Accounting careers may not be as good as they once were

Technology is changing the industry quickly, and many believe that it will shrink the cost of the services we provide

Technology is changing the industry quickly, and many believe that it will shrink the cost of the services we provide

When I was getting towards the end of high school, I really didn’t know what I wanted to do. I was good at both mathematics and computers, and so I thought it would be something in IT or business/finance.

I went along to a careers fair at the start of my final year, and when I was there I spoke with someone about a career in accounting. I gave it a bit more thought and decided that accounting might be a good way to go, and I was then lucky enough to land a job straight out of high school working for a Big 4 accounting firm. As it turns out, the choice of accounting has been quite lucrative for me, going from a very ordinary starting wage for a cadetship/traineeship while studying, to progressing to Partner money 14 years later at age 32.

Up until the last couple of years, I would have thought that a career in accounting would definitely be the way to go if you’re wanting to make some decent money. Of course not everyone makes partner, but even if you can make manager level or equivalent (entirely possible by the age of 30 for many people), you can be making six figures which would put you right up there compared to a significant portion of Australians.

However, some changes in the industry that have happened, and that I can see happening, are starting to make me reassess whether accounting really is the way to go for the longer term for many people.

Technology is eliminating some jobs

Many of the tasks that administration and entry-level staff are involved in are disappearing, making me question the amount of time that such jobs can continue to exist. Some of these tasks that are being eliminated by technology include:

  1. Filing (no more paper files);
  2. Archiving (limitless digital storage means no more archives);
  3. Incoming and outgoing mail (everything is done via email, with even the tax office increasing electronic communications);
  4. Invoicing (this is now paperless in our office, and will be emailed out to clients soon);
  5. Answering telephones (many enquiries come via email now rather than via telephone); and
  6. Basic data entry (cloud accounting is killing off data entry).

In our business, I predict this will have consequences for roles in a number of occupations, including:

  1. Administration staff – to reduce by at least 1/3rd, if not more; and
  2. Trainee/cadet accountants – these entry level roles will need to reduce by at least 20%, but possibly more.

Technology is dumbing-down/simplifying other jobs

Cloud accounting systems from companies like Xero, Quickbooks and MYOB are revolutionising our industry and commoditising the services that we provide.

Cloud accounting systems from companies like Xero, Quickbooks and MYOB are revolutionising our industry and commoditising the services that we provide.

For those that will continue to have jobs in the industry, their roles will be greatly “dumbed-down” and simplified in a number of ways, including:

  1. Cloud accounting will eliminate data entry, with transactions automatically imported from online banking feeds;
  2. Cloud accounting packages will generate the financial statements, so you probably won’t even need to prepare financial statements in accountants’ software systems;
  3. The tax return will be prepared automatically from the cloud accounting software package, meaning tax returns will largely be prepared with a click of a button.
  4. For individual tax returns, much of the information is already available from the tax office’s “pre-filling” reports, and I would say that these returns will eventually be done automatically without an accountant. An accountant would then only be needed if you wanted to lodge a variation.
  5. Self managed superannuation is being largely automated by the same cloud accounting processes detailed above, and given that pricing has been disgracefully high in the past this segment is ripe to be stolen by the big banks who will drive prices through the floor.

Clients are becoming smarter and don’t need us for so many things

Many of the services that we provide to clients have historically been provided based on the clients being ignorant. While I believe that people will continue being ignorant about money, I believe that they will become more informed about the value of services that we provide and may choose to simply not obtain some of those services.

While the pace of financial education for the general population is frustratingly slow, I believe that people will eventually develop enough financial intelligence to reduce the need for some of the basic advisory services provided by some finance “professionals”.

Clients are becoming more cost-conscious and just won’t pay so much for many services

As technology reduces the amount of time it takes to attend to accounting tasks, clients are also starting to question how it can cost so much and take so long. It is no longer uncommon for clients to query fees regularly, especially for smaller clients in the <$4k per annum fee range.

The internet is also increasing competition for accounting services, with the geographical requirement that your accountant be close to home being steadily eroded. Innovative new ideas like, where accountants can pitch for client work online without ever meeting or speaking to the client, will have the effect of breaking geographical links, but also driving down costs.

