The future of the accounting industry: 7 important trends in 2023 by Karbon

7 important accounting trends in 2023 by Karbon

SUMMARY

• Tech fluency will make or break many firms

• Vital skills for accounting professionals will be more tech-focused but human-led

• AI isn’t to be feared (just yet…)

• Young people are the future of the workforce: if you don’t adapt, you’ll lose them

• Hackers have just as much to gain as you with the advancement of AI—you need to protect your firm

• The environment will play a bigger role in a firm’s day-to-day

• The accounting firm of the future has collaboration at the core

The accounting industry is in the midst of a major transformation.

Evolving technology, the changing business landscape, and the environment are all shaping the future of the accounting profession. They’re impacting why and how things are done.

So what does this mean for the future of accounting?

If you have concerns about the speed at which technology is developing, the skills shortage, AI, or the numerous other shifts altering the profession before your eyes, try to reframe these concerns as opportunities. Because if there’s one thing for certain, it’s that those who don’t adapt, will get left behind.

Here are seven important trends you need to be aware of about the future of accounting.

Trend 1: Will technology change the accountant’s role?

There’s no doubt about it: technological literacy will become a fundamental part of what it means to be an accountant. Clients will use more tech, and you’ll use more tech. That’s the reality. 

But what does that mean for the role of the accountant and the accounting firm owner? Is it doom and gloom—or is it the sweet call of opportunity?

Looking into the distant future, it’s difficult to predict how far the digital transformation will go. But no, technology will not replace accountants. 

The fact that tech can already perform many of the manual and repetitive accounting processes that used to suck up your time is something to embrace sooner rather than later.

Sure, AI, automation, and even technology that doesn’t exist yet will mean that you’ll no longer need to perform many of the tasks you used to. But the reality is that machines can’t build human relationships like humans can, and they can’t combine intuition with experience to deliver great client service.

Technology will provide you with more time for planning, data analytics, and fulfilling your advisory role. So instead of just keeping your clients compliant, technology will afford you the time and insight to focus on making their business (and your firm) more profitable.

Meaningful action you can take to prepare for the future of accounting: 

No matter your experience or age, you should prioritize learning how to leverage new tech. Or at the very least, experiment with it. Get to know how tools like ChatGPT work. Learn how to use low and no-code tools. Follow leaders in the accounting tech space like Jason Staats.

By immersing yourself in new tech and becoming an early adopter (even if it’s just for experimental purposes), you’ll be better placed to leverage game-changing tools for your accounting firm.

Trend 2: Will AI replace accountants?

The explosion of AI is causing widespread chatter about the future of many professions, and even doomsday predictions from some. Accounting professionals are not exempt from that discussion.

While AI has been around for many years, the uptake of generative AI tools (most famously OpenAI’s ChatGPT) has been one of the most exponential on record. And it’s got many finance professionals worried.

OpenAI's ChatGPT is the fastest growing app in history, reaching 100 million monthly active users in just 2 months.

According to The Future of Jobs Report 2023, just under 75% of companies surveyed expect AI to lead to high job churn. On top of that, they’re predicting that growing technology and digitalization will result in 26 million fewer jobs by 2027 across select industries, including accounting and bookkeeping.

But what this fails to take into consideration is the accountant’s role as a strategist with human experiences, an understanding of nuances, passion, and resilience. Plus, an accountant that can leverage AI is an accountant who is on the leading edge of tech trends and is more likely to provide a nimble and modern service.

The way accountants prove their worth is changing to be centered around examining trends, analyzing data, and evaluating the business environment holistically. 

While it is difficult to predict where artificial intelligence will take accounting services, there are two things you can rely on:

1. Imagination and creativity is what sets you apart from machines

There’s no point competing with AI in the areas of raw data processing. Instead, focus on how you can use it to drive more value to your business and your clients’ businesses. Your ability to combine imagination and experience with financial data trends (and many other factors) still needs a human touch. 

2. AI can’t build human relationships like you can

Trust forged between two people—client and accountant—is a bond impossible for AI to replicate. Fundamentally, showing someone empathy and sensitivity will keep people at the forefront of the accounting profession for a long time. 

