This was the direct appeal made to attendees at the ATSA (Australian Technology Showcase for Accountants) Conference in Melbourne on 21 October 2014 by Jason Bender of Deloitte.
Mr Bender had earlier said that accountants need to think about how they’re going to react to the changes that are occurring in the marketplace and to the accountancy profession. He said that, “if accountants are not really careful, the profession could really suffer.” Sobering words to take into consideration as you plan for the 2015 challenges and there are many on the horizon.
The challenges include:
Digital Disruption
A couple of years ago, Deloitte produced a report, “Digital disruption – short-fuse, big bang?” The report predicted that six different industry groups (including accountancy) would encounter 24-43% of revenue becoming “disrupted” overtime.
“Disruption” doesn’t mean revenue is gone. However, there will need to be new strategies developed by the affected industries (including accountancy) on how to respond to changing market conditions.
One of the key recommendations by Deloitte is that business (including accountancy businesses) should “replenish revenue streams”.
Australian Taxation Office – Red Tape Reduction
At the same conference, the Second Commissioner of ATO, Geoff Leeper, outlined the ATO’s policy relative to the Standard Business Reporting (SBR) Strategy.
Mr Leeper indicated that the ATO had advised the Productivity Commission that the “red tape” saving from the introduction of the SBR Strategy would be at least $500million a year from 2015/16. He referred to this as the “red tape saving”. Mr Leeper stated that “A lot of these savings would come from professional fees.” Mr Leeper then said, “This is the ‘digital disruption’ for accountants.” He added, “This is all going to change the role of accountants beyond compliance. Accountants have to become business advisors rather than tax compliance experts for SMEs.”
For firms that have already made the decision to diversify into another range of products, these two significant issues will probably not amount to much. However, for firms which have not yet made a diversification to new services for their clients, – incidentally, services which clients have been asking for years, in survey after survey – those accountancy firms could encounter significant difficulties in the future.
Another point to consider is that, undoubtedly, the Australian government will publicise the “Red Tape Reduction”. In the lead up to the next Federal election, the government will be saying to small business operators “you should be getting a saving in your accountancy fees.” This will lead to small business operators asking their accountants for a fee reduction.
One way to overcome this is to have diversified into other product offerings.
Turbulence in Politics – Effect on Business Relationships
It’s interesting to look at what’s happened in politics in Australia in the last 18 months. A few weeks ago, a government, which three years ago, received an overwhelming mandate in Queensland was defeated in the election. Late last year in Victoria, a first term government was rejected in favour of the opposition.
These election results highlight that the electorate – which obviously includes the small business community – has become tougher to please. There is a severe risk for many accountancy businesses whereby this “turbulence” in politics will flow into the relationship between SMEs and their accountants, if the accountants are not delivering the type of services the SME market is expecting in 2015.
Australian Economy
The decision of the Reserve Bank to lower the official interest rate to 2.25% is a reflection of the poor performance of the Australian economy.
The poor performance of the Australian economy, combined with red tape reductions of accountancy firms, “digital disruption”, turbulence in politics (which would probably have a bearing on business relationships), will undoubtedly lead to more pressure on accountants to provide services the market is seeking.
Now is the time to develop appropriate strategies that will steer accountancy businesses through these troubled times.
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