Governments don’t seem to be favouring the status quo for accountants

A rumoured proposal from the Australian Taxation Office is to start automatically stripping data out of the cloud accounting software of taxpayers to automatically complete their various tax returns. While this is a fair way off as a reality, I can certainly see how it could be an effective way for clients to handle their tax obligations. It would also greatly reduce the scope of services that accountants could offer to taxpayers in this scenario.

Another example is individual tax returns, for which the writing is surely on the wall. Countries such as the UK have done away with individual tax returns, except for taxpayers that choose to self-assess, and this would put firms like H & R Block and ITP out of business overnight. The system actually works quite well in the UK, and given that the Australian Taxation Office already has access to the appropriate data for this task I can’t see any reason why they don’t just make it happen now. The only reason they don’t is probably because of the backlash from the accounting sector, but if it’s in the best interests of taxpayers I can’t see how long they can hold out…

So should you take up a career in accounting?

I believe that the accounting firms that are most-susceptible to these challenges are the big firms. They typically have highly-inflated fees where clients are being significantly over-charged, they have bloated cost structures with a high level of excess staff and bureaucracy, and they are least able to handle fee shrinkage due to their big payrolls and the significant lifestyles that they are supporting for their partners.

Given the above, I believe that a career in accounting can still be quite rewarding, but I would question whether a start with a big firm is as good as it once was. Smaller firms of course have their own issues, not to mention it can be very hard to squeeze your way through to the top of the tree, but I would stop and question the tried and tested career in accounting.

While I can’t really put myself in the shoes of those starting out in the industry, I would say that I believe an approach that has a good chance of success is one where you take a smaller firm with a strong client base, and roll out better use of technology. This should reduce time commitments, reduce the required headcount, and reduce costs overall. If you can educate your client base along the way then you should be able to make plenty of money without working as hard. Making the transition from traditional accounting model to the new world will be the key challenge though.

What is your prediction?

So what do you think? Is the accounting industry going to be very different in the future? And will it still provide rewarding careers like it has in the past?

And what about your industry? Are you working in a job that may not exist in the future or is at risk of being very different going forward? Or have you even thought that far ahead?


13 thoughts on “Accounting careers may not be as good as they once were

  1. This is such a good and interesting article. I have recently left the accounting world for quality/regulatory work; I did this for many reasons but primarily the market is over-saturated here in the UK and I too have noticed that technology is making a lot of roles semi-redundant. I think you’re right on the money here!! Pun intended 😉

    • Thanks Mrs WaterB. It’s good to see that I’m not the only one noticing the changes that technology is bringing to the industry! I sometimes feel sorry for the people that are hoping to join (or have recently joined) the industry as the opportunities have to be steadily reducing and competition will be fierce for jobs in the sector.

      • I have also noticed that it’s not enough to be just an accountant. The higher up you go you need to display other commercial skills that are usually found solely amongst sales, marketing and operation directors – Companies are really banging their buck in terms of resource.

        • Yeah, everyone needs to be a salesman nowadays. And I’very even told some if my staff that they need to develop their “commercial skills” because that’s what they need to do to progress. It’s a real shame that you can’t just be a good technician anymore.

  2. Yep, my job is changing with technology too, but in a good way! I work in the STEM field, but my profession within the field is not considered very dynamic or upwardly mobile, despite requiring a lot of education (lucky me!). However, my job is also essential to several industries, and cannot be eliminated with technology. The big shift for us is in going freelance. People in my profession feel undervalued working in a company (it’s that lack of dynamicism and mobility), but because they offer an essential service, they can command higher wages when they branch off on their own. My company seems to also encourage this because of the way our accounting is done: having less internal headcount relative to revenues looks great on paper to our shareholders. I can see how much the freelancers are making (at least triple what I make), because I have to sign off on their invoices! Technology is also helping anyone go freelance, because it’s easier to job hunt and connect with others online. I totally welcome this shift, and hope it’s still this way when I go freelance in a few years.

    P.S. call me old fashioned, but I think I would still like an accountant to look over my financial statements, rather than trusting that the cloud computing software imported all my bank transactions correctly. Seems like too much could go wrong there. :/

    • I can totally relate to the pitfalls of working for a company – the whole groupthink thing and lack of mobility can be quite stifling. I could envisage working freelance (or as a consultant as we would call it) after I retire, if only for the flexibility that it would provide. Being in a bit more control of my own destiny (rather than having the huge group of partners decide it for/with me) has a lot of appeal.

