Will technology be the ‘bright’ spot for accountants as recession looms?

Rising inflation and interest rates. An energy shortage. Geo-political instability. Declining growth.

Europe faces a recession next year that will drag down global growth in the event of a harsh winter that would exacerbate the region’s energy shortages, the OECD warned on October 26.

In its mid-year economic outlook, the Paris-based think-tank projected global output to grow 3% this year; this is half the pace achieved in 2021. The OECD also cut its 2023 growth forecast by 0.6 percentage points to 2.2%.

Businesses are on high alert and will be looking for ways to streamline their processes and cut costs, all the while remaining competitive within their respective markets. In the past, decisions around business continuity were taken by the chief executive or board of directors, but more and more are business leaders leaning on their finance leaders – whether internal or external – to provide valuable insight.

For many, accountants have become valued advisors. During the pandemic, as businesses grappled with economic and geopolitical uncertainty, senior leadership teams turned to their accountants for advice, beyond the realm of accounting.

In-house teams and external practices were asked where value could be added to the business, as cost-cutting measures were implemented, and local lockdown rules prompted the advent of hybrid working.

Digitalisation has been one area where accountants and bookkeepers have had to lend greater support. In the palls of the Covid-health crisis, accountants’ expanded advisory function has once again been called into action with the introduction of new regulation– in the UK Making Tax Digital for ITSA has been the headline act.

With the introduction of new legislation, accountants are not only being asked to demystify new rules, but also provide guidance on technology solutions needed for compliance and, in some instances, provide training.

As a result, a greater number of advisors are having to become tech specialists to help implement the technological change clients are wanting. Similarly, accountancy teams have also had to bolster their own tech stack – and digital skill sets – to keep pace with client needs and remain competitive in the sector.

It is therefore imperative, that as the globe pivots on the edge of a recession, accountants are prepared to aid their clients through the next period of uncertainty.

Internal challenges

Having weathered one economic storm this decade, many accountancy teams will be aware of the burden which will be placed upon them by their clients, but they also have their own internal challenges to overcome. Key among them will be pressures on how they price their services.

Pressure on prices is not a new phenomenon; given the competitiveness of the sector, accountants are used to having to re-evaluate their pricing. However, with the recession looming, and the market going through a period of consolidation, remaining competitive will be a challenge for many firms – for some, it may lead to cash flow issues.

Similarly, accountants are not only competing for business, but for talent as well. Digitalisation within the sector has meant demand for digitally literate, and data-driven individuals has skyrocketed. This is an issue across most sectors and one which is likely to continue as the impact of the Great Resignation ripples through markets. Accountancy practices which can secure the right talent will be those which not only foster a digitally friendly culture, but also one where learning opportunities are in abundance.

Another major challenge facing accountants is the threat of cyber incidents. As gatekeepers to a large amount of valuable, and sensitive client information, accountants are prime targets for hacks. Keeping this information secure is of the utmost importance, but with the growing digital footprint of many firms – and the expansion of the attack surface due to hybrid working – this challenge has become a lot harder to mitigate.

Where technology can help

But help is at hand, for both clients and accountants themselves. While technology threatens to disrupt lines of business – and in some instances may incur large upfront costs – the efficiency gains to be made are boundless.

Better technology allows for better lines of communication, centralised and secure locations for data, and frees up time for accounting professionals to turn their attention to more analytical and advisory duties through increased automation.

Companies such as Bright, have emerged to assist accountants – and their clients – in this journey. Bright is a leading provider of accounting, payroll, and practice management solutions to businesses across the UK and Ireland; they are already helping thousands of accountants, bookkeepers and small to mid-sized businesses (SMEs).

In a forthcoming podcast series, Accountancy Age – in partnership with Bright – will discuss some of the key challenges currently being faced within the industry.

The series will unpack key trends, solutions, and how technology can help firms and businesses operate more efficiently in the years ahead. Leaders in the industry will give their take on interesting topics – such as the changing role of the accountant and what digitalisation means for practices – and provide better insights.

To register for the podcast, please complete the form below: