Why the accountancy profession needs to adapt or die

Sumit Agarwal, founder and managing partner of DNS Accountants, believes that accountants are facing an extinction level event.

Speaking at the AAT Annual Conference, he explained that the threat is survivable, but only if the profession embraces change.

‘This is no longer a choice; it’s a mandatory requirement. If there’s a contagious disease and there’s a vaccination available – you get vaccinated,’ he says. ‘It’s survival of the fittest. If they don’t adapt, they die.

‘Look at what is happening in retail today. House of Fraser just announced they’re closing 31 stores. Most retailers in the UK have not taken the threat from Amazon seriously. The same thing will happen in the accounting profession. Do you want to be part of the adaptation, or part of the extinction?’

Legislative challenge

The amount of legislative and technological changes over the past five years have been incredibly extensive, Agarwal says. As a result, accountants have been focusing on catching up with obligations around compliance. But this is distracting from the real challenge – adding value when traditional services are losing theirs.

‘A lot of small businesses are struggling, and if their accountant can’t come to their rescue, they will change accountants. We have to redefine the profession in the next five years.’

Accountants need to run their practice more like a business, he says. They must be more sophisticated in the way they market themselves and how they work with their clients.

‘Compliance is becoming more product oriented, and as a result, accountants won’t be able to make a good living from it. The profession can die if we don’t become advisors, if we don’t work closely with our clients.

‘I personally feel it’s redefining the entire profession, particularly the practice side. This is a massive opportunity for the accountants who are geared towards it, but it could be sad news for accountants who aren’t prepared for the change.’

Changing mindsets

The biggest challenge for many accountants is changing their mindset, says Agarwal, who created his own software, Nomisma, to help with his practice’s own transition in 2013. Buying into technology is the easy part; letting go of old habits is the challenge. It doesn’t have to be a scary process, however.

‘It’s not rocket science; if you know how to use the internet and mobile, it’s not a great leap from that. You take a step-by-step approach; it’s a journey. You need to think about digital marketing, you need to be working on cloud and you need to be working on mobile. It’s bringing the accountant-client relationship closer together, so that they work in real time, rather than once a year.’

Mark Rowland is a journalist and former editor of Accounting Technician and 20 magazine.