Compliance, Advisory and Automation
During the late 1700’s and early 1800’s, steam power mechanized the workforce, automated processes in agriculture and led to mass migration from field to town.
Less than 2 decades later, electricity, steel and mass production saw an explosion in the number and size of factories. An abundance of repetitive tasks created work for unskilled men, women and children of all ages.
Fast forward to the 1970’s and robots enter the workforce. Advancements in electronics and computing allow automated machines to own tasks in the production process, creating a shift from manual labor to a more highly skilled workforce.
And now, with big data, artificial intelligence and machine learning, we’re firmly in the midst of the 4th great industrial revolution.
4 Industrial Revolutions
Mechanical production, railroads and steam power
Mass production, electrical power, and the advent of the assembly line
Automated production, electronics, and computers
Artificial intelligence, big data, robotics, and more to come
Automation is an unstoppable force
But history suggests that there is no reason for alarm. Technological disruption has proven, almost without exception, to ultimately generate increased productivity and employment.
The Committee for Economic Development of Australia (CEDA) identified the probability that 40% of Australia’s workforce could be replaced by automation within the next 10 to 20 years1. This is a common prediction shared across New Zealand too.
But what does that mean for the accounting and bookkeeping professions?
"In the next five or six years I think that the accounting and auditing profession will change more than it has in the last 30 years."
Cathy Engelbert Deloitte Chief Executive Office
The speed of this change is primarily down to the rise of Artificial Intelligence and the ability to automate an increasing amount of day to day tasks.
Tax return preparation gets easier every year, making tax departments more productive, but also making it possible for more people to self-serve.
Tax return preparation will be almost entirely automated in a matter of years as documents download directly into accounting software.
As compliance and advisory work continue to be unbundled, accountants and bookkeepers will need to focus on delivering actionable value, managing and guiding data to increase their range of advisory services.
Such dramatic, accelerating changes will have massive effects on the industry, creating huge opportunity for those firms who are able to adjust their:
Utilising effective training and recruitment to ensure competence in analysis, workflow design and client assessment.
Investing in tools that will increase capacity, automate tasks, and allow for strategic contribution into clients’ decision making.
Traditional mindsets ensure accountants and bookkeepers continue to be technical advisors rather than trusted strategic advisors. It is important that they begin to see through the disruption and into the opportunity.
So how will these changes manifest themselves? How will major pillars of work like compliance and advisory be impacted in this unprecedented era of technological change and convergence? What will you need to be prepared to face, and when?
"We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction."
The automation generation
Artificial intelligence, machine learning, robots. These are all terms that we’ve been familiar with for decades but which belong primarily, in our consciousness, to the realm of science fiction. It’s easy when we’re so busy dealing with the day to day, to be unaware or even oblivious to how much of our lives are entwined with these technologies already.
How far-fetched is the idea of an electronic personal assistant on your phone? How distant the thought that your TV might know what shows you would like to watch or a website, what clothes you might like to buy?
Yet many in our industry refuse to acknowledge how this technology could help them or remain fearful that embracing this technology would somehow reduce their relevance.
If you fall into that bucket, take a minute to think about the car you drive. Does it have a cruise control function? Reversing cameras? Proximity alarms? Alarms to remind you to belt up or remove your keys? Does it even have a key? Maybe you are equipped with automatic parking and driving functions?
These are not jaw dropping new features to us. They’re all reasonably new, but they have been accepted into our daily driving experience without question. Do they make you less of a driver? Reduce your level of control? Do they lessen your importance behind the wheel? Or do they simply remove or simplify some of the manual tasks associated with driving so you can focus on your main job of getting to your destination safely?
So why then the fear of automation in the workplace?
Granted, we probably care more for our livelihoods than our vehicles, but the premise is the same, automation is here to make our lives easier.
"We will see a shift in jobs, but we won’t see significantly fewer jobs."
Steve Palomino Director of Financial Transformation, Redwood Software
As automation in accounting takes hold, Steve predicts that plenty of new jobs will be created, it’s just that the jobs will be different than people expected when they were studying, just as jobs today are different to those ten years ago. Steve continues;
“If you don’t want to learn new skills, then it may impact you negatively, but I don’t see an adverse impact on our industry as a whole”.3
But what have the machines ever done for us?
Automation is already taking the pain out of data entry, but what else could be up for automation?
