On the off-chance that you haven’t noticed, accounting is in an era of transformation. That transformation was a frequent theme at Xerocon 2019 in San Diego, where I spent three days talking to accountants, bookkeepers, software developers and entrepreneurs from around the world.
The digital transformation is impacting all accountants, whether they work at firms or in industry. As I listened to the various keynotes and breakout sessions, observations from a recent report from the AICPA kept running through my head like an echo. In a survey of 700 senior finance leaders at companies around the world with $200 million or more in annual revenue, the AICPA identified a subset that they called “Digital Finance Leaders.”
These “Digital Finance Leaders” all had a cloud-first and customer-first mindset, and perhaps not coincidentally, their companies were more likely to have positive revenue growth and to be applying digital innovations across their organizations. Cloud-first and customer-first is part of the DNA of Xero and of many of those I met at Xerocon.
Demonstrating agility by leveraging digital accounting technology and willingness to adopt new ways of doing the work and new approaches to running accounting and bookkeeping firms was a marker of the successful firms I saw represented among the speakers and attendees.
Be Bold and Willing to Experiment
Shawn Kanungo, a digital strategist who spent 12 years at Deloitte, and who was encouraged by his parents to choose accounting as a safe career, began his keynote by noting that we’re in a period of exponential change. This era requires an exponential mindset: a mindset that values experimentation over certainty, that uses technology and automation to enhance capabilities and that values collaboration over working in solitude.
“The best companies are the most vulnerable to disruption,” said Kanungo. The “best companies” he was referring to include Fortune 500 companies that have long been considered the safest bets for investment and among the best places to work and have a career. Think Blockbuster, Toys R Us, Circuit City and Borders Books – all companies that were among the best, but which proved especially vulnerable to digital disruption.
But, as Kanungo pointed out, some of the hottest jobs today didn’t even exist 15 years ago, and accounting specialties such as data scientists, blockchain specialists, bot managers and cyber managers will make accounting the “sexiest job in the world.”
Embrace a Change Mindset
Steve Vamos, CEO of Xero, encouraged us to embrace a change mindset. Instead of operating our businesses from a desire to control, today’s connected age requires a shift to caring, connecting and enabling. Instead of being afraid to make mistakes, accountants and bookkeepers need to be willing to try new things and be willing to fail as part of the process of learning. And instead of being the ones with all the answers, we now need to listen and learn.
Change is hard for us humans, Vamos acknowledged, since we’re programmed to fear change. And our past knowledge may serve as an anchor, keeping us rooted in the past. “Success is not a great teacher,” he said. “So don’t let past experiences rule us.”
Drop Your Tools and Embrace Technology
As Kanungo said, change requires unlearning, and sometimes we need to “drop our tools,” a reference to firefighters who survive sudden changes in a fire by dropping their tools and running. To a firefighter, those tools become a part of their identity and abandoning them feels like leaving behind a part of themselves. So it is with accountants.
Over my lifetime, accounting has transformed from a paper and pencil, fully manual operation where speed and accuracy with a ten-key was an essential skill. And where accurate period-end numbers took weeks to compile, to a high-tech, automated operation, with accurate numbers in real time.
But despite these possibilities, some accountants still haven’t “dropped their tools.” As recently as 2017, a firm where I had worked still relied on manual data entry in client accounting services and tax.
Contrast that with the new tech announcements at Xerocon, which included an expansion of the partnership with Stripe. This enhanced integration will include the ability to set up recurring invoices in Xero as automatic payments via Stripe. The Stripe transactions will be imported as direct feeds into Xero, eliminating the challenge of reconciling Stripe payments, fees and invoices.
Embracing technology doesn’t just make for less tedious work, it also helps the bottom line, according to Nick Houldsworth, Executive GM of Xero. During his platform keynote, he pointed out that small and medium businesses that use cloud apps grow net profit 30% faster, and advisors who advise their clients on cloud apps grow net profit 60 percent faster.
And we can’t talk about the transformation of accounting without mentioning blockchain, which Mathew May, founder of Acuity, discussed during a breakout session. When 12 people got sick from Romaine lettuce, Walmart removed Romaine lettuce from all its stores, with a cost in the millions. It took four weeks to track down the source to a single farm. Walmart now requires all suppliers to use an internal blockchain to trace goods.
Despite the promises of blockchain as an immutable, decentralized and transparent ledger, the main way that accountants encounter blockchain is via clients with cryptocurrency investments. Cryptocurrency is still a bit of a wild west, with over 2,000 cryptocurrencies on the market and no consistency in data capture.
Transformation isn’t Just About Tech
During a session on Day Zero with Jeff Phillips, CEO and founder of AccountingFly, I heard about the importance of workplace culture and the myth of the generational changes sweeping accounting firms. According to Phillips, “It’s not about Millennials. You either have a good place to work or you don’t. The generations don’t matter, the Millennials are just calling us out.”
Job postings on AccountingFly that offer remote work get eight times as many applicants as those that do not, so offering remote work can always be a solution to the race for talent (which, by the way, talent won). Giving candidates the support they need, and meeting them where they are can help firms connect with the right people.
Liz Mason, CEO at High Rock Accounting, described the pay structure she now uses which aligns compensation with the desired aims of the firm. Instead of receiving salaries, her staff are paid a percentage of the billings for the work they do, similar to a commission basis. While the first few months were challenging, she now says that “everyone at the firm is making more money than before.”
Transformation is happening across the accounting world, whether we’re ready for it or not. The pace of change in technology is only going to get faster. The good news is we don’t need to develop the tools ourselves, or completely understand how they work. We just need to be willing to try them out, experiment and above all, be willing to fail so we can keep on learning.
About Liz Farr
Liz Farr, CPA, spent 15 years in tax and accounting at small firms in Albuquerque, NM. Besides tax returns of all flavors, she worked on audits of governmental entities and not-for-profits, business valuations, and litigation support. Now she's a full-time freelance writer specializing in content marketing for accountants and bookkeepers around the world.