I am just back from the UK, where I visited our accounting clients in far-flung places like Glasgow and Wales. I am no expert on running an accountancy practice but I have developed a better perspective about the industry and what it will take to secure an accountancy business in the future. My post is focused on the UK accountancy sector, because so much I learned was truly unsettling.
1. Staffing concerns
Accountancy talent shortage remains an ongoing problem for both small and large firms and it doesn't look like the dearth is going to abate soon.
Over the last year, I have seen that many of QXAS’s new accountancy clients are coming to us either because they can’t retain qualified staff or find new ones. Brexit and the General Election have only exacerbated the talent situation.
If this wasn’t bad enough, starting salaries of accountants is set to rise by 3.7% in 2017! The reason is plain and simple: graduates looking to work in the industry are expected to do more than ever before and with a shortage of accountants; they have their choice of who to work for. The days of an accountant being just a number cruncher are over.
2. Challenge by cloud/online accountants and technology
There is a new superpower in accounting: online/cloud accountants built on the back of online technologies. They are challenging the market currently catered by small and mid-sized accountancy practices. Cloud accounting has reportedly become a 53 billion dollar industry across the world.
Entrepreneur, speaker and consultant, Rob Nixon has predicted in an Accountex blog that by the end of 2017:
Even HMRC is getting in on the act by moving to ‘digital to default’ strategy (See the section on MTD below).
Luckily, QXAS is a technologically advanced outsourcer and is covered on the cloud strategy front. Our cloud accounting services for accountants lets even the firms who have yet to develop an integrated approach deliver a comprehensive service to their clients.
Time and tide wait for no one. It’s time to embrace the change.
3. The Brexit phenomenon
Back in June 2016, UK voters chose to leave the EU. A year on, Theresa May, UK’s new prime minister, surprised the entire UK populace by announcing a snap election on Thursday, 8 June 2017. To this day the Brexit phenomenon has resulted in:
Theresa May triggered the exit process on 29 March, meaning the UK is scheduled to leave on Friday, 29 March 2019, unless all 27 other EU members agree to extend the deadline.
4. Digital marketing
I have seen how the automation of commodity services is putting pressure on prices and bringing new low cost competitors in the market. In my opinion, now is the perfect time for accountants to differentiate and make compelling reasons why clients should stay or come to them.
Gone are the days of just relying on traditional marketing. Accountants need to upgrade and bring digital marketing and sales skills into their practice.
5. Making Tax Digital (MTD) worry
We all know that MTD is meant to transform the tax system so it is more effective, more efficient and easier for tax payers. As we all know, HMRC will initiate a phased transition to digital tax for everybody, with the journey already started with a beta testing in April 2017.
However, it is not as easy as it sounds. Despite being a seismic change, what MTD will look like is still largely unclear. This is because HMRC’s digital teams are still working on the tech and systems that will make MTD a reality.
MTD has received different reactions from the accountancy community. I am hearing that quite a few accountants are thinking of an early retirement and selling up their practice instead of dealing with the new regime. I think age definitely plays a small part here but it’s more to do with understanding the MTD challenge and how to respond by:
I have always believed that changing trends are challenges, not threats. Retiring or selling a business is a big decision and should be done for the right reasons. And MTD should definitely not be any accountant's swan song.
There are affordable solutions and a digitally advanced outsourcing company like QXAS with a young and technically sound workforce can make life easier for accountants, by keeping our accounting clients compliant with the MTD regime when it is brought in.
6. Digital accountancy firms are the future
Since 2011, I have been working with UK accountants in practice, helping them adopt strategic outsourcing to make their practices and workforce more profitable and productive.
So what’s the biggest change I have seen in the industry in this time?
It’s the cloud. I am amazed at how it is disrupting the whole profession, with many accountants driven to retire and sell their practice!
I have spoken to quite a few traditional accountants (small) with less money who had their heads buried in the sand and were refusing to accept that the change is happening. Some think that maybe they will have to downsize their teams, or win new business, but I don’t agree that anyone needs to be excluded.
I think outsourcing will be needed in order for firms to deliver compliance work cost-effectively. Doing this will allow accountants to free their time and offer broader digital services.
It’s a do or die situation and small accountants have to step up their game. Just look at how paper is disappearing in offices. With tools like Receipt Bank, paper receipts are already becoming history. The future is digital with or without you.
Though the UK is cold, the Brits are possibly some of the nicest people I have ever met. I cannot wait to return sometime later this year.
My name is Vishal Kurani, the author of the QXAS blog and I appreciate you stopping by! I help accountants gain Accounts Outsourcing knowledge through my easy to follow blogs and guides. Download my free guide "The Accountants Guide to Making Payroll Profitable" to learn how to make payroll profitable for your accountancy practice.