Accounting trends to watch out for

In 2022, accountants played a crucial role in helping businesses navigate a recovering economy, stricter government mandates, and a persistent shortage of skilled workers in the Australian labour market. To address these challenges, they placed an increased focus on the recruitment of tax and audit specialists as talent shortages tightened accounting compliance requirements.

According to the latest Accounting Market Pulse report from CommBank¹, accounting businesses are experiencing a seven-year high in terms of market confidence in growth opportunities. As the market stabilises post-pandemic, demand for accounting professionals has reached an all-time high in seven years, particularly for accounting firms that continue to embrace digital transformation and automation.

The future of accounting

According to Forbes², the finance and accounting industry is speeding towards a transformative period. The growth in the adoption of innovative technologies and outsourcing solutions to improve financial processes has started to remove time-consuming and transactional tasks from day-to-day operations.

The role of the average accountant has broadened to include more leadership and operational responsibilities. The future of accounting is about implementing financial actions to foster business growth, rather than just collating data. This means that accountants, with the help of these new adoptions, will have more influence and insight into company-wide operational initiatives than any other business function.

If 2022 was about adopting AI-powered tools and implementing digital capabilities to improve accounting efficiencies, then 2023 is about capitalising on these investments. The focus is now on finding and retaining employees who can use these upgrades to give the firm a competitive edge. This changes the recruitment game, as job descriptions may change due to the introduction of digital tools, and the emphasis is on hiring accountants with more analytical skills.

However, a labour skills shortage is affecting all industries, including the accounting industry, and one in five businesses today cite finding suitably skilled or qualified staff as their number one recruitment concern³. Additionally, there is a continuous need to manage the balance between remote or hybrid working environments as a recruitment challenge.

According to Dext⁴, 78.5% of accounting leaders are optimistic about achieving their business goals in 2023:

• 29.4% want to take grow their client base and increase profits
• 69.6% will see how existing or further investments in technology can help create more attractive pricing schemes for their services
• 52.5% state financial advisory services such as tax and compliance will be in high client demand.

The past few years have taught us that predictions and circumstances can change rapidly. To be prepared for 2023, accounting firms should invest in the right people and technology to handle any potential economic uncertainties.

Key accounting trends to watch for in 2023

1. Recruiting and retaining top talent

   The competition for skilled talent has never been fiercer. According to the Australian Financial Review's Top 100 Accounting Firms survey for 2022⁵, the largest accounting firms in Australia are struggling to recruit and retain staff, a trend that has continued for two years. The top reasons for retention issues are competition from other jobs and unsatisfactory salaries or working conditions⁶.

   This puts pressure on accounting firms to increase salaries and benefits to retain current talent or pay high recruitment costs, which have more than doubled in a year, averaging $23,860 per candidate⁷. Despite a 14.5% increase in yearly revenue growth, these businesses could have seen even greater growth if they had enough employees to meet demand.

   In response, firms are seeking ways to improve candidate and employee experiences to attract and retain talent in a highly competitive market. This includes using automation to manage repetitive tasks and offering more flexible, remote work options. When local resources are insufficient, firms may also consider outsourcing as a solution to access global talent and improve staff satisfaction.

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2. Automation and artificial intelligence

   Automation and artificial intelligence (AI) are no longer up for debate as the crucial role they play in accounting work has been widely recognised. Automation has reduced the tedious manual tasks for accounting professionals, providing them with advanced tools to tackle every accounting task. 

   According to the Dext survey, 56.6% of respondents identified productivity features with automation and AI as a top priority for delivering their 2023 goals. This shift frees up accountants from compliance tasks, allowing them to concentrate on developing their staff and delivering valuable business advisory services to clients in the years to come.
   

3. Cloud technology and working from home

   Did you know that one in three accountants will work remotely 75% to 100% of the time in 2023⁴? The ability to work remotely requires the use of cloud technology, including accounting software, video conferencing, document sharing, and productivity tools. Australia is a leader in cloud accounting adoption⁸, enabling accountants and businesses to conduct business beyond local borders by outsourcing basic accounting tasks, such as to the Philippines. 

   This shift allows accounting professionals to focus on more strategic work and advisory services, which adds value to the firm's revenue. Cloud-based software is not only necessary for accountants, but also for clients who are increasingly utilising accounting software in conjunction with other integrated applications. Accountants must keep up with their clients' technological expectations and be able to advise them on optimising integrations.

4. The role of data
   

   The ability of accounting firms to offer valuable strategic planning and advisory services will rely heavily on data analysis. The use of big data is enabling accountants to turn internal data sets into secure, effective and critical insights for businesses. Analytics has always been a part of accounting services, but with the increase in available data, it is becoming crucial for business decision-making.

   To stay competitive, accounting professionals will need to continually upskill in areas like data analytics, as emphasised by organisations like the IMA⁹. The demand for data specialists is expected to soar, and accountants will need to step into the role of trusted business advisor to meet the needs of clients.

Firms must invest in retaining and attracting top talent, while also embracing new technologies and upskilling in areas such as analytics and strategic planning. By outsourcing basic compliance tasks, firms can free up resources and focus on their growth as trusted business advisors.