For years, accountants have worried that advances in technology will erode the relationship they have with their small business clients, but new research indicates that most actually plan to grow their relationship with their accountant.
The new data from cloud accounting company Xero shows that, despite advances in AI and automated accounting technology, the vast majority of small business owners (72 percent) will continue to rely on the human advice of their accountant. The Xero survey of 512 small business owners was conducted by MMR Research Associates, Inc. between the May 14 and May 17, 2018.
According to the survey, the accounting profession is frequently held up as one of the industries most likely to be negatively impacted by AI and automation. For example, a recent McKinsey study suggested that as many as 800 million jobs could be lost worldwide to automation by 2030, with accounting poised to take one of the biggest hits.
Data from the Xero survey, however, shows that advances in technology mean that small business owners want to work with an accountant more than ever before. That’s because they rely on them as a trusted advisor who can help navigate a period of change.
Specifically, the study shows that:
- Accountants are the most trusted source of business advice. Accountants are the most trusted, and frequently used, source of advice for small businesses -- beating out peers, friends/family, online communities, lawyers, consultants, and financial advisors. Two-thirds (65 percent) of small business owners find the advice provided by their accountant very, or extremely, beneficial to their business.
- Small businesses don’t see advances in tech as a replacement for their accountant. Seventy-two percent of small businesses would still use an accountant even if they had an app using AI to automate accounting. Additionally, 80 percent of small business owners plan to continue working with their accountant over the next 12 months.
- Accountants have an opportunity to help small businesses navigate changes in technology. As trusted business advisors, accountants can play a key role helping small businesses realize the benefits of technology. Accounting firms are increasingly evolving from a focus on compliance services, such as tax, to more complex business advisory services, such as advice on managing major business transactions. Employees at these firms spend about eight hours each month educating themselves about new business apps -- that’s double the four hours per month spent by employees at compliance-focused firms.
“This data shows that advances in AI and automation are not the doomsday scenario for the accounting industry that is commonly portrayed,” said Keri Gohman, President, Xero Americas. “Instead, this is a massive opportunity for accountants to play an even bigger role in helping their small business clients succeed. Technology alone will never be the solution; technology combined with people will be.”
Gohman added, “We are at an inflection point -- advances in tech are profoundly altering the economic and social order. This presents both positive opportunities and potential pitfalls.”
Ryan Watson, CPA a Partner at Upsourced Accounting, believes small businesses are always more successful when they work with an accountant.
“When you’re starting a small business, you don’t know what you don’t know,” Watson says. “You’ve got no muscle memory for the process – about everything from company formation and proper registrations to raising capital, developing a budget, and setting expectations around spend and growth.”
Business owners who don’t work with an accountant typically spend the first few years of entrepreneurship spending or losing money to learn how to build and run a business the hard way. But those who work with accountants from the outset, Watson says, can avoid these mistakes and make the right, measured decisions because their accountants have already worked with hundreds of similar business owners and “have developed muscle memory around what works and what doesn’t.”
Far from detracting from this relationship, Watson says, AI platforms can enhance the partnership between small businesses and their accountants by liberating accountants from time- consuming and mundane tasks like recording accounts payable, and allowing them more time to offer value-added services such as budgeting and forecasting.
Meanwhile, Xero’s survey suggests small business owners have already embraced this concept, indicating “advances in technology mean small business owners want to work with an accountant more than ever before.” How then can accountants take advantage of this opportunity? How can they leverage the AI platforms their small business clients use to offer more consultative services to their clients?
Watson says AI offers two major values to accountants:
- Automation: By leveraging AI-powered technology, accountants can automate a significant amount of the work they’re currently doing by hand. For example, an integrated AI solution can automate the AP workstream by ingesting bill data (e.g. vendor, date, amount, etc.) and use that information to select the relevant G/L code automatically. With the right pricing strategy, this automation reduces time and increases margin, freeing the accounting team up to focus on more of the work they enjoy doing.
- Consulting: Similar AI solutions exist across all workstreams, including non-financial operational platforms, and clients are increasingly looking to accountants to help solve for back-office process. Understanding the suite of technology available to your clients and confidently recommending options and designing processes for implementation is a great way to drive incremental revenue.
To take advantage of these new opportunities and help their small business clients navigate perpetual changes in technology, accountants need to formally and consistently devote time to studying the evolving technology available to their clients.
The first step in that process, Watson says, is for accountants to assess their current platform and their current clients. “Ask where are the opportunities in your own practice or with your clients to automate inefficient processes,” Watson says. “Start with the workstreams that are most foundational to the business and most consistent across industry verticals – workstreams like core G/L, payroll, accounts payable, and expenses, for example.”
Chances are some of your existing clients are already using automation in these areas, and many other clients aren’t yet but would be willing to start, Watson says. He suggests starting a pilot group by evaluating tools that can automate inefficiencies in these workstreams for these clients. The best way to identify technology to evaluate and test is by searching the “app marketplaces” hosted by core G/L programs and by building a network of like-minded accountants doing the same research.
“Becoming adept at helping your small business clients navigate changes in technology is an ongoing process of identifying inefficiencies, researching technology, identifying pilot clients, and implementing the technology. Then rinse and repeat. Start early and start small and you’ll be advising clients on technology in no time,” Watson says.