IN recent years, the rise of new technologies such as artificial intelligence (AI), machine learning, and automation has been one of the biggest disruptors across multiple industries, changing business processes and the way professionals work, including in the world of accounting.
Cloud accounting platforms have incorporated AI and machine learning to automate the coding of a large portion of transactions that small businesses do on a daily basis.
AI eradicates the time spent on manual and administrative activities such as punching and coding transactions, allowing business owners to focus on running their businesses, and their advisers on providing them strategic counsel to deliver better value.
Without a doubt, new technologies are indeed replacing routine processes. But this paradigm shift also provides an opportunity for accountants, bookkeepers, and business owners to shift their mindset from tactical tasks like transferring data from paper to the accounting system, to strategic, analytical functions like forecasting and long-term planning to grow the business.
Indeed we're seeing signs of this happening across accounting and bookkeeping firms in Singapore and Hong Kong.
EMBRACING APPS FOR GREATER REVENUE AND PRODUCTIVITY
Xero's 2019 Accounting & Bookkeeping Industry Report offers insight into how technology is creating new service opportunities across the three prominent accounting practice types: compliance, simple advisory, and complex advisory.
Businesses in Singapore and Hong Kong are not foreign to payroll and employee-related apps. However, integrating complementary add-ons to the cloud accounting platform allows small businesses and their advisers to have a broader overview of the business across functions.
As these apps are focused on HR, payroll, and employee processes, they contribute mostly to efficiency instead of having a direct impact on expanding services and growing revenue.
Nevertheless, it is noteworthy that leading accounting firms - the top 15 per cent of firms with high growth and revenue relative to those of the same business age - are adopting these apps at a faster pace.
On the other hand, simple and complex advisory firms in Singapore and Hong Kong are now using data automation apps that automatically fetch, collect, and store documents and information, reducing the time spent by employees to perform these functions manually.
While a little over one quarter of accounting firms in Singapore (25.8 per cent) have adopted data automation apps to improve operational efficiency, three-fifths of firms in Hong Kong (59.5 per cent) have already done so.
The move to data automation apps for accounting firms is increasingly critical. Singapore's pace-setting firms are making on average 99.5 per cent more revenue and growing nearly three times faster than the industry average and are saving around 215 hours serving each client every year.
Apps that facilitate the creation and delivery of advisory services are a more recent development in Singapore and Hong Kong, which is why the majority of accounting firms across the spectrum are actively planning to adopt these technologies in the new year.
The reason is simple - apps that offer solutions for budgeting, reporting, and above all, forecasting open up new advisory opportunities and new revenue streams. The use of these complementary apps is coupled with bank feeds which allow real-time financial data to flow directly from the small businesses' bank accounts into their cloud accounting platform, facilitating the interpretation of data by their advisers.
As such, less time is spent manually collating the information and more time dedicated to advisory work around cash flow forecasting and business reporting.
This year, we are seeing more firms exploring the use of forecasting, budgeting and reporting apps, with 42.9 per cent of advisory firms looking to implement them by April. By devoting more time to higher value advisory services, it is no surprise that accounting firms are increasing their small business clients' "stickiness", with higher retention rates for high-value clients (only 6.8 per cent client departures in the last 12 months in Hong Kong and 3.1 per cent in Singapore).
LEVERAGING NEW TECHNOLOGIES TO STAY AHEAD
If anything, Xero's Accounting & Bookkeeping Industry Reports for Singapore and Hong Kong tell us that apps that integrate artificial intelligence, automation, and machine learning are not so much replacing accountants as they are making them more effective at their jobs.
But while the rise of new technologies opens new opportunities for accountants to deliver more value, it also brings forth a potential problem if not addressed - skills shortage. According to a survey by Ernst & Young and CPA Australia, 79 per cent of accounting firms said they don't have the necessary skills to keep up with the demands of the job in 10 years' time.
That said, here are a few ways accountants and bookkeepers can remain relevant and thrive in the face of new technologies.
- Understand importance of strategic thinking, business acumen and leadership skills
The pace at which accounting software is innovating means the modern accountant is spending less time on manual tasks and more time making decisions that grow the business for their small business clients. Traditional financial accounting is still important, of course, but accountants can benefit from brushing up on their financial analysis and managerial accounting skills, which will help them make sense of the numbers crunched by accounting software.
In other words, accountants need to see themselves more as a strategic business adviser or even a CFO, which means the need for them to analyse financial figures against other factors such as broader economic trends and potential risks. It's no surprise that the top skills accounting professionals think they need in the next 10 years include strategic thinking, business acumen, analysis, and leadership.
This pivot to complex advisory services also explains why on average, pace-setting firms generated S$242,600 in total advisory revenue compared to the S$96,200 from regular firms. They also saw growth of 28.8 per cent in the 12 months to October 2018 versus only 11.6 per cent from other firms. These are real opportunities that accountants and bookkeepers can readily tap into if they leverage technology to reduce time spent on routine tasks and focus on higher value advisory work to grow their business.
- Strengthen relationship with client
Because accountants can expect to spend less time crunching numbers, their new responsibilities will naturally bring them closer to the small business customers they serve.
This means accountants must be ready to interpret financial data and provide their analyses in a way that can be easily understood by business leaders. In fact, the same EY survey found accounting professionals expressing a need to develop their influencing, communication and advisory skills.
- Tap on complementary apps to expand further into advisory services
As the role of accountants becomes more diversified, they need to equip themselves with skills and knowledge beyond accounting to remain competitive. We now see a growing demand for advisory services such as forecasting and reporting. To adapt quickly to this demand, accountants can tap on complementary apps such as Spotlight Reporting and Futrli to deliver comprehensive performance reports, conduct cash flow forecasting, scenario modelling and create customisable dashboards to facilitate business conversations with their small business clients to add value to the relationship.
The good news is that the industry is still going through a learning curve with these complementary apps as an extension of the traditional accounting platform, so now is the perfect time to jump on the bandwagon to stay ahead of competition and remain relevant as the role of accountants evolves further.
A MORE REWARDING CAREER AHEAD
Amid talk of routine accounting functions being replaced by technology, the truth is that new technologies are ultimately creating richer opportunities for accountants and bookkeepers to carve out complex and strategic jobs. I am optimistic that the new era of technology will see these professionals rise to play a more strategic and vital role to business leaders, and become essential partners in their growth journey.
- The writer is regional director for Asia at Xero