By Paul Phipps
Are The Days of Accountancy Practice Numbered?
We recently had a rather interesting conversation with an individual, who claims to have an insight into the world of accountancy, which left us with the impression that this person, who shall remain nameless, thinks that the future of the accountancy practice is somewhat doomed, to say the least, which made us think.
The upshot of the conversation was that, ‘He Who Shall Remain Nameless’, seemed to be saying that high tech accountancy software is poised to destroy accountancy practices within ten years, because businesses and individuals will be able to fulfil their own accountancy needs using increasingly sophisticated software. A grim view, indeed, but not a view shared by us.
Is this an accurate assessment?
As we are all aware, and there’s not getting away from it, technological automation is poised to carry out tasks that are currently done by humans and this is going to affect how work tasks are carried out and will undoubtedly make some jobs redundant across all sectors. Accountancy practice won’t be immune to this change, but will the likes of Xero, Sage, IRIS and QuickBooks really replace your friendly local accountant and the valuable advice and business support they offer, as has been suggested?
As recruiters specialising in accountancy practice, we are not seeing any slowdown in our clients’ need to recruit staff and it is still an acute shortage of suitable candidates with the relevant experience that is the perennial problem for us and whilst this is very much the current situation, rather than the future, fortunately, our clients don’t seem to be preparing for a decrease in business, quite the opposite in fact.
A notable exception here is the contractor market with IR35 and whilst this will impact upon practices (some more than others) people currently contracting will still be working as either an employee, a limited company or sole trader, potentially creating work for professional accountancy firms.
Obviously, this is a massive subject and change is inevitable, as with any sector in modern times, however, we are not sure that the demise predicted by ‘He Who Shall Remain Nameless’, is how we see it, given the recruiting patterns and the continuing forward planning that we are witnessing with our practice clients.
This does depend upon timescales. Looking at it contemporaneously, there are thousands of recruitment agencies in the UK and a fair few that specialise in practice recruitment and we are all frantically chasing those elusive candidates. We average around forty live vacancies at any one time and there are no obvious signs of that decreasing, which is hopefully indicative of a positive future.
Will there still be accountancy practices in ten years?
This is really a question of; if software allows people do their own accounting, does that mean that they will? With changing work patterns in recent years and during the last economic downturn, self-employment increased as overall employment declined (during the downturn), according to the ONS Labour market economic commentary: September 2019, and self-employed levels have remained high.
When individuals change to self-employed status, they are usually a specialist in their field and obvious exceptions aside, i.e. accountants, they will not want to get involved with the hassle of doing the accounts and I say this from personal experience. When I was a sole trader, my accountant’s fee was the best money I spent each year. Having that stress taken away from me, to prepare a profit and loss account and file my tax return, enabled me to get on with my specialism, for which, clients paid me. It’s horses for courses.
As an independent recruitment business, we outsource all of our accounts to our accountant and that will continue indefinitely. The service and business advice that we receive is exemplary. It removes the worry so that we can concentrate on recruiting and if we have a query, we know where to go for advice, which saves us time.
What does the future hold?
Predicting the future is always a tenuous endeavour and whether accountancy practices as we know it disappear or remain is pure conjecture. That said, whilst change is a given, we think that in ten years’ time, there will still be a need for accountancy services, for a range of businesses and individuals, although technology will undoubtedly result in a different way of working in most cases.
There is likely to be a lot of mergers and acquisitions of accountancy firms and we are seeing that already, with a number of our clients either merging or being taken over by larger firms including international business services groups.
However, not everyone wants to deal with a leviathan of a firm where you are purely a figure on the balance sheet rather than an individual. Also, not all accountants want to work for these larger firms. Instead, they may decide to set up their own niche practice locally and clients may follow the individual accountant, preferring the personal service.
The truth is, we don’t know what will happen to the accountancy industry. In fifty years’, time the world will be a very different place with technologies and changing labour markets creating a world unrecognisable to us today and maybe the accountancy practice as we know it won’t exist, and the same could be said for recruitment agencies.
However, it is said that at its inception, LinkedIn set out to take the place of recruitment agencies by putting employers and employees in touch. What actually happened was that recruitment agencies saw LinkedIn as an excellent way of finding and contacting prospective candidates and now, LinkedIn has considerable revenue from recruiters that pay for advanced features. So, there might be hope for accountancy practice despite the doom-filled predictions.
What do you think – Is ‘He Who Shall Remain Nameless’ correct – will accountancy firms disappear within ten years? We would love to hear your opinions so please comment below.