2019 has been nothing short of rapid, with the industry facing the introduction of Making Tax Digital (MTD) for VAT and then the first quarterly deadlines. Uncertainty around Brexit lingers, and as a result more practices are reviewing their processes and using software to set themselves apart. With that in mind, what will 2020 have in store for the industry?
There is no shortage of innovations, digitalisation and exciting changes to our industry. You might be feeling overwhelmed by it all and the uncertainty that accompanies change. At Wolters Kluwer we want to help you to navigate these changes, arming you with the knowledge and solutions that can make your business run more efficiently.
Here are 5 top trends to be ready for in 2020.
The rise of the virtual practice – journey to the cloud
We are seeing a new model of accountancy practice emerging, as start-ups establishing themselves as a digital practice from day one. Their laptop is their office. Collaboration is through shared remote access to client data. Client ‘meetings’ take place online. Communications are electronic and through a portal.
Without the overheads of running an office, costs are low, and they can respond with agility to changing client demand.
This also leads to an increased reliance on on-premise integration with cloud products. Traditionally, many accounting and bookkeeping processes [such as entering invoices, bank reconciliations and reporting] were done manually. With cloud accounting, much of this is automatic, which significantly reduces manual data input and reduces the risk of human error across your workflow.
Cloud accounting software is not reliant on the device. Data is instantaneously available from anywhere to both you and your clients with the right software. There is also higher level of security with additional levels of encryption. Forward-thinking practices are looking to automation for most tasks, from an invoice to a time sheet.
The rise of the monetised advisory firm
Our research has shown us that firms that continue to focus solely on compliance work as part of their practice deliverables can to grow annually at between nought to 3%. If you compare that, however, with firms focusing on delivering advisory services to their clients, they can anticipate growth in the region of 10 to 20% annually.
Many accountants we see are already offering advisory services, high value advisory services, even if they’re not recognising them as that initially. They are now considering however, how you can monetise and how you can drive greater value from that additional value service.
At Wolters Kluwer, we went out and asked 700 practices how they were looking to bill for these advisory services. 50% said they are looking to incorporate that value-added services to retain and to bolster their existing fee earning structure. A similar percentage, however, are looking to attach value based on the value that they provide.
Introducing robotic accounting
Digitalisation of the industry has been accelerated with government initiatives like MTD over the years. The main question is how you can keep up with the changing times, new tech-smart firms taking on compliance work as well as find more time to be with your clients.
Some areas in the industry already taking on robotic include:
- Invoice processing
- Practice management tools
- Financial close and reporting
- Accounting reconciliation
Amongst the digital trends, is an area that’s getting significant coverage across the accounting industry press and beyond and that is Robotic Process Automation or RPA. There will be continued acceleration of robotic process automation through 2020 as practices look to effectively automate routine tasks.
These tasks which are often high in effort and low in value exchange between the practice and their clients. Therefore, not only will RPA lead to greater efficiencies it’s also likely to improve employee satisfaction and ultimately impact customer experience.
Automating as many areas as possible within your workflows will enable you to deliver more with the same resources thereby increasing efficiency, profitability and unlocking more time to spend with your clients.
Increased legislation and regulation
MTD is here to stay and the first rush of submissions under MTD for VAT is becoming a distant memory, even for clients in the deferral group. The soft-landing period for MTD for VAT will end in April and digital links will be mandatory from this date.
It’s vital to ensure the software supplier you are using is not only supporting you in delivering against your compliance obligations but that it’s ahead of the curve and able to demonstrate to you how they are ready to meet HMRC requirements in the future, like MTD for Income Tax.
We’re expecting to see more regulatory complexity in the compliance space, which will impact:
- The digitalisation of the pre-accounting flow – receipts and expense capture for instance
- Automatic data generation to populate accounting software
- Collaboration tools to allow instant exchange of data with clients and approval
Heightened alert to cybercrime
There are few businesses that hold such sensitive data on their clients or customers as the typical accountancy firm. Data security will remain top of mind due to government regulations like GDPR and the possibility of cyber-attacks. Consumers are deeply concerned with how their data is collected and used. A barrage of news about data concerns, government surveillance, and corporate misconduct feeds this fear.
As accountants encourage their clients to join them on their ‘digital journey’ and with more data being exchanged online, they must take every precaution to protect their data and encourage their clients to do likewise.
Join this webinar with Gareth Cram – Product, Strategy & Transformation Director for how you can start to prepare your practice and clients for these challenges.