How much of an impact did the pandemic have in changing fundamentally how the profession works? What progress has been made in digital transformation and which areas still need attention?

The importance of good data and getting our hands on it is far from a new concept in accounting. It’s the bread and butter of the profession and its services. But in recent years we’ve seen the volumes and sources of data we work with grow fast and the importance of it being accurate and available real-time grow too.

Accounting is not alone here. For years, everyone seems to be talking about how “…data is the new oil” in every part of our economy and society. Data proliferation. Data science. Data fragmentation. Big data. In accounting we’ve been told again and again that access to data and the ability to use it effectively is the backbone of accounting excellence. It’s key to accurate reporting but it also helps accountants focus on what they do best: advising clients on how to improve their financial situation. Data may be the new oil – but it’s of no use if it’s not refined and definitely not useful if you can’t get to it.

But despite all this data talk many firms are still battling to keep up. Struggling to unlock the potential in their client data to support new ways of working and develop new data-driven advisory services. Many have avoided centralised data stores, preferring to stick with their old ‘team centric’ ways of working: disparate client data and spreadsheets siloed across the firm. This hurts collaboration and slows progress in business or digital transformation.

But in real terms – did this old approach really hurt their businesses? Perhaps not – at least not until the pandemic opened all our eyes to the importance of technology in keeping our firms working. Core to that is not the collaboration tools we have all learnt to love (important though they are) but the ability to access client data wherever you are working so you can… well, keep on working.

When offices shut around the world, accountants had to suddenly try and maintain their standards of excellence while all working with each other, and clients, remotely. They were forced to embrace the power of digital data storage and to find ways to collaborate virtually. This was the only way they could support their clients.

But just how much of an impact did the pandemic have in changing fundamentally how the profession works? Where have the great strides towards increasing its data-centricity been made, and which areas still need attention?

Silverfin’s Technology Trends in Accounting 2021 report took the pulse of 200 industry leaders across 5 countries, examining how the last year has impacted accounting firms across the globe.

Let’s take a look at some of its key findings…

Not all firms are on board with tackling data and digitising

To collect, analyse, and put data to good use at scale, it must be digitised. It’s as simple as that. Digital data is no longer a nice-to-have, it’s essential.

When asked “All of my client data is stored digitally”, 9% of respondents disagreed in 2020. That means almost 1/10 firms were still using physical data in some form. Some good news here as this year, that was down to 6%.

This is an improvement but it’s still worrying that there are firms (and their clients) out there that are not using digital data. Of course, some might say “We’d love to have our clients’ data in a digital format, but the clients themselves refuse to play ball”. We understand that issue particularly in the SME client space. But maybe it’s time to take on the responsibility of educating clients about the overwhelming benefits of them joining you on a digital journey. A conversation about the digital tools available to clients to help them speed up and simplify their own bookkeeping and the positive impact this can have on their business performance usually does the trick e.g. better cash flow management; faster payment of invoices and improved forecasting and planning. And if that doesn’t work try telling them that making a small move like this to digitisation now will enable you to be faster, more efficient and more helpful – this might be all it takes.

You don’t need to start ditching clients because they are slow to adopt digital tools but a commitment to educate clients about the range of tools they can use will pay dividends in the medium term. Rest assured those of us working in the accounting software industry are more than happy to help you with this.

Data consolidation is the foundation to success

There’s little use in having digital data at your disposal if it’s spread here, there and everywhere. Aside from the impact this fragmentation has on efficiency in the reporting process, this raises significant concerns about risk factors like data security. If accountants want to be as efficient as possible, they need to consolidate their key data in one single (and secure) place. This guarantees that nothing ever gets lost and accountants can quickly get to work without having to waste precious time digging around for the right data.

Fortunately, over the last year, 10% more of Silverfin’s survey respondents agree that they have consolidated all client data into a single, firm-wide, cloud-based data store (up from 37% to 47%). Double digit progress is great — but it’s not enough. The majority of firms still don’t have a single cloud-based system where all their clients’ data is consolidated.

Not only does this significantly decrease firms’ efficiency, accuracy and speed, but it also opens up a far greater risk of human error or repeat work occurring as teams are at risk of working with the wrong or out of date data.

All of my client data is stored digitally

Get real-time with data

Consolidating data might be the foundation to success — but if you want to fulfil your firm’s potential, you need more than mere foundations alone. Most importantly, you need to work with up-to-date data.

Think about it: you wouldn’t drive a car with a fuel gauge or speedometer that wasn’t showing real-time data. Likewise, in business, accountants need to know what’s happening within their client’s business right that very second. This is not just about ensuring compliance reporting is accurate it clearly plays a very important role in delivering effective advisory services.

Fortunately, accountants seem to now be on board with this idea. When asked whether they agreed with the statement “I have a live link to client data that keeps it up-to-date automatically”, 39% of last year’s respondents disagreed. This year, that was down to 17%. Better still, last year only 13% strongly agreed — this year that was up to 23%.

I have a live link to data that keeps it up-to-date automatically

Collaborate your way to success

This is where things get interesting. Working from home meant collaboration became more important than ever before — there was no way to operate without it. And when it was no longer possible to all huddle around a single screen when working together on projects, it was crucial that accountants could access, and collaborate, on client files virtually.

Unsurprisingly, there was a 19% uplift in the number of firms that made sure all client files could be worked on collaboratively (from 39% to 58%). We expect this figure to increase further in the next few years as it’s likely that hybrid working will continue for some time yet.

Client files can be worked on collaboratively and viewed by anyone in my team

There are silver linings from a tough year

The pandemic has been tough on everybody. However, without minimising the toll that it has taken, there has been one silver lining for the industry: it’s sped up digital transformation at least in data and collaboration.

The circumstances that have driven this progress are incredibly unfortunate — but this long-term impact of the pandemic may well be beneficial for the entire accounting profession.