      I agree that people still like an accountant to look through the actual detail of their affairs, but in future the technology will take care of the preparation and the accountant will just be reviewing it, correcting it and then interpreting it at the end. To be honest, I’m not sure that many clients will be able to tell the difference if it is done well enough. The times, they are a-changin’!

  3. I have read the June 2015 chartered accountant magazine, there is a good coverage on technology with accounting too. the main take out for me as a graduate employee is get ready for the possible change, and equip myelf with knowledge.

    • That sounds like a good approach as you will need to be a person that is up to speed with technology while also having the soft skills to ensure that you are ahead of the competition. If you are thinking about it now then there is a good chance that you will succeed. Best of luck!

  4. Very recently I became unemployed because the company I had worked for automated their accounting system. They let the entire accounting department go! Problem is it’s impossible to find jobs that actually pay a decent salary because the market is saturated with people looking for the same work. Accounting degrees are useless now. A friend of mine who works in software development claims there will be a 90% drop in demand based on the cloud accounting systems that are set to hit the market in the next decade or so. I guess it’s time for a career change! Great post!

    • Yep, I think plenty of roles will disappear in the near future in the industry but I’m not sure that people can see the change coming. Finding roles will be much harder, which makes it even more important to build up an emergency fund in case you role is made redundant.

      Your friend is right – the cloud accounting packages are having an effect already, but I think it’s about to really fire up over the next couple of years. We are taking on less entry level staff in our firm already, so I think that there will be a lot more graduates wondering why they got their degrees!

  5. Hi,

    I just discovered your blog and it seems interesting at first sight. I am an accountant too, from Canada, and my first job out of university was at a Big 4 firm, but in Switzerland. I also worked for that same Big 4 firm in Brisbane Australia. I have been back home for 6 years and now run my own tax return business (individuals only). I do 3000+ of them and that provides sufficient income for the rest of the year. Technology so far has only helped my take on more clients, as we can now download a client’s tax information directly from the government website without entering it. So far this is reserved for tax professionals only. The average time it now takes for standard tax return is 10 minutes. This has allowed me to lower my prices and be more profitable.

    I don’t know about other countries, but I do not think technology will fully replace an accountant for tax returns (individuals). There is too much information that has to be evaluated and cannot be automatically downloaded ( medical expenses, tuition fees, home renovations (in some cases), etc). People are simply not interested in taxes, do not want to take care of them, and would rather have someone else take care of that, because they also fear they will do a mistake and the taxman will be after them.

    I agree that technology has changed the accounting industry, but there is a limit to replacing human interaction when providing a service.

    • Hi Guillaume

      Thanks for reading, and I’m glad you found it interesting. Your background certainly sounds interesting, and I hope you enjoyed your time working abroad in the industry – I know that I did!

      That’s interesting about your current firm and the sheer volume of individual tax returns that you do. I agree that there is a lot of information that needs to be evaluated, but I still believe that the individual tax return space is a shrinking one, especially if they introduce a standard amount of deductions without substantiation.

      In Australia, the “tax agent portal” as it is known started in about 2001-2, and the “pre-filling” technology has now been rolled out to individual taxpayers preparing their own returns without the services of a tax agent. This means that individuals have access to the same information as tax agents, so much of the advantage of tax agents is taken away. If clients are interested in doing the return, they have the same advantages as tax agents, and if they are not interested in doing their return, then in time they may not need to lodge one at all.

      I can certainly see how technology has helped you to become more profitable, but I think we will start seeing how technology will shrink the services provided. That is certainly what we are starting to see, and our firm isn’t even focussed on individual tax returns at all. As you have stated, people are simply not interested in taxes and do not want to take care of them, and it is for these very reasons that I believe that western governments will make lodgement of individual tax returns optional over time.

      You may not see the risk in Canada, but firms in Australia that service a similar market to you see the risk as very high. So much so that when one of the biggest firms in that market (who shall remain nameless) signs leases for the properties it occupies, it actually insists on inclusion of a clause that allows them to break the lease (without penalty) if the government removes the need to lodge individual tax returns. You might say that they are just covering all bases, but I absolutely think that they can see what is coming and are trying to protect themselves as much as possible.

      Irrespective of this, well done on building the firm that you have built to date – 3,000 is a lot of individual returns!

  6. Pingback: Cloud accounting: Replacing our industry’s jobs of the future | The Insider Accountant

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