The last ten years has seen an unprecedented speed of change in the Accountancy Profession. In all likelihood the next ten years will be even more revolutionary with the growing maturity of Cloud Accounting and Apps as well as the exciting development in the world of Open Banking, Artificial Intelligence, Robotics and Cloud Bank Accounting.
So let’s take a look back at the Accountancy timeline as well as explore some of what the future may hold for the Accountancy profession.
Traditional Accounting 1494 Onwards
The core of Accounting and Bookkeeping as we know it today evolved from the work of Luca Pacioli in 1494 when he became the first person to publish a work on the double-entry system of bookkeeping. Pacioli later became known as the “The Father of Accounting and Bookkeeping”. Of course back then manual ledgers and paperwork formed the core of accounting; it wasn’t until well into the 20th century that computerised systems of accounting became popular.
The 20th century closed with many still taking along a bag or shoe box full of invoices, receipts and bank statements to their accountant at the end of their accounting period for what is affectionately called an “incomplete records job” to be undertaken by the accountant.
Cloud Accounting 2007 onwards
Technology wise not much really changed in the world of computerised accounting until the Cloud Accounting revolution started around about 2007, with the launch of FreeAgent and the CheapAccounting.co.uk accounting software. Xero and Clear Books quickly followed with the launch of their software in 2008. Many other systems have emerged over the years. In recent times the Cloud Accounting space has become very crowded with “too much” choice for the end user along with complex pricing model and special introductory offers designed to entice the user into the Cloud.
As Cloud Accounting system reaches maturity a plethora of supplementary add ons and Apps have surfaced allowing users to do almost anything from capturing receipts on their phones, load bank statements into the software, raise invoices, manage stock, run an HR function, manage their point of sale or whatever other business process they may need. Not only this but as well as dashboards giving up to date information including estimated tax liabilities, many Cloud Accounting systems integrated into HMRC meaning that tax returns, such as self assessments, VAT and corporation tax, can be filed directly from the software without further intervention. The only thing that they do not seem to do is make a cup of tea; roll on the robot that achieves that.
Is this moving towards the elimination of the Accountant from the process? Certainly some would like to think so not least HMRC who now interact with “customers” via social media and online chat which is worthy of note not least because you can capture any advice given especially if you have relied on it; HMRC are not always known to be entirely correct.
Post 1st Generation Cloud Accounting
So what next for the world of business owners, accountants and Cloud Accounting suppliers?
Without a doubt it’s fair to say that the world of accounting, tax and Cloud Accounting software has become very complicated over the last ten years. For those with very straight forward needs the solutions out there are expensive and functionally too rich for the simplicity that many of the 5.695million UK businesses actually need. Special offers, trial periods and discounts are plastered across software supplier web sites as the players fight to gain market share. New entrants frequently emerge, not just in the software arena but also in the unregulated accountancy space, as the costs to launch plummet along with funds being readily available for exciting new FinTech businesses.
The next generation of Cloud Accounting has started with challenger Cloud Banking Apps; these take away the need for additional software by providing inbuilt bookkeeping and accountancy functionality. Whilst in their infancy right now these give the micro business owner instant bank account opening, cheap banking as well as varying degrees of accounting functionality. This means that the bank reconciliation, as accountants know it, we all but disappear from the face of accounting in the micro business world; the first of many accounting functions to disappear into oblivion as the clients of the future demand more but are less willing to pay than ever before. The App generation expect things for free or a very small charge. The future will be interesting; will all players survive? Will robots take over in the accountancy world? Will accountants continue to earn fees from clients in the traditional way? Will new accountancy business models emerge?
More importantly – will I be around to see it all?