How accountants will leverage AI in the future

AI has enormous potential to help you do your job. Here are some ways you will be able to make the most of machine learning in your accounting firm:

1. Access deep, accurate, real-time data about your clients 

2. Automatically extract information from contracts, leases, and other official documents

3. Harvest big data automatically to inform strategy and forecasting

4. Analyze financial reporting and identify anomalies to detect fraud early

5. Transcribe phone calls and render minutes for meetings

Some of the accounting tools you’re already using, like Karbon for practice management, are already using GPT-technology to help you work faster and smarter.

Meaningful action you can take to prepare for the future of accounting:

Foster an environment where clients can reach out and communicate with you whenever they have a question. Show them you’re there (rather than ‘the machines’). Better yet, leverage the power of over-communicating. By proactively communicating to your clients, even if there’s nothing to say, will ensure they know you haven’t forgotten about them.

Technology allows you to always be present—a gift that lets you quickly build strong relationships with your clients.

If you’re exploring AI tools for your accounting firm, why not share that with your clients? Let them know you’re finding better and more efficient ways to work so that you can spend more time strategizing with them about the future of their business.

Trend 3: More and more accountants will rely on automation, including no-code and low-code tools

Another tech trend that promises to shape the future of accounting is an increasing reliance on automation tools and functions. Ultimately, this reliance will mean less time spent on manual processes and more time back in your pocket.

Essential (and time-consuming) accounting functions like payroll, compliance work, data entry, some communications, onboarding and planning will be automated. 

And that’s not a bad thing. That reclaimed time can be better used for decision-making, problem-solving, and critical thinking. 

For example, chasing clients for information has always been a drain on accountants’ time. But firms using process automation are easing that stress. In fact, Karbon users are saving 3.2 hours each week per employee by leveraging automation to automatically chase clients.

If that’s what you can achieve today with automation, can you imagine what the future of accounting holds?

No-code and low-code tools

No-code and low-code tools are designed to empower accounting firm owners to build apps and integrate their tools (and therefore improve their operational efficiency), minus the software programming knowledge.

A recent Zapier study found that 90% of no-code users believe their company has achieved faster growth because of no-code tool adoption. 

With so many no-code and low-code resources available to accountants, there’s no denying a future filled with empowered advisors and firm leaders using tech to improve their processes, workflows, solve problems, reduce time and costs, and increase the value delivered to clients. 

Don’t be surprised if there’s a rise in apps created for accountants by accountants who brought their idea to life with minimal software development skills.

Meaningful action you can take to prepare for the future of accounting: 

If you and your team are spending too much time performing manual tasks, reassess your tech stack. Find new technologies that will save you time. And if you have a problem that no tool can seem to solve, why not see if you can solve it yourself? Explore some no-code apps to find out.

Trend 4: Accountants won’t go back to the office full-time

Recent news of multi-billion dollar companies like Amazon returning to the office is the exception, not the rule.

According to a recent study from The Conference Board, only 4% of CEOs in the US and Europe are looking to mandate a return to the office, with only 5% of CEOs in the US and 2% in Europe citing it as a priority in 2023. For many, the focus is on optimizing the hybrid work model.

And for the accounting industry, it was the firms that were already working from home that fared better during the pandemic.

The 2022 Practice Excellence Report found that since 2020, firms younger than two years old have outperformed older firms. Because they started at the beginning of, or during, the pandemic, they were working from home from the get-go, and avoided the interruptions and challenges associated with a sudden shift to remote work.

Fully remote or hybrid accounting firms are the future. As long as you have a solid tech stack so you can operate and collaborate efficiently internally and with clients, there’s no need to go back to pre-COVID work habits.

By the same token, it’s important to be mindful of the challenges that come with remote work and take appropriate action to mitigate them.

Meaningful action you can take to prepare for the future of accounting: 

Make sure your tech stack supports remote work. For example, UK-based firm, Linford Grey has designed theirs to maximize efficiency so that the team is afforded a harmonious work life balance, no matter where they’re based.

For a list of useful technology for remote firms, check out this list.

