Insights from a recent webinar presented by ESS BIZTOOLS, featuring Andrew Geddes, Australian Accounting Industry Guru and Peter Towers, Managing Director of ESS BIZTOOLS.
In our recent sit-down with the renowned accounting expert, Andrew Geddes, we explored a number of important issues currently facing the accounting industry today.
Andrew highlighted the dilemma that many mid-sized accountancy practices are facing, and detailed the choices they’re going to have to make to ensure their ongoing survival in a rapidly changing industry.
Of particular concern to many accountants is how quickly low-end tax compliance work is moving from being reasonably profitable and sliding into making a reduced contribution.
So the question on many practitioner’s minds is: “can we move from compliance dominance to external CFO and virtual CFO service delivery?”
Well, this is how Andrew Geddes sees it…
The dawn of the new era for accountants is here – are you ready?
Forty years ago, Andrew was the joint founder of the Financial Management Research Centre (FMRC) at the University of New England.
The FMRC was a unique high level, business/academia/accounting research centre whose objectives were clear:
To gain a greater understanding of the SME market.
To encourage accountants to provide a broader range of commercial services.
To have an academic involvement in how accounting services could be improved for the benefit of SME clients.
His co-founder was Dr Geoff Meredith, who later moved on to become a professor at the Southern Cross University in Lismore, New South Wales.
FMRC was initially created to help accountants gain a greater appreciation of the SME market.
Back then, the main objective of most accountancy practices was the preparation of client accounting reports for tax compliance.
The aim of the FMRC was to get accountants thinking and to encourage them to offer a broader range of commercial services to the SME clients.
Shortly after it was formed, the FMRC began running over 100 workshops a year for hoteliers, engineers, accountants, smash repair businesses, all sorts of other small businesses. This was the start of the management education industry in Australia.
FMRC’s message to accountants was innovative, they went out into the industry and told meetings of accountants, “Apart from tax work, let’s try and help our clients more with their businesses.”
Today, for Andrew Geddes that once-simple message has evolved into promoting Business Advisory Services enabled by labour-saving online tools. 40 years has gone quickly and FMRC is still helping clients.
Supplier of Advisory Services
Andrew is still very much involved as an industry advisor. He is a member of 10 client advisory boards some of which are accounting firms. Others are engineers, surveyors, and there are a few tech start-ups on his client list.
Today’s position of the accounting industry?
For years, small and medium sized accountancy firms have felt very comfortable producing tax compliance work for their clients.
They knew they could count on almost every client coming back to them year after year to lodge their tax returns. It was like a very profitable production line.
What many accountants didn’t realise was that modern technology would eventually catch up and ambush them.
The once lucrative and predictable tax-based business model is falling apart in 2023. Even the Tax Commissioner has indicated that compliance work is on the decline.
If you like being in business, what do you do?
Andrew Geddes says accountants need to look for new ways to put their existing expertise to work.
The big question he’s often asked is: “Can accountants move from a compliance dominance to an external CFO offering or even a virtual CFO offering?”
Andrew responds that you need to look at the trends in the market and understand what’s happening. The Australian Taxation Office is driving through digitisation, robotics and artificial intelligence and are making it very clear that the demand for some of the basic compliance work is going to reduce. The banks and software providers are on the same path.
So a large number of small accounting practices may find that some of the work they do will be automated. Some may see this as a disaster. But for others, there’s an opportunity to think about: “Who are my more receptive clients and how can I help them by offering them more than I am now?”
The other trend is that team members are always wanting more interesting work. In the couple of progressive accounting firms that I am working with, they have young people learning how to drive predictive accounting, learning how to do business valuations using business valuation software and creating useful financial reports so that the advisors can get alongside their clients and discuss ways to improve their business.
Want to know more about how your firm can capitalise on this New Era? Call 1800 232 088 or email email@example.com to have a discussion with our Managing Director, Peter Towers.
Peter Towers | ESS BIZTOOLS