The Future of Accounting: Will it Still Exist in 2040? [Part 1]
With the imminent rise of artificial intelligence, a wide variety of professions will be at risk of becoming obsolete within the next 20 years. With this in mind, many business owners and number crunchers alike are asking themselves, “what is the future of accounting?”
The robots are coming.
Let’s be honest, accountants have a tough job earning the career respect they deserve. Few children admit to wanting to be an accountant when they grow up, while firefighter, teacher and astronaut remain at the top of the list. Even lawyers, who get similar flak, have an easier ride than the humble accountant, who tends to be pigeonholed and stereotyped as, (can I say it?) boring!
If I’ve learned anything on our startup journey, it’s that: a) there are lots of wonderful accountants out there. And b) robust financial practices and great technology underpin the successful businesses we see today.
The Forest AND the Trees
Another thing I’ve learned through running a business is that I’m really not a details person. If you’re a type N on the Myers-Briggs scale like me (25% of the population), you often miss the details in favour of observing patterns and seeing the bigger picture. I need to work closely with people who do details well. Finding people with complementary abilities is crucial to building a successful team.
The role of an accountant is, by necessity, detail-orientated and fact-based. Not only do business owners want accurate and up-to-date numbers to keep things clear and legal, but we also have to be aware of changes in the law or upcoming legislation that could impact our businesses financially or structurally in the future.
So accountants have to live and breathe the details. This means that they are often so busy completing year-end financials, chasing up missing records, problem-solving time-sensitive issues, or even just pitching for new business, that there isn’t a lot of time for anything else.
Accounting Firms Need to Evolve to Survive
One thing we know for sure is that technology is changing the future of accounting in business. Cloud accounting packages like Xero and QBO have made accounting software finally accessible from anywhere on any device. But they also present it in a way business owners can actually understand! Running Sage on a dusty computer in the corner of the office is now, for most, a thing of the past.
Buzzwords like ‘AI’ and ‘Machine Learning’ are increasingly bandied about, used by some to prophesy the extinction of accountants. But I still believe! The future of accounting is bright and here are just a few reasons why:
1. The role of the accountant is about giving business owners the peace of mind that they’re not making a horrible mistake somewhere and ending up with an unexpectedly large tax bill, fines, or even a prison sentence. Having an outside third party (human) perspective on how the books are being run is such a valuable asset that I can’t imagine that need will ever go away, no matter how automated things become.
2. Accounting is much like the legal profession, where interpretation is frequently needed around the application of tax law, especially for new laws. It’s difficult for a computer to do this kind of work effectively.
3. There is still so much more value that accountants and bookkeepers can add. Automation doesn’t rule out the value-add, it just allows for more efficiency which is actually a growth opportunity. If billed correctly, consultancy and advisory work should be much more profitable than compliance work.
The Accounting Firm of the Future.
Accountancy is an evolving discipline. And the speed of change is increasing. New legislation like Making Tax Digital will only be a catalyst for that. For hundreds of years, compliance was all that was available. Accountants generated value both by assuring that information was accurate when it came to paying taxes and by interpreting that data to help leaders make better decisions.
That world has changed. New sources of information, including KPI’s, customer behaviours and engagement metrics, churn, lifetime value of the customer (LTV), cost of customer acquisition (CAC), and customer satisfaction are being integrated as part of the modern business intelligence dashboard.
The challenge of capturing and presenting this information is also reducing. Software exists to take away that pain. Compliance is no longer enough to become the trusted advisor businesses are looking for.
I’m sure I’m not alone in wanting more from the relationship with our accountants.
What Can Be Done to Save The Future of Accounting?
We’ll cover some of this in part two of the article, but fundamentally, business owners need a technology champion. Someone that really understands the technology stack and how to integrate them together.
By understanding what information a business is capturing and what it really needs you’ll begin to be able to help leaders understand how useful and reliable their data is. Not all analytic tools are created equal!
By coupling your experience and skills with great software tools to provide a better interpretation that is focused on key decisions, the role of trusted advisor is very much up for grabs. And the future of the accounting profession looks bright.
Thanks to Kenny Fraser for contributing to this article
Further reading: The Future of Accounting: Will it Still Exist in 2040? [Part 2]