What is the future of accounting in 2022?

January 12, 2022 Osman Khan

2021 was a busy year for accountants. You’ve supported your clients through the effects of the pandemic, dealt with the new trade legislation brought about by Brexit, and managed new tax rules, from IR35 for the private sector to the VAT domestic reverse charge for construction.

This year, the challenges are set to continue. Now that various Government-backed financial support schemes have come to an end – including the furlough scheme which closed in September 2021 – businesses are finding themselves under increasing pressure.

Technology is changing too, and with it the role of the accountant continues to evolve. 

While nobody knows for certain what 2022 might hold, we’ve outlined a few of the trends and changes we think will affect the accountancy profession in the months to come.

Insolvencies on the rise

Company insolvencies exceeded pre-pandemic levels for the first time in November 2021, with 1,674 insolvencies registered in the month – 88% more than in November 2020, and 11% more than in November 2019.

That number could rise over the coming months, as businesses deal with the economic impacts of COVID-19 and the Omicron variant, alongside Brexit, high inflation, labour shortages and loan repayments.

Accountants will need to work hard to safeguard their clients and help them project and manage their cashflow over the next year, but inevitably, the difficult economic climate could mean some clients are lost.

To replace that lost income, accountants may need to rethink their strategy for 2022 and seek new clients, or offer new services to existing ones.

Automation marches on

Every year, automation seems to be at the top of the tech pundits’ prediction lists, with technologies like AI, machine learning and blockchain leading to more jobs being done by machines.

This isn’t just hype, though. It’s already happening.

Back in 2017, the ONS analysed 20 million jobs in England and predicted about 1.5m were at high risk of automation. A further 13m were only at medium risk, however, and 5.5m had a low-risk level. 

It found that between 2011 and 2017, the proportion of jobs in the high-risk category had decreased slightly, from 8.1% to 7.4%, while the proportion of jobs at low and medium risk of automation increased. 

The figures suggest that while some of those higher-risk roles have already been automated, the labour market is shifting towards complex and less routine skills that are harder to automate.

To accountants, automation might feel like a threat, with accountancy software providers often advertising their products as a ‘DIY’ solution for business owners.

But the ONS research found chartered and certified accountants are in the ‘low-risk’ category, with around 26% of the duties and tasks in this role at risk of automation.

Taxation experts had a higher risk level, at 35%, and bookkeepers, payroll managers and wages clerks even more so, at 56%. Even so, both are classed by the ONS as ‘medium risk’.

What this shows is that automation isn’t likely to eliminate accountants’ jobs altogether – but it is essential that accountants use automation to their advantage, and adapt the way they work as technology develops.

In 2022, we’re likely to see a steady continuation of the automation trend, with more routine tasks handled by software. But we might also see some shifts in the way accountants are using technology. 

For instance, those who are already using cloud software to automate individual tasks might start to look at the way their workflow is automated as a whole – integrating the applications they use across different areas of the business, from accounting software to their CRM or practice management system.

New skills, new expectations

Alongside the increased use of technology comes a growing need for accountants to expand their skill set.

In recent years, many accountants have been shifting their focus towards business advisory services, and that trend is likely to continue in 2022. 

These more strategic services used to be available only to high-paying clients and businesses with an in-house finance team. 

But now that more accountants are able to streamline and automate the routine compliance side of their work, there’s an opportunity for them to offer that same quality of service to smaller firms.

To provide that, many firms will need to think about upskilling their team as business advisers. Accountants will need to know not only how to handle the numbers, but how to draw out insights that might not be visible to their client, and explain them in clear language. 

Clients’ expectations of working with an accountant are also changing, with soft skills and customer service becoming more of a priority.

As they use more software in their work, accountants should also look at improving their knowledge of technology. 

The rollout of Making Tax Digital (MTD) has already prompted many accountants to take on the role of technology consultant for their clients, advising on the software they need and offering recommendations based on their own experience. 

As MTD for income tax looms ever closer, many firms will face that same task again – this time, with sole traders and landlords who might not be aware of the requirements or familiar with accounting technology.

To future-proof their firms over the next year, accountants should think about how they can become well-versed enough in technology to stay on top of the latest trends, and keep their clients informed.

The next phase

As crisis struck in 2020, businesses across the country entered survival mode and their accountants mobilised to support them, in many cases putting their own business goals on hold. 

Simply getting through the past couple of years has been an achievement in itself, and although there will still be client challenges to manage in 2022, this year could mark an opportunity for accountants to refocus and think about the changes they could make to take the pressure off.

This might be by adjusting to a new way of working, with remote work providing the option for hybrid and flexible arrangements.

It could be about getting back to their marketing and growth plans, building their client base with the right kinds of clients and looking at their long-term business goals and profitability.

But it might also be about finally taking some time out, building efficiencies into their business that allow them to take a well-deserved break. 

At AIRPA, we believe automation and integration is the future of accounting – our platform is designed to save time, improve efficiency and increase profitability for accountants.

Get a demo or free trial of AIRPA today and find out for yourself how it could maximise your firm’s potential.

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