Report: Crisis drives reliance on accounting tech

Report: Crisis drives reliance on accounting tech

Before coronavirus, the accounting industry was projected to undergo a dramatic digital transformation—and through unconventional means, firms across the UK have adapted to a new, tech-based normal

Report: Crisis drives reliance on accounting tech

In just over three months, coronavirus has flipped the stereotype of accountancy on its head. Forgoing desktop spreadsheets for cloud-based software and sports jackets for sweatpants, UK accountants have responded to global lockdowns quickly and efficiently.

Over the past few years, the government’s Making Tax Digital pulled the industry into the tech era, doing so until it was hastily postponed days before launch. As a driver for widespread tech adoption, crisis management has taken the initiative’s place.

“Tools like task and workflow management have become incredibly important during this challenging time as they assist in defining processes so that practices can clearly see what’s going on,” Evan Jones, lead technology product manager at Wolters Kluwer Tax & Accounting UK, said via email.

In early 2019, a Sage report found that only 35 percent of accountants would call their firms ‘early adopters of technology,’ with the majority only buying what technology was essential. At the beginning of this year, many in the industry told Accountancy Age 2020 would be the period in which the industry pivoted to much wider tech reliance. The pandemic has substantially sped up that adoption, market participants now say.

Prior to the spread of the coronavirus, ACCA’s 2020 Future Careers report even found that across all age groups, the majority said careers within the profession were changing significantly, with the second-largest majority saying it was changing to some extent.

While few in the industry could have anticipated a pandemic, it is clear that the major changes the profession has undergone are here to stay – as are the hard lessons the industry has learned during lockdown.

Remote working, tech security and disaster plans

While many firms took steps to digitally upskill ahead of coronavirus, the pandemic may have accelerated the cloud-first mindset. As the pandemic progressed, Accountancy Age found that firms not already utilising collaboration tools, like Teams and Slack, had to scramble to create a cohesive remote workspace.

This quick shift to remote working was necessary, but it exposed several security flaws. Accountancy firms have reported a rise in phishing attempts, with some capitalising on the increased correspondence HMRC sent out to agents and taxpayers.

Additionally, newer problems like ‘vhishing’ and ‘Zoom bombing’ appeared, complicated by staff no longer being protected by employee encryption software and VPNs.

“The human firewall – your own staff – are most likely to be the weakest link in your IT security,” Craig Atkins, managing director of IT firm 1-Fix, explained via email.

In both the short and long-term, Atkins suggests that teams undergo security awareness training combined with regular phishing simulations, which can help weed out team members who need additional training.

“With accountancy firms, we typically see around 36 percent of the users will fall for phishing emails when the training starts,” Atkins said. “This falls to 14 percent in 90 days, and 3.5 percent at the end of the year, which shows the value of delivering an engaging program over the long-term and using it as a form of CPD (continuing professional development).”

Atkins advises that regardless of size, firms take advantage of their newfound knowledge to create a business continuity and disaster recovery (BCDR) plan. The pandemic will not be the last crisis that firms will have to handle, and having a BCDR ready at the start of a crisis can mitigate fallout from future situations.

While the pandemic caught the world off-guard, multiple accountancy and finance professionals have said it will absolutely change the way the industry functions.

“Accountants can’t just head over to the office anymore, and shouldn’t be wasting valuable time delivering physical documents, exposing themselves and putting themselves at risk,” Rob Harrison, managing director for UK & Ireland at SAP Concur, said via email.

“Almost every business has found themselves in a position where technology is no longer a ‘nice to have,’ but the difference between surviving these adverse conditions or being severely damaged by them.”

“All things considered, there’s no going back now that we’ve seen how well technology can work, and teams can collaborate despite the distance between us,” Harrison said.

However, remote collaboration is only one piece of the puzzle, as client needs also changed overnight. From needing advice on the government’s financial assistance programmes to concerns about business stability, organisations have required more support during lockdown from their accountants.

“I don’t think there’s going to be a world where we come out of Covid—I think Covid, and this sort of way of working, will be maintained to a point,” said Nick Williams, head of sales at Intuit Quickbooks.

“I think it just amplifies the fact and need of having a trusted advisor, someone that you can lean on, which is the accountant or the bookkeeping professional, to help navigate through this.”

Adding value to changing client needs

The value-add services that accountants provide have taken centre stage during lockdown as clients, particularly those in hard-hit sectors, have needed more information in real-time.

“We see that 89 percent of small businesses are more successful when they connect to an accountant,” Williams said. “So that connection and that success point, they’re definitely playing out now as this crisis hits – you know, the need for advice went through the roof.”

Cash is still top of the list of priorities for most businesses, many of whom are looking to their accountants for guidance on how to access short term capital. Automating processes could be key to that.

“Keeping a firm eye on cashflow is front of mind for all CFOs and finance directors, making sure finances are watertight is absolutely a key priority and, in truth, always should be,” SAP Concur’s Harrison said. “But especially now, what we are seeing is the need to ensure every invoice is paid on time, all the books are balanced and all the numbers are adding up.

“Automation is of course the most effective way to reduce human error and fraud, which we have no room for during this time considering current market conditions. So, the need for connectivity is certainly rivalled by the need for visibility.”

Before the pandemic spread, artificial intelligence (AI) and robotic process automation (RPA) were already becoming more accessible to smaller accountancy firms. found that 58 percent of accountants believed the use of automation and AI would improve their firm.

In recent months, technology professionals have been quick to point out that a lot of menial work carried out by accountants and bookkeepers could be easily automated, creating more time for value-add services.

At the time of publication, the soonest the UK can fully emerge from lockdown is autumn, suggesting that remote working will be a reality for accountants in the short term at very least.

“We are now seeing a real drive towards technology and services that will improve the remote working environment,” Atkins said. “Companies are realising that remote working is certainly here to stay.”

While the industry will continue to learn lessons from this pandemic for months, if not years, to come, accountants can begin taking precautions against future crises today, Atkins advised. For instance, taking a hard look at current company policies and processes that may not have functioned well under the remote-working model.

Williams explained that for medium to large-sized firms, some processes may have too many steps that don’t lend themselves to an online-first environment.

“The processes first need to be reviewed, so the processes are very lean,” Williams said, “and they’re able and agile so that if and when a major situation like this can be handled again, the business is already future-proofed, or ready to pivot immediately.”

Ahead of future crises, organisations also need to ensure that employees have a safe and comfortable remote working set-up, and that the company has collaborative technology on-board, according to Harrison.

“Weathering the storm has meant swift adaptation to very uncertain conditions, but many businesses have demonstrated this beautifully,” Harrison said. “With this in mind, I’d say focusing on automating the back office can only be a valuable investment and will safeguard against future disasters.” It is clear that technology will be a key player in mitigating future crises, and the measures that firms invest in pre-emptively can make or break the success of a crisis response.

While every organisation will have different needs, having pre-prepared crisis plans for core functions is essential for firms to quickly rebound. Given that coronavirus has disrupted normal practice, it is equally important to learn the positive lessons that the pandemic has taught the industry.

“I think it’s really highlighted some benefits, but also gives me confidence in what can be achieved in such a short time,” Harrison said. “Imagine what we can do once we’re all reunited?”

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