We met with some leading firms at the end of 2021. Read what they had to say was occupying their minds most as a new year gets underway.
2022 is set to be another year of exciting change or transformation for the accounting profession.
In our world, innovative technologies, from Artificial Intelligence (AI) to blockchain, are reinventing how work is done, the nature of client services and the work of accountants.
But transformation is not all sunshine and rainbows. Firms will face many challenges throughout the year, just as they have in the last two — whether they’re embracing new pieces of legislation or regulation like Making Tax Digital (MTD) in the UK, or adapting to ever-changing employee expectations and a war for talent.
We met with many leading firms at the end of 2021 at our Fast Forward Roadshows to discuss their views of the future. So let’s dive into what they had to say was occupying their minds most as a new year gets underway.
1. Increasing the value from technology – both for their firm and for their clients
Technology has been praised for its transformative impact on the accounting sector. Firms are increasingly realising that if they want to improve productivity and performance, they need to embrace technological solutions wherever possible. It is also creating fantastic opportunities for the creation and delivery of new client advisory services.
To a certain extent this is old news for accounting firms. But moves to drive more and more activity online by various governments around the world like the extension of MTD in the UK, means accountants must also help their clients go digital in their accounting. They need to know what technology is right for their firm and be the digital expert for their clients too. In the UK, from April 2022, all 1.1 million UK-based businesses that fall below the VAT-taxable income threshold will have to comply with MTD requirements. In other words, they’ll have to keep digital records and use third-party software when submitting their tax returns to the authorities.
Most accounting firms are already well-versed in using accounting software themselves, both for their own practice as well as for their clients. But in 2022, they’ll play a key role in ensuring all their clients, big and small, successfully adopt accounting software. So not only will they need to understand the technology available in order to advise their clients, they will also need to ensure that their own investment in technology is enabling the growth of their own business.
2. Attracting and retaining talent
This year, recruitment and employee retention will be a top priority for accounting firms of all shapes and sizes. But why is this such a hot topic?
Well, there are a few reasons. Fewer people are qualifying than in the past. In fact, just 1 in 4 candidates successfully passed the 2021 CFA Level 1 exams. Despite this, demand is increasing — creating the perfect storm. The Financial Times reports “growing ‘white-collar’ labour shortages as businesses fight it out for top talent”, with recent salary increases expected to continue moving forward.
We heard how salaries are going up and firms are struggling to beat out the competition for the pick of the talent — and job seekers are being more selective than in the past because they can be.
Most sectors have experienced the Great Resignation that started last year. Accounting seems to have been less affected according to a number of recruitment firms we spoke to, with fewer people changing firms. It was felt in discussion that rather than this being a signal of stronger loyalty it was more likely to be that accounting is just experiencing a delayed reaction – that an increase in movement is expected in 2022 as talent stayed put last year but will make a move this year. As a result, firms looking to grow will need to work much harder to attract new talent whilst also investing in culture and salaries to keep the people they already have.
Younger generations expect more from their workplace than their predecessors. If they don’t enjoy working somewhere, they’ll quickly look for opportunities elsewhere. They have no qualms about moving to find somewhere that provides what they’re looking for.
Attracting and retaining talent has become trickier than ever before. This has led to a complete role reversal, with firms now going into sales mode. To steal from JFK, rather than asking candidates what they can do for a firm, firms have to make clear what they can do for candidates.
Salary inflation management, recruitment and employee retention are now business priorities. Firms that can keep hold of their best employees in 2022 will benefit from better client relationships, stronger leadership and avoid additional costs associated with recruiting replacements and training, whilst at the same time ensuring business continuity.
3. Identifying how to charge for advisory services
The COVID-19 pandemic has completely transformed how businesses view advisory services and the role of their accountant.
On the one hand, it has had a positive impact, demonstrating how valuable these services can be. When faced with sudden lockdowns and economic uncertainty, where did business owners turn for help? To their accountants. Firms might not have saved lives during the pandemic — but they certainly saved countless livelihoods.
But there was also a big downside: accountants felt compelled to offer up these advisory services and largely did so for free. Their main concern was making sure their clients’ businesses survived — so they weren’t going to charge for crucial advice that could help keep the lights on.
Unfortunately, clients have now simply come to expect advisory services for free.
There are two problems here. First, as restrictions ease and we learn to live with Covid-19, accountants have to convince their clients to start paying for advisory services. Second, firms need to work out which billing model to use. Should they adopt an hours and costs-based model? Or would a subscriptions model work better? Then comes the issue of scaling — how can firms digitise these services so that they can be scaled successfully and cost effectively?
The answer might well differ from firm-to-firm. However, our attendees identified four main steps to successfully rolling out — and billing for — advisory services:
- Standardise and automate all existing compliance work;
- Identify clients that want — and need — advisory services;
- Prioritise this list based on potential revenue and strength of relationship and use a subset as testers to refine and standardise services;
- Then, pitch these services to all other clients when you have them well defined.
But this will only be possible once accountants embrace a new role, repositioning themselves as genuine growth partners. Firms must embed themselves within their clients’ companies and do everything they can to help them grow. Implementing the right tools — those that turn data into advisory conversations — will play a key role in allowing them to do this.
4. Increasing firm-wide data and technology or digital literacy
Clients want more than just a P&L — they want bespoke reports and dashboards that allow them to drill down into the details. To interrogate the data and explore scenarios before making decisions. This is more complex than it might seem. While accountants are fantastic at digging through datasets, their expertise usually doesn’t extend to gathering data from multiple sources, reformatting it and creating customised dashboards or interactive reports and forecasting tools for their clients.
Well, it didn’t use to be.
Accountants are increasingly looking to learn programming and data science skills. The ICAEW sums it up as follows, saying “It’s time for accountants to unleash their inner computer programmer as technology paves the way for greater efficiency, better data insights and more streamlined ways of working”.
It’s not enough to have separate data scientists. To unlock maximum efficiency and value, accountants must themselves be data experts — after all, they’re the ones who work with the data and relay key insights to their clients, so it’s up to them.
Firms are recognising that they need to arm their people with data science skills as soon as possible. We heard how firms are running coding programmes for graduates, and encouraging more senior members to get involved too.
5. Maintaining culture and learning opportunities when working remotely
Remote working means firms’ cultures have taken a hit and remote working has made it harder for firms to manage, train and mentor their employees. Learning opportunities have been slashed. Now junior accountants can’t easily ask their managers a question face-to-face when they run into an issue. The informal ‘can you just check this’ conversations are just not as easy as they used to be.
It appears that hybrid working is here to stay — even industry heavyweights like PwC and Deloitte have told their employees that they can work remotely if they wish. So firms must therefore identify ways to ensure that remote working doesn’t impact learning opportunities and culture in 2022.
Kickstart 2022 the right way
Whether your firm is looking to win the war for talent, improve its data literacy and skills, or maintain a successful culture, one thing’s for certain: you need to adopt the right technological solutions to support your journey. Tools that put you in charge of your clients’ data and automate time-consuming workflows, making your team more productive and freeing up time for that all-important advisory.
Tools like Silverfin.
To learn more about how we can help your firm succeed in 2022 and beyond, book a demo and see how our accounting platform works for yourself.