d learned to master all its complexities.
It’s the same with accounting firms all around Australia. Some will find their “Morpheus”, an expert guide who helps them harness technology and make it a powerful asset to drive their business forward. Others will struggle with the new paradigms and be overwhelmed by disruption in the industry.
Are you ready to take the red pill?