Trend 5: Cybersecurity threats will only get smarter

Hackers target accountants and bookkeepers—especially those in small and medium size firms—for two key reasons:

1. You hold a goldmine of information

2. You don’t draw the same public and police attention as larger firms 

Threats like Business Email Compromise (BEC) have risen globally, with the US alone reporting an estimated loss of roughly $2.4 billion USD.

“If we look at the risk profile of accountants, it’s probably 9 out of 10,” says Drew Fenton CPA, Director of Specialist Insurance Broking firm Fenton Green & Co.

“If you’re my accountant, you will have my tax file number [social security number] banking details, you know whether I’ve got a mortgage, all about my family, my business, and superannuation [401k]. You have my complete financial profile and that is valuable.”

Your firm’s business isn’t the only business that stands to benefit from generative AI and rapidly evolving technology. Hackers are excited too. AI-generated phishing emails are being opened more frequently than manually crafted phishing emails.

As a result, the global market for AI cybersecurity is estimated to reach $133.8 billion USD by 2030, up from $14.9 billion USD in 2021.

Perhaps the biggest threat that AI poses for accounting firms isn’t replacing them, but infiltrating them.

Meaningful action you can take to prepare for the future of accounting:

Take time to understand the risks and best practices of cybersecurity, and seriously consider seeking professional help from companies like Practice Protect to train your team and safeguard your accounting firm against the threats of hackers and scammers.

Trend 6: The accountant’s role in fighting climate change

Over 80% of consumers expect businesses to be actively involved in combating climate change and just under 50% will shift their purchasing to more environmentally-focused companies. 

The stats are clear: the people purchasing from your clients’ businesses want to know your clients are being accountable to the planet. And who’s better positioned to guide your clients through their climate responsibility than you, their trusted advisor?

No one.

Right now, 87% of surveyed consumers in the US support mandatory climate disclosures for businesses, with carbon emissions the core focus. This number will only grow.

This means clients will begin to demand carbon neutrality advisory services.

Environmental auditing identifies ways clients impact the environment, then integrates environmental cost with financial cost to find solutions that work for both metrics. 

As a small example, helping a client go paperless is a great solution to save time, money, and the environment. Nowadays, digital documents and eSignatures can meet the needs of most businesses. Other examples include working with environmental consultancies like Rye Strategy to help calculate and offset a business’ emissions.

Meaningful action you can take to prepare for the future of accounting: 

Examine your firm's carbon footprint and seriously consider becoming a carbon neutral accounting firm. Sign up to get B Corp certified and identify ways your firm can move forward supporting a future for everyone. Not only are you fighting climate change, but you’re a more attractive option to potential clients and employees.

Trend 7: Attracting (and retaining) talent in a shortage

Since 2020, 300,000 accountants and auditors have quit. That’s a 17% decline. And with more accountants retiring than graduate accountants entering the profession, there’s a serious talent shortage.

Now, the onus is on you to attract and retain top talent in a dwindling talent pool. In order to do so, firms of the future will need to focus on 6 key areas:

1. Young people want to use technology

Increasing the use of general and accounting technology will attract young people to the profession. The likes of Chad Davis and Carla Caldwell are showing the world that accountants can do powerful things with automation, AI, and tech in general. And that’s exciting for young people considering their career choices.

2. Young people want career growth and development 

Nearly 9 in 10 millennials classify professional development and career growth opportunities as very important to them. And organizations that invest in employee development report an 11% increase in profitability and are twice as likely to retain their employees.

3. Flexible work is a must

When given the choice, an overwhelming majority of employees—87% according to this study by McKinsey & Company—prefer to work remotely.

4. Diversity and inclusion will no longer be a preference—they’ll be a requirement

80% of workers say that they want to work for a company that values diversity, equity and inclusion, and 60% want their leaders speaking out on social and political issues.

5. Soft skills will increase in importance (while technology handles transactions)

Young accountants need to develop their soft skills (as well as their tech skills), so they can continue to build and foster client relationships while their tools handle the majority of the manual and repetitive tasks.

