Technology has taken hold in the accountancy sector, rapidly transforming the way in which accountants process data, inform business strategy and interact with clients. But while advances in technology have led to widespread efficiency improvements and time savings, tech developments have also given practices and individuals cause for concern.
The potential impact of cloud software on an accountant’s service offering is just one of the issues with which accountants are grappling. Other considerations include the long-term relevance of the accountancy role; how to stay ahead of the competition; and how to best leverage the current automation available and artificial intelligence opportunities on the horizon.
In the following interview, Jason Reynolds, Director of the Home Counties division at AJ Chambers, speaks to Riki Gangola, Partner at Top 100 accountancy firm RDP Newmans, to find out how the firm is embracing technology and providing value to clients.
What differences are there in how accounts are prepared with modern cloud-based software?
Cloud-based software can make things easier and make information much more accessible for us when dealing with clients. But there is a misconception that these products mean you don’t need an accountant.
How important is it for you to dig deeper into the detail of a company rather than looking at raw data produced by these pieces of software?
The service we provide to our clients is far greater than simply number crunching. A great number of our clients are owner-managed businesses who are looking for help in succession planning, assistance with strategy and making commercial decisions, or tax planning. It is really key to understand what makes them tick in order to do this.
To what extent do you need to understand the mechanics of someone’s business in order to make intelligent recommendations?
It is important to understand the fundamentals of someone’s business in order to give the best advice. For example, we often deal with clients who are going through acquisitions, mergers or even a dissolution, and you need far more than a profit and loss account and balance sheet in order to guide them through this process let alone to arrive at a reasonable valuation for a business.
If you can’t understand what drives income streams and profitability and possible future changes to these, it is difficult to give meaningful advice.
The people aspect is also really key for our clients. The fact that we understand our clients and their issues, we speak regularly with them and that they respect and trust us gives them the confidence that we are giving the best advice.
Ultimately, that is the kind of reassurance that software can’t provide.
In that case, what benefits are there to cloud software?
Those types of software can take away some of the more routine and repetitive aspects of data analysis. Sometimes the client can even do some of the work, and it generally helps to make the job more interesting for junior staff. This gives them more opportunity to get involved in more challenging aspects of accountancy work.
Another benefit is that it can be very helpful to access all the information easily. Particularly if you are speaking with a senior person at a client for example, it can make it easier to quickly refer to the specifics of what is going on in their business in order to offer advice.
Ultimately, advisory services are the most challenging and rewarding part for us, and for the practice more profitable.
How much of your business is compliance based versus advisory?
A lot of the work is still compliance based. Ultimately, throughout a practice like ours it is when you get to a senior level and beyond that you are more involved in the advisory side and dealing with the tax planning and other advisory issues.
Also, there are some clients who frankly prefer a purely compliance based service. Some self-employed clients with simple affairs don’t see the need to engage us for anything else. Technology can be really useful for these kinds of clients.
How do you think technology and initiatives such as Making Tax Digital will impact bottom line hiring?
Moving forward it probably won’t affect the numbers of people involved in the accountancy field and who a firm of our size needs to hire. What it might impact are the skillsets people will use day to day, as the technology will be able to do a lot of the heavy lifting.
In that case, do you think it might impact the people who have the necessary skills and experience to offer advisory and consultative services in 20 years or so?
It might mean that in the future there are fewer people who have dealt with the more mechanical aspect of accounts production, but that won’t necessarily be a problem as that will be the way the profession moves. There will still be a need for individuals who are commercial, who are good at explaining things to those who aren’t accountants, and who can give insightful business advice. An important attribute is also personality; you are after all a trusted advisor.
What focus do you put into the people and personality aspect when you are hiring, as opposed to the technical?
For a firm of our size, it is important that everyone not only fits into the team but has the ability to deal with our clients.
Ultimately that is what an accountancy practice is about; keeping your clients happy and helping them deal with their issues. And that takes the right kind of person.
How different do you feel the service is in a firm of your size compared to smaller firms?
Something we often see when taking on new clients who have dealt previously with a smaller practice is that issues are not dealt with as quickly as they could have been. These firms sometimes have more limited resources.
A firm of our size has the benefit of more breadth and depth in terms of specialist skills; you know you have expert colleagues who can help. You don’t need to be doing everything yourself, because you have the relevant resources that you can tap into.
It also means that staff get to work in different areas and spend time with these senior internal people, so they get really good exposure to a variety of situations.
As a mid-sized practice, what about the difference to larger firms?
We are not so big that it makes it hard for staff to progress.
There are quite short reporting lines so you can deal with partners early in your career, and if someone is good enough, there will always be the opportunity for them to step up.
Whilst they can be excellent technically, we have found that sometimes large practices can be very transactional in approach; whereas our clients really value the time we take to develop a strong relationship.
Finally, do you see the industry changing that much with greater emphasis on technology?
As mentioned, it will make things potentially easier and quicker for small companies and self-employed people to use technology to speed up the compliance aspects of their accounts.
However, the consultancy aspect and advisory work in practice has always been there, and it will still be absolutely fundamental to the offering we have as a firm in the future. It is something our clients expect and value very highly.