Cloud accounting has been the biggest talking point in accounting for some years now – and if we haven’t already reached the tipping point, we’re not far away. Now is the time to look at what else you should be thinking about.
Today we’re seeing three specific trends taking form: collaboration, automation, and blockchain. If you can better understand what these shifts are and how they will transform accounting in the future, you’ll gain a huge competitive advantage.
There’s little question that the needs of your clients are evolving; as such, the way you meet those needs is transforming, too. Greater attention is being placed on collaborating – with staff, clients, and external parties – to produce higher-quality work in less time, at lower costs. Some of the technology shifts to enable this collaboration have already emerged, and much more is on the horizon.
Client onboarding is top of mind for many tax firms. Fortunately, client collaboration beyond simple document exchange is materializing. In the near future, technology platforms will embed your clients in your workflows with assigned tasks, auto-reminders, and cross-company notifications – all via email or lightweight, pseudo-login portals.
Your clients might not be down the street anymore, but this won’t stop them from becoming part of your accounting firm’s collective team and work. Staff collaboration has evolved as well thanks to a new era of communication tools, such as Slack and other industry-specific tools.
The right tools can reduce your team’s collective email by up to 60 percent, provide a contextualized history of all your team’s conversations, and allow for in-the-moment work conversations. If you have a team of three or more, the impact of an internal collaboration product will be profound.
As Tom Hood, president and CEO of MACPA, has said, “The collaboration curve is quickly replacing the experience curve. Who you know is replacing what you know.” Your network is just as important as your experience, enabling you to get the answers your clients are looking for, even if you don’t immediately have them.
For those who put in the effort, technology is enabling networks to grow rapidly. Your practice management can span beyond your physical walls and you can now share specific work with others.
If you attended the QuickBooks Connect or Xerocon events this past year, you might have heard big data and automation initiatives discussed a lot. Automation will hit the industry in three distinct waves: automated processes (phase 1), artificial intelligence (phase 2), and predictive insights (phase 3).
Phase 1 is the ushering in of automated processes. QuickBooks Online, for example, will soon organize new clients not only by industry type, but also attach and configure their banking accounts and feeds automatically.
Xero will soon auto-reconcile transaction lines in bank feeds based on prior behavior and crowdsourced results. Additional components, like notifications based on out-of-balance processes and stalled transactions, will alert accountants to take action with their clients.
All of these are logical progressions of existing defined processes.
Phase 2 will see true artificial intelligence emerge. When a client takes a certain action (perhaps creating an invoice), the remainder of the process will automatically complete itself based on the expected behavior. Errors by clients will no longer need to be researched and found, but presented with recommended actions to resolve.
The concept of true financial web-connecting financial institutions, accountants, and businesses is finally near.
Lastly, in phase 3, we will see predictive insights eventuate further in the future. Financial activities will automatically be created by simple, detected actions – just a quick confirmation will be required.
Advisory services will be simplified with dashboards and pre-run scenarios created to provide endless data to discuss with a client. Workflow processes that span multiple technology products and players (including clients) can be constructed and run without user intervention.
Automation is already here, but will evolve further over a long period of time. To capitalize on it, begin the journey to value pricing now and expand your relationships with clients to include business advisory services.
Blockchain, bitcoin, and triple-entry accounting may seem like complicated ideas, but if you take the time to understand them now, you’ll have a head start on the rest of the pack.
The concept of blockchain first emerged as a fundamental component of bitcoin – the first digital, decentralized cryptocurrency. What’s notable about bitcoin and these cryptocurrencies is they eliminate data manipulation (fraud) by linking current and past transactions together, while being managed by a decentralized, public database.
Blockchain will transform double-entry accounting to triple-entry accounting in the coming decades. Currently, if two parties transact, each party reflects in their own books the appropriate debits and credits.
If someone wants to defraud the government, it can be difficult to detect as these transactions aren’t linked and the full transaction can’t be verified. Triple-entry accounting, on the other hand, links multiparty transactions together using simple, digital-confirmed counterparty contracts, and then leverages blockchain or financial cryptography to track and openly distribute full transactional details. Thus, confirmed counterparty transactions are of huge interest to governments, potentially eliminating tax evasion and fraud while simplifying tax filing into mere tax confirmation.
While triple-entry accounting is still a ways off in terms of large acceptance and use, the beginnings of the movement have emerged. In China, for example, B-to-B invoices must be printed on government-issued paper stock, with plans to fully digitize them in 2018. It might sound futuristic – because it is, but not too far out.
Collaboration, automation, and triple-entry accounting will usher in a new era for accountants. While these shifts can appear daunting, taking the time now to understand how they will impact your relationships with your clients and the services you will provide will pay huge dividends in the future.
Now is your chance to get in the front foot.