6. Offshore talent is a finite resource

As of 2023, there are roughly 200,000 certified public accountants in the Philippines. And because the CPA examination pass rate averages around 25%, there are only a couple thousand new CPAs added to that total each year. With this dwindling offshoring pool and an increase in the demand for outsourcing, it’s important to remember that offshore talent is a finite resource.

Meaningful action you can take to prepare for the future of accounting: 

Building a tech-savvy workplace culture that champions diversity and flexibility will go a long way to attracting talent. 

To retain top talent, it’s crucial to value their contributions and provide opportunities for personal and career growth—you can find more details about attracting and recruiting young accountants here.

What skills will accountants need in the future?

In light of these trends, the critical skill set of the accountant—beyond technical accounting skills—is set to develop.

1. Soft skills

Soft skills, like problem solving, time management and teamwork, are what will differentiate you from machines. These skills are critical in communicating and collaborating with clients and colleagues.

In this study by LinkedIn, the top five sought-after soft skills by employers were creativity, persuasion, collaboration, adaptability, and emotional intelligence. 

Research conducted by Harvard University found that 85% of job success came from having well‐developed soft skills, and only 15% came from technical skills (hard skills).

Clients are searching for peace of mind. Being able to communicate the actions you're taking and the reasons behind them gives your clients reassurance they’re on the right path.

2. Understanding no-code or low-code tech 

By 2024, 80% of non-IT professionals will develop IT products and services, with over 65% using low-code/no-code tools.

You can save time and money by building tech to suit your exact needs or connect critical apps without employing a developer.

This resource from Jason and Chad is designed to help you with automation ideas, including using AI, and no-code apps and tools.

3. Technological fluency

57% of accountants deem technology literacy to be the most critical addition to skill sets for future employees.

Being familiar with industry tech is an essential skill. Accounting professionals who utilize tech will be more efficient and successful than those who don’t.

There are emerging tech advancements that have the potential to radically change the industry, for example, blockchain technology. It is complicated, especially for those new to it. But it is growing in relevance, and clients will look to their accountants for guidance on how (or if) to use it. You need to know the answers if you’re going to remain competitive. 

4. Translation and data storytelling

Accountants need to be able to take complicated, esoteric language and put it in easy-to-understand terms. 

Similarly, data storytelling is going to be a valuable skill—in other words, making the numbers talk. With more big data available, making the information tell a story will improve client understanding.

Collaborative firms are the future of accounting

If you can better understand the future of accounting, you can better prepare yourself, your team and your firm.

None of the accounting trends and predictions of the future of accounting are possible (or effective) without one core feature: collaboration.

You can’t reap the benefits of AI without working alongside it and you can’t run a successful remote accounting team without successful collaboration. Collaboration is key.

How to build a collaborative accounting firm

Build a collaborative tech stack

A disjointed accounting tech stack does not promote collaboration. To unlock the full benefits of a connected tech stack, your accounting software tools need to integrate.

At the heart of your collaborative tech stack, implement a truly collaborative practice management solution

Karbon is an accounting practice management tool with collaboration at its core. Thanks to features like @mentions, activity timelines and integrated email, Karbon saves each employee 4.1 hours per week by enabling collaboration on work, tasks and communications team-wide.

Prioritize alignment to your firm’s mission and values

Without an aligned team, all the work you do on your business—your vision, mission, strategy—is wasted. It’s only if you clearly communicate your firm’s goals that your entire team can work together towards achieving them.

Build a collaborative culture

To build a collaborative culture with a team of modern accountants: promote transparency, encourage teamwork, build trust, and ensure everyone's participation is valued.

Ensure visibility across your entire firm

Collaboration can’t happen unless your team has visibility across everything they need to do their job effectively.

Terra firma for the future

In a time of exponential growth, predicting where the world will be in five or ten years is difficult. Many fear the increased prevalence of artificial intelligence, but in reality, the accounting industry needs humanity now more than ever—though in a different capacity.

By getting ahead of trends, and focusing on the right skills, firms can use the changing accounting environment to perfect their craft and find (and retain) clients. 

They can build a platform for success, no matter what the future holds.

To learn how Karbon can help mobilize you for the future, you can book a demo here.