The last few years have seen a seismic shift in the business landscape, whether it be the boom in small business creation seen by the pandemic, technological disruption seeming to democratise the financial management of companies or changes to the legislative landscape. But what does this mean for the bookkeeping profession? Speaking at Accountex, the Institute of Certified Bookkeepers’ (ICB) panel of experts took out their crystal balls and discussed the future of bookkeeping.
Technology and automation
Automation has presented a challenge to many industries, and bookkeeping is no exception. A 2020 survey conducted by Sage demonstrates that entrepreneurs increasingly want to take control of their business’ finances and feel empowered to do so using digital accounting software. This trend surely suggests that the role of the bookkeeper is at risk of becoming obsolete, but is this the case?
Rasa D’Alton FICB PM.Dip, ICB member and owner of Cloudit Bookkeeping Ltd, remains confident that business owners will not turn their back on vital bookkeeping support from qualified professionals. Similarly, Dayle Rodriguez, Kreston Reeves’ Systems Advisory Manager questioned the threat that accounting software poses to accountancy professionals. “AI is not as smart as people think,” he said “accounts need the oversight of a skilled accountancy professional for them to make sense to businesses.” It is not enough to simply file accounts electronically without guidance, and entrepreneurs are demanding the level of insight, engagement and knowledge of their business’ figures which bookkeepers are uniquely placed to provide. This sentiment is illustrated in the exponential growth of the sector, with a fifty-fold increase in its turnover and number of bookkeepers since 2003.
Chartered Accountants vs. Certified Bookkeepers
Panel chair and business journalist, Juliette Foster, quizzed panellists on whether the similarities between the role of the bookkeeper and accountant posed an existential threat to either profession. ICB Director of Professional Standards, Lucy Brown FICB PM.Dip said that she didn’t think that this relationship had to be so adversarial. “I see the relationship between accountants and bookkeepers as symbiotic,” she said; “people go to their bookkeeper for regular oversight of their business’ finances, and to their accountant for broader tax advice. I don’t see that changing.” In fact, it is the case that many accountancy firms are capitalising on the trust businesses place in bookkeepers by taking on teams of them to attract new business and provide better advice, increasing the already high demand for bookkeeping skills.
Making Tax Digital for Income Tax Self-Assessment and legislative change
Arguably, it is the advent of Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) that presents the largest challenge to the bookkeeping profession going forward. The need to submit a quarterly update on business income and expenses will undoubtedly create unprecedented demand for client services, with 4.2 million businesses falling within the scope of the changes. “Many sole traders, landlords and small and micro business owners urgently need trustworthy, skilled professional support,” said Ami Copeland, Director of Communications at ICB. Panellists agreed that this work should only be undertaken by a supervised professional, such as an ICB bookkeeper, who with their proximity to their clients are in the best position to submit that quarterly return. Of course, the increase in demand driven by MTD for ITSA bodes well for bookkeepers’ bottom lines, but also provides an opportunity for them to highlight the value-add that working with them can present to a business.
Ami additionally predicted that accounting professionals will need to be able to cope with a rapidly evolving legislative environment. With MTD for ITSA shifting to a quarterly reporting system, it seems likely that quarterly income tax payments will follow in the coming years, increasing the administrative burden on accountancy professionals and the skillsets they will need to possess. Likewise, major changes to the wider taxation system, such as the government’s recent move to increase the tax burden on online and digital businesses will require accountancy professionals to keep up with developments as they happen; something that ICB works hard to promote to its members through its agile qualifications syllabus and extensive programme of ongoing learning.
A consistent theme of this panel was that change is a constant in the business world and that small businesses are crying out for adaptive, supportive and technologically savvy advisors to give them the clarity to navigate the challenging terrain ahead. ICB Bookkeepers are and have always been there to provide entrepreneurs with the support they need to increase their business’ productivity, to systematise, to explain, to nurture, and are therefore best placed to guide small businesses on that growth trajectory. It is the bookkeeper’s adaptability to change and passion for getting to the heart of the businesses that they work with that will stand them in good stead to cope with evolving client expectations and position them as key figures in promoting growth. Increasing demand for services will additionally provide them with opportunities to show entrepreneurs what it is that they can do to turbo-boost companies’ development, making the future seem very bright for the bookkeeping profession.