New research reveals “fear and control” biggest blockers to automation

While the government initiative Making Tax Digital (MTD) has already driven innovation in the industry, the business conditions brought on by the coronavirus crisis is now providing accountants with an even bigger impetus for change. To support their clients through the uncertainty ahead, especially SMEs, accountants must reassess the role of technology in their business.

Technology transformation, automation and ‘accountants as consultants’ are not new concepts, but the research participants suggest that digitisation for the sake of compliance is not enough. Nor is there time to wait – we’re entering a time of unprecedented economic disruption, and digital resilience will be key to survival for many SMEs. Accountants may have to educate clients on how to improve their own processes.

Recognising the urgent need to automate

“Figures are in the past – it’s about advising on future trends,” says Daniel Overton, director at Aston Shaw and quoted in the research.

While the coronavirus has made practice digital transformation mission critical, MTD compliance provided an early yardstick. “Digital is not just compliance,” says Overton, when asked about the impact of MTD. “Just changing systems to make our accountants work better isn’t the only focus – efficiency is ok but it’s about looking at technology add-ons that can add real value . . . automation of payments processes is helping businesses develop new business models and accountancy firms can help them with this,” he says.

And the wider impact brought on by the MTD regime change has seen important back office innovations, not least the ubiquity of cloud adoption. Judith Dugdale, head of digital solutions at Moore & Smalley, says: “The appetite for cloud has increased massively since MTD was announced.”

Likewise, the improvements in payments technology have brought hidden inefficiencies into sharp relief, most notably in the overly manual and opaque salary and supplier payments process. The recent fintech revolution has seen payments technology outstrip many practice’s current financial capabilities in the flexibility and robustness required to manage payments at scale.

“Fear and control” are blockers to change

Yet while back office operations are changing to meet the challenge of a more digital world, other accountants report the greater hurdle may be reticence on their clients’ part. This is especially worrying with remote working now a necessity for many businesses.

“Fear and control are the biggest blockers to adoption,” says Overton, “people have routines and ways of doing things that work and don’t see why they should change. We spend time educating our customers – yes, your process does work but if you do it this way you save time and make it easier.”

It leaves accountants stuck between a rock and a hard place. On the one hand, MTD and coronavirus are forcing through the true digitisation (beyond Excel) of back office operations, while clients are unaware of how those operations impact them or, indeed, can benefit them.

Tim Baum-Dixon, director at Hentons, describes how the practice has evolved its approach to client relationships: “We’ve got a process – meet the client and get them to tell you about what has been going on with them and in that conversation, there’ll be a nugget that the client will drop in and it will be nothing to do with accounts. It is a pain point. It’s important to understand where the client wants a business to go. What information they need to make decisions and drive that change.”

Accountants shouldn’t wait for clients to become comfortable with change

Emerging technologies and the changing business environment are reshaping accountancy, transforming it beyond the point of no return. Accountancy practices – global, national and small alike – are racing to discover the secret to adapting to technological change so they can support their clients through this challenging time.

But that is easier said than done. It requires a complete reevaluation of the role the accountant will play in coming months and years and how they plan to smoothly integrate new technology and business models into operations without disrupting business as usual.

And accountants cannot afford to wait for clients to become comfortable, nor should they. Instead, accountants must be the force for change and that extends to introducing new business models ahead of the curve to fully optimise the use of technology, starting by leveraging automated payment services which are becoming an unfair advantage for some accountants.

Read the research Automating Accountancy: Winning with Consultancy to discover how the participants, from the likes of Aston Shaw, Smith & Williamson and Williamson Morton Thornton are adapting their business models to streamline operations and deliver greater value to clients.

NB Interviews were carried out in early 2020, before government restrictions due to coronavirus.

Tom Kelly is account director and strategic lead for accountancy at Modulr