It is 10 years since Lehman Brothers collapsed and marked the start of an international banking crisis. Over the last decade the banks have rebuilt their balance sheets and worked through issues arising from years of bad lending and poor practices. Pre-2008 the paperwork and agreements from many lending institutions were inadequate. Nobody wants to return to irresponsible lending, but the consequences of stricter lending policies is the significant increase in time taken and costs of raising finance.
It is not only the banking sector that has experienced increased costs and administration. For accountants, solicitors and other professional firms there has never been more legislation to contend with. Anti-Money Laundering, Data Protection and the Criminal Finances Act are only some of the recent changes that have fundamentally changed how professional firms manage clients, data and their workforce. Some of these changes are necessary, but it is clear that legislative changes are struggling to keep pace with the new digital age.
With an ever increasing amount of data held electronically professional firms need to invest heavily in technology and training. To do this needs strong leadership as investment in technology can go badly wrong and is costly. The majority of professional firms in Scotland are partnerships with less than 10 partners. For some firms there may not be consensus amongst the partners that their business is changing. Older partners close to retirement may naturally not see a return for long term investment in technology. The speed of change in technology is so quick that even if the commitment is there from the leaders in the business the decision on systems and implementation will be difficult.
The way that accountants communicate with clients will change hugely in the next 10 years. In 2016 it is estimated only 40% of all transactions were in cash. By 2026 it is predicted this will drop to below 20%. The millennial generation do virtually all their banking, shopping and socialising online. Many millennials are running and managing businesses, and within a decade many more of them will be. Their expectations will be completely different from the generation before.
For the accounting profession, software is increasingly removing the manual work to prepare accounts, payroll, VAT and tax returns. Banks will now feed transactions direct into accounting software, which removes data entry. Software can read and match invoices received, and increasingly artificial intelligence will be used in accounting and auditing. The importance of adding value will be vitally important, as large international businesses will do the simple processing far quicker and cheaper than smaller local firms.
A decade from now, businesses and how they operate will have changed even more. At Campbell Dallas we are already helping our clients future proof their business in the digital age by migrating to the cloud ahead of Making Tax Digital, which for VAT registered businesses begins in April 2019. We believe those firms that manage to embrace technology and make the relationship with their clients easy, secure and with added value will flourish in this fast-paced digital age.
If you want to discuss any of the points raised in this blog please get in touch with me here, or:
01738 441 888
The information in this blog should not be regarded as financial advice. This is based on our understanding in October 2018. Laws and tax rules may change in the future.