The growth of the accounting and bookkeeping industry in 2017 was simply immense. Subscriber numbers for QuickBooks Online hit 2.55 million worldwide in the first quarter alone, Xero made the move to the Australian stock exchange to expand their capacities, and Sage boosted their cloud offering with the acquisition of Intacct for $850 million.
So what’s in the pipeline for the industry in 2018? From a year of conferences, networking, and some good old fashioned research, we’ve put together the five accounting trends that will define 2018.
1. The Further Rise of the Gig Economy
Arguably the most talked-about phenomenon in labour markets in recent years has been the birth of the so-called “gig economy.” The phrase refers to self-employed workers performing ondemand tasks or “gigs” directly for clients, often on a short-term basis. Some workers work gigs to supplement traditional wage income, while others piece together multiple gigs to make a living.
The McKinsey Institute’s October 2016 report Independent work: Choice, necessity, and the gig economy found that 162 million people across Europe at the US are currently engaged in ‘gig’ work, which counts for approximately 30% of their combined working populations. The Intuit 2020 Report predicts that this number is only due to rise, forecasting that freelancers will represent 43% of the workforce by 2020.
The world of self-employment can be a tricky one to navigate, as there is no longer the simplicity of Pay-As-You-Earn tax or tax withholding. On top of that is navigating the expense claim process – for many, these are daunting prospects. However, the scale of this market, and the potential untaxed revenues, mean that tax authorities can’t ignore it.
As an accountant, you can and should take advantage of more people needing assistance with self employment tax obligations. Workers who have previously had their tax obligations covered by their employer will suddenly have to to manage their own affairs.
Make sure that you have systems in place for self-employed clients, such as tax self-assessment apps and learning materials so you can offer a price point commensurate with income from a side-job.
You may also want to think about targeted marketing for self-employed clients – perhaps a blog post about your specialised services for self-employed clients, or an e-book on which expenses are allowable to claim. Either way, current accounting trends show that there will be a lucrative market for those who can adapt their service offering to this growing workforce.
2. Changes to Global Tax Systems
Australia made the move to a digital tax system long ago, but it’s taken a long time for the rest of the world to catch up. Making Tax Digital was meant to come into effect in the UK in April of 2018, but due to the negative response from businesses, HMRC pushed this back by a year. Although the deadline for VAT-registered business is now April 2019, the process of migrating your clients should definitely begin this year. Spring 2018 will see the new system rolled out to a test group, followed by a wider release.
Meanwhile in the US, Inland Revenue Services recently released their 2017 Digital Services report which details a number of recommendations for Congress, including implementing online tax accounts and developing APIs to better engage with third-party softwares. The IRS already offers online accounts for individual taxpayer, but this report suggests that the US may be going digital in the not-so-distant future.
Your role in this time of change is simple: try to stay as up-to-date as possible with any changes and educate yourself on new legislation before it comes into effect. In this way, you can be a reliable fountain of knowledge for you clients as familiar systems become unfamiliar. You can also use that knowledge in advisory services, to add extra value for your clients.
3. Automation of Accounting Function
Automation in accounting is an accounting trend in 2017/2018 that is fueled by software advancement. Accounting can now be highly automated without the need for significant physical intervention. Most accounting software can automate data entry and other redundant tasks to some degree, but this automation is often not complex and will be improved further. This is where artificial intelligence (AI), with the help of machine learning, comes in.
According to ICAEW’s 2017 “Artificial intelligence and the future of accountancy” report, accountants can use machine learning to improve accuracy and speed when entering data, through automation, better detection of fraud, and enhanced predictive analytics. This will lead to efficient utilisation of capital and better management of resources.
This doesn't mean you must be tech savvy or shift to a developer role to create your own machine learning-based accounting application. However, technology trends constantly change the industry landscape, and the rate of change has only increased in the past five years. If you don’t want to be caught off guard by the sudden impact technology can have on your business, you must educate yourself and your team on these trends in advance.
4. Data Security Will Take Centre Stage
As of May 2018, the General Data Protection Regulation (GDPR) will be effective, an EU-wide ruling which essentially holds organisations accountable for the information they have in their possession. In view of the data breaches that have been happening all over the world this year – including a huge attack on Paypal’s system announced only days ago – it’s only natural that big data and data security is at the forefront of consumer consciousness.
If you’re based in Europe or the UK, the first step is of course ensuring that you are GDPR-ready (this self-assessment tool is pretty useful). Even if you are based elsewhere, it’s important to remember that as accountants and bookkeepers, you have access to sensitive information which needs to be appropriately protected.
An essential part of good client experience is providing your clients with peace of mind, and knowing that their financial data is safe and sound contributes substantially to that peace. In 2018, investing in trusted security software can and will be a key differentiator for your firm, so you should begin researching your options – Mimecast and Symantec are good places to start.
5. Rise Of Millennial Clients
In 2018, more millennial clients are expected to arrive because many of them will become tax-paying adults. The rise of millennial clients means that they are going to expect more. More transparency, more proactiveness, more technology, etc.
Accountants that still use old management systems will experience difficulties obtaining and keeping millennial clients. This new roster of clients will want a more personalised approach, which is not possible if you’re still in the age of the dinosaur. Younger clients expect accountants to really guide them in their finances.
Similarly, they expect their accountants to be paperless, which means you need to be on the cloud and ideally provide mobile optimised technology.
As an Accountant, you will need to move beyond tax services and diversity services as well as utilise the proper technology to gain a competitive edge and target this new generation of business owners.
In summary, your 2018 checklist is as follows:
- Prepare your firm for self-employed clients
- Ensure that you are up-to-date with changes in tax policy
- Explore the new world of chatbots
- Invest in data security software
- Expand your advisory services
- Educate yourself on the benefits of new accounting technology
It’s never too early to start planning – factor these trends into your 2018 strategy and reap the rewards.
What’s Next For The Industry? Here Are 7 Accounting Trends For 2018 [Blog Post] Retrieved from: http://theoutsourcedaccountant.com/whats-next-industry-7-accounting-trends-2018/
Narang, A. (2017, December 13) Top 4 Trends That Will Transform the Accounting Sector in 2018 [Blog post] Retrieved from: https://www.cogneesol.com/blog/trends-transforming-accounting-sector-2018/