Is the fight on to stop accountants falling into irrelevance?
By Jim Scott
Is the rapid uptake of cloud bookkeeping software a true and imminent threat to accountants?
Will these tools – which are easy to use and require little accounting knowledge – continue to eat into the accountant’s traditional role and bring about irrelevance?
The commodification of bookkeeping we’ve seen has been driving down the cost of services and led to clients expecting cheaper fees.
And it seems that if accountancy firms are not vigilant, the cloud bookkeeping software companies could be eating their lunch before long. This has heightened and accelerated the need for accountants to demonstrate their added value and make the move towards advisory services.
The trend towards cloud
Cloud software has become the de facto standard of any new accounting firm due to its affordable pricing, ease of use, and efficiency.
This has helped lower the barriers to entry of starting up accounting practices, as illustrated by a record 636 new firms being incorporated in just in one month in March 2021. This is part of a wider boom, with over 6,000 new practices being established in the last 12 months.
Our market analysis indicates there are 71,000 UK accountancy firms – considerably more than the numbers quoted by other industry sources, with as many as 55,000 small and micro practices with 1-10 staff.
Before the pandemic 75% of these firms were still what we would classify as analogue (paper-based, desktop driven, with mainly manual processes residing). We believe this number has now dropped to 25%, meaning three in four have digitised.
Our latest customer data suggests that this is happening by and large in the cloud; with almost half of IRIS customers now in the process of moving some operations to the cloud and 27% fully cloud enabled.
Accountancy in the cloud
The market has now evolved, so that core cloud bookkeeping tools are supported by a rich variety of add-ons, filling in feature gaps such as receipt scanning and inventory management.
Cloud accountancy software designed specifically for accountants (instead of their SME clients) has developed more and more in recent times. This has led to the advent of a full suite of cloud-based practice management tools, fulfilling every facet of workflows, from onboarding new clients and assigning staff, to recurring tasks through to being able to make compliance filings with Companies House and HMRC.
Evolving and expanding services
This advent has afforded accountants the ability to evolve and diversify their service offerings and provide insights around advisory. Some firms have made their services more niche as a result; to specialise on a sector-specific basis or in areas driven by their experience or passions.
Those who are willing to seize the opportunity will become even more embedded within their clients’ businesses by demonstrating their expertise and collective knowledge gained from serving their wide client-base.
But those who are not may risk falling slowly into that dreaded category of irrelevance.