Small and mid-sized accounting practices must look at diversifying their product offerings and upskilling their workforce to maintain to competitiveness during a period of significant growth in the artificial intelligence and cloud technology spaces, according to Matt Barton, technical manager at the Institute of Financial Accountants (IFA).
A 2023 survey conducted by Intuit QuickBooks revealed that 36% of accountants feel technology has made their time with clients significantly more meaningful, with a further 40% saying that it has made it somewhat more meaningful.
Increasing digitisation is presenting smaller accountancy firms with an opportunity to enhance their offering, helping clients with technological upskilling and adoption, says Barton.
In the UK, a significant barrier to technology adoption for SMEs is comprehending which technology solution to go for, with 44% of SMEs, saying there’s too much confusing data on it, according to a government survey.
“It’s another form of value-adding service they can provide to their business clients, helping them get technologically upskilled and resourced.
“It’s part of the overall spectrum of why it just makes good sense for any practising accountant, particularly if you’re in a small partnership or a sole practitioner, to look at any and every way you can to expand your offering beyond just looking at compliance and regulation.”
Barton states there can be a “misconception” at times that HMRC’s idea of the digitally excluded is only refers to the older generation, adding that young innovative businesses can still be hesitant when it comes to technology adoption.
“For a lot of our members’ clients, they are good at whatever they do, but they’re not necessarily good at the finance stuff. That’s why they’re bringing in an accountant, as they’re not always comfortable or confident with technology,” he adds.
Early cloud adoption paid off
Since the emergence Chat GPT in November 2022, there has been a debate about the speed of adoption that firms will opt for.
Some technology products can transpire to be overhyped, like NFT’s, states Barton, but in the accounting space, cloud accounting turned out to be beneficial.
“If anything, that was underhyped when [cloud software] first came out. There was a bit of reticence in the profession about whether this was a flash in the pan or not.
“In this case, it really paid off for early adopters because they were able to differentiate their offering and realise those kinds of big efficiency savings and really leverage them before everyone else caught up.”
In April 2023, RSM announced a firm-wide initiative to adopt Chat GPT across all service lines. Barton says it is far riskier for a smaller firm to decide to embrace technology as quickly as this.
“Large organisations have more of a safety buffer to take a chance on something new. If it doesn’t pay off, write it off, and take a hit to the bottom line for that year.
“Small practices and small business don’t have that cash buffer to take a risk that may not pay off. So, people are rightly a little bit cautious about it.”
AI affecting junior development?
In a recent report, the ICAEW said that accountants have welcomed successive waves of automation over numerous years to improve the efficiency of their tasks. However, the report also stated that up until now, technology has lacked the sophistication to replicate the expertise and bespoke advice offered by professional services advisers.
While Barton does not dismiss the effectiveness of AI automation for the bottom line, he does hold reservations that it may stunt the development of junior accountants.
“From an accounting profession point of view, how is a junior accountant going to get the professional experience they may have used to get when they were brought in to do some of the more menial work in a practice, if that menial work can be done by a software platform.”
“Potentially we’re going to be creating ourselves a bit of a skill gap in 10-20 years.”