My latest article as it appeared on Accountants Daily
“What accounting looked like ten years ago – and how the industry is changing”
Five years on from the turn of the millennium, the industry had gotten over its last major change – the introduction of GST. With small businesses now required to produce quarterly BAS statements as well as their annual tax returns, they were beginning to play around with looking after their own books.
Three things were happening:
1. Small business owners were turning to off-the-shelf desktop accounting products in a bid to reduce their accounting fees. The idea was if they could do more of the work themselves then they could reduce the workload and ultimately the cost of their accountant.
2. The bookkeeping industry was expanding as small businesses turned to bookkeepers, both qualified and unqualified, to help ease the burden of increased compliance requirements, bridge the gap between business and accountant, and reduce costs – small business owners expected a reduction in accounting fees as a result. The rise of unqualified bookkeepers led to some tension between those in the bookkeeping and accounting fields.
3. While under increased pressure to reduce their prices, accountants were increasingly playing an administrative role, spending hours trawling through desktop programs to decipher and correct figures entered by clients. They were charging small businesses to fix administration issues without adding significant value.
As accountants, while we wanted to be valued advisors, we just didn’t have the data we needed to provide real-time advice and, quite simply, it just wasn’t needed. Prior to the 2009 global financial crisis, small businesses were propped up by the general market conditions. It was easy to set up a thriving small business riding on the back of the booming Australian economy, without getting professional advice.
At the same time as small businesses were prospering, the cost of operating an accounting firm was high. Actually running the business was slow and manual. The tools we had were costly, and exporting and producing reports involved a huge amount of manual effort. Technology was just edging its way in and clients were starting to move to desktop accounting programs.
Fast forward 10 years, and accountants have become an integral part of the small business. Our role has changed. Tax compliance services have become just part of the ongoing conversation and we’ve found ways to automate parts of the process. Whilst compliance is still an essential service, clients now regard our advisory role as more important. We now use technology to help our clients improve their business.
These key changes to the accounting industry have mostly occurred over the last three or four years, with the introduction of cloud accounting and Xero.
It’s not necessarily about putting information in Xero and expecting it to change everything. Instead, we now have a tool that makes up-to-the-minute data and trends much more visible, so we can have conversations with our clients in real time. Xero gives accountants the opportunity to play a valuable and valued business advisory role.
Client expectations have changed over the past 10 years. We now see forward-thinking clients looking for accountants who use cloud accounting software. And more and more forward-thinkers are making the shift themselves.
For the industry to be able to continue its growth and success, more government support and incentives for people to move to the cloud are required. Improving digital strategy is a priority for the government; assisting small business owners who are ready to make the switch to the cloud needs to figure prominently.
While the ATO is moving to a digital-by-default approach, they have acknowledged that teething problems are frustrating accountants and bookkeepers alike. As this much-needed transition continues, I’d like to see a seamless flow of data between the ATO and accountants to further reduce the compliance burden for our clients. Ultimately, less red tape will let us get on with advising our clients and helping them to grow their businesses.
The recent Xerocon partner conference included sessions on Xero’s partner code of conduct which generated conversation around how accountants work and act with their clients in this new digital age. As well as continuing this conversation, it’s important that industry bodies take the next step: creating a straightforward, plain English, industry-wide code for cloud accounting and computing, which addresses the standards for bookkeepers and accountants operating in the cloud.
We need to continue to educate small businesses to understand the benefits of using an accountant who goes beyond compliance to offering business advice – and to see that the savings in compliance costs made possible by cloud computing can be redirected to getting timely and valuable business advice from their accountant.