For years I have had to put up with lawyers telling me how good we accountants have it compared to them. “You get your clients coming back every year for their tax return – we don’t” is their chant and mantra. They bemoan the fact that they are only needed when there is an “issue”.
Given what I see as coming up, they will lose their chant.
It is becoming increasingly apparent that the world of tax returns and financial statements (or “compliance” as we know it) is going to change markedly in the years to come. The timeframe over which it occurs could well be under three years.
What we are seeing is the development of software and IT “solutions” that effectively feed information straight from your customers’ records into the Tax Office. This means that they will gather data on you more quickly and before any accountant (unless you have one doing all the entries) gets a look at it. From where I sit, this poses a range of challenges to anyone and will create a highly targetted and focussed audit approach from the regulators. When we consider the speed with which information can now be obtained on a business (daily bank feeds with automatically coded transactions), it isn’t that great a leap to have nearly everything automated.
So what does this mean for the classically-positioned compliance firm working around Australia? It means that their service offering is going to be removed from them and they are going to have to find some new ways to service their customers. It won’t be based around the “compliance factory” that has been a staple for years. It will not be around the preparation and lodgement of financial statements as this will be largely automated and make the accountant/bookkeeper redundant.
The really sad thing is that, like most change, not many accountants that I have spoken to are aware of what’s coming. They believe that things will just continue on their merry way. They are also generally the ones who haven’t grasped the whole technology thing in any way and don’t “get” the Firm of the Future thinking with regard to their businesses. This is sad.
Thinking about what will happen flowing from this is that a lot of the accounting firms will then start lowering their prices to try and attract more customers as their prices to their existing customers will drop markedly (especially where they bill by time). This will place more pressure onto staff, more stress on their already overloaded systems and drive many to the brink.
Then have a think about those industries that have been established to “offshore” the processing – they will disappear too. If there is no need for the work, it doesn’t matter where it gets done! The flow-on from this for a number of these businesses will be significant.
However, there exists a terrific opportunity for those that do understand what is coming and make the changes necessary in their business to adapt to the new environment. The old business models will disappear and the focus of the customers will be on engaging accountans who can add value and do not bill by the hour. They will seek advisors rather than reporters. They will seek a professional relationship with a trained and experienced expert with knowledge and training in the areas that matter. I am afraid that someone who is really good at processing “I” Returns will be at a significant disadvantage in this new world.
So when my lawyer mates continue to gripe at me about how we have an “annuity stream” from tax work, I will gently remind them that this is coming to an end. My concern is that it will take a lot of our accounting friends along for the journey.