Understanding the latest accounting trends will provide accountants and bookkeepers with insight into where the accounting industry is headed and, consequently, help your firm prepare for the future.
Trying to predict the future in the fast-paced accounting space is nearly impossible; however, a few key trends have surfaced over the past few months that will continue to have an impact in 2019 and beyond.
Here’s my take on some of these trends, as well as how your firm can start to prepare for what’s to come!
Preparing for a future with digitization policies
If you’re still hesitant about adopting cloud accounting technology, new and upcoming legislation might provide the push you need.
New laws and governmental policies are not “trends” in the sense that they might be fleeting or replaced with “newer, better” options next year. They’re most likely here to stay. The movement to business digitization, including governmental mandates, is now transforming how compliance work is completed (especially tax compliance), therefore prescribing the way accounting and bookkeeping will be done in the future.
Government digitization policies such as HMRC’s Making Tax Digital (MTD) for VAT in the UK, and initiatives such as Australia’s Digital Transformation Strategy, aim to reduce the tax compliance burden on business owners, reduce fraud, and help both the governments and taxpayers become better positioned for the future (which continues to move toward increased digitization).
Although the policies above are regional initiatives, it’s safe to predict that similar pieces of legislation will soon come into effect in North America and other areas around the world.
So, how can accountants and bookkeepers prepare for the digitization of business and accompanying governmental policies?
- Stay up to date – For MTD specifically, HMRC has released several resources to help tax agents prepare. Xero and Intuit also have helpful MTD resource centers for both advisors and small businesses.
- Educate your clients – As of June 2018, research from Intuit indicated that fewer than half of businesses were aware of MTD, highlighting the opportunity for advisors to play a leading role in education. This is a unique opportunity to help small business owners through a changing and uncomfortable time – as an advisor, you’re well-positioned to provide a ton of value to small business owners as they go digital.
- Embrace the cloud – Using cloud technology that enables seamless digital record-keeping is necessary for compliance with digitization legislation. (Our Accounting App Evaluation Checklist might help when making some of your technology decisions).
The productization of machine learning
For the past few years, much of the discussion around “accounting technology trends” has centered around the steadfast approach of machine learning and artificial intelligence (AI), and the ways in which these new technologies will revolutionize the industry.
The productization of machine learning is a trend to watch closely because it is actually already here. A variety of tools within the accounting app ecosystem have recently introduced capabilities such as machine learning-powered data extraction, chatbots, predictive insights, and so on – all of which are having a meaningful impact on how accounting and bookkeeping tasks are done.
To provide a couple examples: At Xerocon Brisbane, Xero announced that they were in the process of completely rebuilding their invoicing feature with machine learning functionality that can automatically recognize and complete an invoice based on previous entries. Similarly, in early 2018, we announced improvements to Hubdoc’s data extraction capabilities powered by machine learning.
Prepare for more machine learning-powered applications and functionality to be introduced in the tech ecosystem in 2019, and familiarize your firm with the concept of code-free accounting.
Code-free accounting: the ability to complete the accounting process without any manual intervention, such as data entry, transaction-coding, bill payments, bank reconciliation, etc.
Managing expectations around automation
As indicated above, the accounting app ecosystem continues to expand and offer advanced, helpful functionality – it’s exciting!
Although technology developments present new opportunities, they can also be the source of growing pains among even the most tech-savvy advisors – namely, the risk of app fatigue and, less discussed, the struggle with managing staff and client expectations regarding the capabilities of automation.
The growing app ecosystem seems to promise that every corner of your bookkeeping workflow will be automated… someday. The reality is that automation today is imperfect. As far as we’ve all come, it’s still very much a work in progress. Instead of seeing automation as a “set and forget” solution, it’s critical to understand it as an evolution. Committing to cloud technology means trusting in its progression as it continues to create efficiencies in accounting and continues to get better over time.
As Alan FitzGerald wrote in Xero’s “2018: the year that was” blog series:
“Thou shalt not wait for app perfection. If an app only does 80% of what you need, use it. It’s 80% better than not having the app! Feedback to the vendor may generate the extra functions you need in future updates. Unless you tell them, they won’t know.”
Managing expectations around automation can be a challenge, but some ways you can ensure you, your staff, and your clients are on the same page include:
- Standardizing your onboarding process – Whether you’re onboarding a new client or introducing a new application to existing clients, it’s important to have a plan. As part of that plan, set expectations about how the application will work and your clients’ required level of involvement.
- Proactively setting expectations – Understanding a client’s journey with your firm can help you set the right expectations, at the right time. Our checklist, Setting Expectations at Every Stage of the Client Journey, provides tips and best practices for expectation setting (from client acquisition, to onboarding, to ongoing services).
- Connecting with the team behind the app – As mentioned in the quote above, providing feedback to app partners is incredibly valuable! Touch base with your account manager or success representative for a particular app to provide feature requests or improvements. Speaking for Hubdoc, we love hearing feedback about how we can improve!
The increasing importance of advisory (and meeting changing client expectations)
Offering advisory services to your small business clients is more important than ever. It’s estimated that only 51% of small businesses will survive more than five years; however, that number jumps to 85% when they work with an advisor. Similarly, seeking proactive advice is often cited as a top reason why businesses switch accountants.
With the increasing significance and demand for advice, it’s also important to note that client expectations regarding the services they receive from their accountant or bookkeeper are also changing.
It’s easy to see why (and how) SMB expectations have changed – developments in cloud technology continue to break down communication barriers and enable client data to be more readily available. As a result, clients expect fast-paced service and responsiveness, personalized services, a detailed understanding of the nuances of their business, and a proactive approach to advisory.
Meeting these expectations is mutually beneficial for both your firm and your clients. With your proactive advice, your clients will see your firm as an essential business partner who is setting them up for success. In turn, your firm will provide an improved experience and see increased client retention and loyalty – which is incredibly valuable in a world where it’s becoming easier to simply switch to a new firm.
To better position your firm to provide proactive advice and meet changing client expectations:
- Set the foundation for advisory success – Before you can offer advisory services (e.g., app advisory, startup mentoring, etc.) or strategic advisory services (e.g., succession planning, virtual CFO services, etc.), you must first ensure you have compliance services nailed down (i.e., with automation).
- Identify inefficiencies in your workflow – Document your bookkeeping workflow to understand where technology can help increase efficiency. Increasing efficiency means you’ll be able to gather client data faster, enabling you to provide more proactive advice.
- Develop technology expertise – Small business owners are increasingly seeking out advisors who can recommend the right technology for their business. By becoming a tech expert (hiring a technological leader, developing a relationship with app vendors, etc.) you are preparing your firm to offer services that will meet future demand.
Keeping people first
Thinking about some of the trends mentioned above – the new technology and policies that are approaching, the adjustments your firm might have to make in order to “keep up” – can be daunting. How are you supposed to make sense of it all?
The answer: people. The beauty of the shift we’re experiencing is that it enables advisors to spend more time focusing on relationships – with your clients, but also with your employees, and the greater accounting community.
When I think about firms that are leaders in cloud adoption, technology is just one piece of the puzzle. They’re also hyper-focused on relationship building. As a couple of real-world examples: Part of LiveCA’s mission is to be an amazing employer, as well as one of the predominant experts in cloud accounting technology in Canada. Beyond Balanced Books focuses on building meaningful relationships with their app partners – specifically, the team behind the apps.
A few other ways you can focus on building a “people-first” business include:
- Leaning on the accounting and bookkeeping community – The more we can learn from each other, the better! Join social media groups, attend events and webinars, and don’t be afraid to ask – odds are, if you're experiencing a challenge or have a particular question, you’re not the only one looking for guidance!
- Focusing on your employees – Since cloud technology enables the automation of administrative tasks, there’s a huge opportunity to create more positions of value at your firm. Similarly, with the ability to work remotely and leverage flexible hours, there’s also an opportunity to provide incredible employee experiences, which will translate into amazing client experiences.
- Letting your clients guide your decisions – Your clients should always be at the forefront of your decision-making process. Doing what’s right for them will always be what’s best for your firm, whether that’s gathering data to inform a technology decision, changing a workflow, or making a hire. Keep your people first, and you’ll be well on your way on the path to success.
Thanks for reading! Which trends do you think will be most important to keep on your radar in 2019? Share them with us on Twitter!
Get more tips for how to use automation to build a people-first business delivered directly to your inbox. Subscribe to the Hubdoc Blog!
About the AuthorFollow on Twitter Follow on Linkedin More Content by Jamie Shulman