It was around late last year that we witnessed another body blow to finance professionals: of the businesses surveyed for Xero’s ‘State of Accounts’ report, 59% said they did not think they would need an accountant at all in 10 years’ time.
What emboldened this response? Well, I suspect we know the answer: the rise of accounting software and steady encroachment of automation have fundamentally altered accounting and finance. As the influential venture capitalist Marc Andreessen put it:
The situation within accounting is unique, though. Emerging alongside this software tsunami are numerous regulatory changes effectively designed to speed up digitisation of the profession. The second payment services directive (PSD2), for instance, will make it simpler for business to connect their accounting software to their bank accounts, seamlessly sharing data between the two.
And then there’s the biggie: Making Tax Digital (MTD), the government’s ambitious plan to completely digitise the UK’s tax system. Under it, businesses will report to HMRC quarterly through their accounting software. Self-assessment will fall to the wayside.
What is clearly emerging is a digital ecosystem. Augmented further by AI and machine learning, we will begin to see technology that can confidently perform the bread-and-butter tasks of an accountant; software that can collate, collect, categorise and process.
It’s not hard to see, given these trends, why 59% of business owners in that survey would think their finances will soon be completed by a machine. Indeed, to an extent, they’re correct - for some tasks they won’t. The staples, the must-haves, will one day soon be completed by a machine.
In his fascinating book The Future of the Professions, the Oxford economist Richard Susskind notes we’re witnessing the unpacking or dismantling of not just accounting, but professional, white collar work in general. Things we’ve always assumed as being in the realm of the expert are being democratised and opened up thanks to technology.
But - and this is a huge but - no machine can replace the innate skill and insight of an experienced accounting professional. To paraphrase Mark Twain’s famous quip: the reports of accounting’s death are greatly exaggerated.
The profession actually has every reason to be optimistic. What accounting technology has taken away, it has also added to the profession. That’s not to say the transition towards the profession’s future won’t require some pragmatic adjustment.
The task for accountants now is to demonstrate value to their clients. Thankfully, technology has made this easier than ever. The fact is, analysing data (the really valuable part) will still require a more human touch.
Nick Heller, founder of the AI startup Fractal Labs and a Google veteran, explained this idea wonderfully. Routine tasks can be automated easily - but analysing and contextualising information and data still requires a trained eye:
“It’s the questions you ask. You have to apply it back to a real customer journey and a real set of questions you need answered. Only when you ask the right questions to set up the right experiments will you actually be able to come up with meaningful results.”
This near future will require a new kind of fluency and a different array of skills. The concept of the ‘finance professional’ will need to be transformed, too. Automation will continue to seep into your daily professional life. Ordinary, day-to-day processes will be performed as standard by software and your focus will move onto real time reporting, cash flow forecasts and growth planning.
For all the unknowns of the future, these are the things we can know with a fair degree of certainty. And if you can see what direction accounting’s future is headed, then ask yourself: what am I doing to get ready?
The shift towards digitalisation doesn’t have to be a huge leap into the unknown. There are several things you can do straight away that will help modernise your firm.
For example, you could move your meetings online. It’s a relatively simple move and you might be surprised by the number of benefits this brings.
For those interested, we’ve put together a clear, concise and actionable tip sheet on how to move your meetings online. Just click here to download your free copy.
*This article was originally posted on Director of Finance on June 12th, 2017.