Earlier this year, NAB Professional Services published the first in a series of studies, labelled “Key Insights”, each of which is to focus on a different section of the professional services sector. Its inaugural report was on the Australian accounting industry, with the study providing an overview and analysis of the accounting industry as it currently stands in Australia, as well as where future opportunities lie.
The study combines the views of Australia’s accounting profession with survey results from more than 750 small to medium sized enterprises (SMEs) across the nation. (You can download the paper here.)
One stand-out result from the study was the conclusion that accountants are considered the most important of all professional service providers in terms of SME business performance. Most SMEs (85%) have relied on an accountant’s services, and from a score between 0 and 8 (extremely unimportant to extremely important), accountants came out on top, scoring 7.8, followed by networks (7.3), legal advisers/representatives (6.7), bankers (6.4) and family (6.1).
Divided opinion on growth areas
The NAB study however uncovered a divergence between the opinions of the SMEs that use accounting service providers and the profession itself. About half of the SMEs surveyed view technology/IT as the fastest growing services in demand, while only 13% of accountants identify technology as one of the fast growing areas of their practice. This is despite a good proportion of accountants (31%) saying they believe their clients would most likely value technology and IT offerings, were these provided.
SMEs, according to the survey findings, would like to receive more business strategy help from their accountant, as well as advice on budgeting and forecasting. Overall the survey found that fewer than 1% of businesses had changed their accountant or financial planner in the past 12 months. Of those that did make a change, excessive fees factored in the reasons 23% of SMEs gave for changing accounting firms, as well as (also at 23%) that their accountant gave reactive service rather than proactive advice.
Speaking of fees, this seems to be an area where businesses are keen to see change, with most of them keen to see an end to time-based billing. A fixed fee would be preferred by 54% of SMEs, with another 19% indicating they would like a hybrid between time-based and value-based billing.
The future: Data-driven decisions — a.k.a. predictive accounting
A paper produced by tax and accounting research firm Wolters Kluwer, looking at the factors that are set to add value to any accounting practice in the future, says the information that will drive the ability to make better business decisions is most likely already sitting in the many tax returns in a firm’s database.
The paper holds that with the ongoing adoption of cloud accounting and cloud computing in general, new technologies can unlock this information by analysing it quickly and automatically. “Sometimes called business analytics, big data or predictive intelligence, it goes by many name variations but with the same result – making better business decisions.”
One of those name variations, which is being seen more in the market, is “predictive accounting”. Data-driven decisions are arrived at, the paper says, “by using a predictive intelligence tool to recognise actionable information from hundreds of macro-economic and legislative events that take place every year – such as changes to tax laws – using ‘client match’ technology to search an accounting firm’s database to match the event with impacted clients”.
Predictive accounting references data held by a practice with external big data algorithms that search legislation, rulings, the precedence created by legal proceedings, commentary and practice aids.
Applying filters across results by content type or topic and other information categories, such as jurisdiction or legislative reference, can then match possible changes to any field held in a BAS form or tax return where client data has been entered.
Predictive accounting tools can also search news items and cross match them to legislation outcomes, enabling more accurate advice. Toolkits can even assess the impact to other financial transactions, to property valuations, or SMSF portfolio management software.
State of the (accounting) nation, and its future State of the (accounting) nation, and its future State of the (accounting) nation, and its future State of the (accounting) nation, and its future State of the (accounting) nation, and its future State of the (accounting) nation, and its future State of the (accounting) nation, and its future