The potential benefits are clear to you, your firm and the industry as a whole:
- Broader range of services all year round
- Increase revenue streams
- Attract better talent to the industry
- Enjoy better relationships with clients
- Have a more tranquil tax season!4
To name but a few… and how about:
- Faster expense auditing
- Simplified payment processing
- Reduce financial risks5
There is a genuine opportunity available to you to hand over many of your repetitive tasks so you can focus on higher value, more engaging and rewarding work. Rather than being replaced by robots, successful accountants and bookkeepers will work with them to ensure a more efficient and effective service to clients.6
Accepting the change won’t be easy, in fact there will likely be some pain, but in the digital age it is vital that we become agile and adaptable. New skills will be needed to remain relevant and competitive.7
Tax services will always be about the numbers, but in the age of automation, success will come to those who can offer insight into them.
Investing in technology to reduce your transaction processing and compliance work will give you the time you need to analyse client data and help your clients’ businesses grow.
Educate and train yourself and your staff
Look into custom designed solutions that use automation
Assess your requirements and opportunities
The life and death... and life... of compliance
Compliance has long been the backbone of the industry. Governments have always wanted faster payments, compliance and reduced fraud.8
However, the more pessimistic of those in our industry may well be buying into a popular narrative forecasting the death of compliance. So let’s tackle that head on... what truth is there in that forecast?
- Online accounting can reduce compliance
- Outsourcing offshore is becoming easier and cheaper9
- Compliance will become commoditized with supercomputers handling the processing and checking of data
- Compliance prices may fall thanks to new systems and the demand for up to date financial reporting10
- The future has no data entry. Zero.
So some truth then. But not the whole truth.
So long as people want to pay the least amount of tax possible and governments insist in creating ever more complex rules, an accountant’s knowledge is going to remain critical.
Compliance is not dead.
The industry has changed a lot in the last 10 years and is likely to change even faster in the next 10. Standard annual reporting will be replaced with more insightful financial forecasts, improved resource allocation and massive workflow efficiencies.
With less time spent on data entry and collation of information, accountants and bookkeepers will have more time to make a real impact into their clients’ lives – become more profitable, grow and forge their dream lifestyle.11
"Cloud-based reconciliation tools have enhanced efficiency and improved visibility into workflows across the business. As the role of the accountant evolves, their specialized expertise will be put to more strategic uses."
Chris Lervolino a research director at Gartner
Automating manual processes liberates accountants and bookkeepers to use their knowledge, expertise and skill for more beneficial purposes. It makes possible the opportunity to become strategic thinkers and not a number plugger.
The changing nature of small business also plays a part in the continued importance of accountants and compliance as we witness the birth of whole industries that never existed before:
"For instance, how do you deal with Airbnb for liability? It’s never been done. Look at driverless cars and autonomous vehicles: who is really liable? The manufacturer or the programmer? We’re seeing all kinds of industries that are impacted."
Brian Peccarelli President of Tax & Accounting, Thomson Reuters “
So the future is rosy then? Some seem to think so.
"If anything, there will be more need for compliance and for specialists in the field in the future."
Kenji Kuramoto founder and CEO - Acuity What
What to do with all that new capacity? According to Rob Nixon, firms are struggling to adapt and are failing to fill their capacity gaps.
However firmly you embrace change, the compliance landscape is shifting. While there will be no shortage of work to be done those who thrive in this new environment will be those who adapt quickest to the influx of automation and use it to add the greatest value to their clients.
Time to advise
So what next? If we embrace automation, and add greater value to our compliance work, then what?
Well, according to an MYOB survey in December 2017, 66% of clients claim they would use time saved in compliance work, to offer more advisory services. This certainly seems to be the future model of the accounting firm as accountants and bookkeepers begin to move up the value chain into more advisory based services.12
The ability for automation to reduce or eliminate manual, repetitive, low end knowledge work will push people working in those areas towards higher value work. In turn, higher cost workers will become increasingly specialized to focus on their area of expertise.
Business advisory services to be more than 80% of revenue13
Armed with the right insight and freed of some of the time-consuming elements of compliance work, accountants and bookkeepers can add a huge amount of value for clients. They can establish a central role in their clients’ day-to-day business and establish a more strategic relationship.
The most obvious way to provide ever increasing value to your client base is to familiarize yourself intimately with your client’s business. Understanding the levers and capital requirements of clients, make discussions about progress become more fruitful and are more meaningful.
Those who have made the leap into advisory have found an abundance of tools designed to help with every aspect of their business from, accounts payable and relievable, bookkeeping, inventory, reporting and payroll. All designed to boost productivity and maximise time savings.14
MYOB’s own offerings such as MYOB Advisor, Power BI and our huge range of Add-On partners are designed to give you the insight you need into your clients’ businesses to begin having advisory conversations. Because in the end, that’s all advisory is. Understanding your clients and talking to them about their business, their goals and their dreams.
Automation may be an unstoppable force, but it’s a force that’s on our side. We should embrace it and celebrate each time another task is eliminated. Each one that falls frees up more of our time to focus on the things that add the most value, give us the biggest sense of achievement, and make us most human.