How does e-business affect the accounting profession

My answer to How does the development of e-business affect the accounting profession, in both positive and negative…

Answer by Wray Rives CPA CGMA

I see two primary e-business dynamics that directly impact the accounting industry.

  • Web based tools that facilitate remote delivery of services
  • Web based tools that automate the clerical aspects of accounting work

Remote Delivery of Accounting Services

The accounting profession has historically been very geographically limited. With most clients living or working within 15 miles of their accountant. The larger the firm the broader the geographic reach might be, but even within the Big 4 firms a local office was usually the primary and sometimes only contact for a client. Bigger firm also usually translates to bigger fees, which often price small business out of the service level and specialization offered by a large accounting firm. In fact, in the past, it could be difficult for a sole proprietor accountant to succeed, because an accounting firm has to cover a broad range of services to appeal to the limited geographic reach of its client base.

To succeed, accounting firms might offer tax planning, tax compliance, financial accounting and reporting, auditing, retirement planning, bookkeeping, payroll and investment services. It is almost impossible for one person to truly be proficient in all those disciplines. Typically you had to get to a level of having at least 3 partners in a firm, with each partner covering the expertise part in some portion of the services offered. In fact it used to be the common “buzzword” with accounting firms to say that you were a “full service” firm. You will in fact still see that phrase on a lot of old school accounting firm websites today.

Think of that in comparison to other professions where specialization is the norm. Sure if you have a cold, you are fine to go to your general practitioner, but if you have a heart attack, you want to be seen by a cardiologist, because the cardiologist knows a lot more than the GP does about the specific topic that is most important to you. The client looking to purchase accounting services, is better served by hiring someone who knows a lot (goes deep) into the topic that is important to their current situation, rather than hiring a generalist who knows enough about the client’s needs.

Remote delivery of services removes the geographic limits on an accounting firm and most of the typical accounting services, with the possible exception of audits, can be delivered just as well and probably at a lower cost than a local accountant can. You may like going to the accountants nice office and being greeted by his pretty receptionist, but there is a cost to those things and you, the client are paying that cost.

Remote delivery of services, I believe, is a positive for the accounting industry and industry clients.

Tools to Automate Tasks

Non-accountants seem to frequently confuse accounting and bookkeeping. Just search on Quora and see how many questions ask when online bookkeeping apps are going to eliminate all the jobs for accountants. The truth is most forward thinking accountants embrace automation of clerical tasks. Clerical tasks, bookkeeping, which is what online apps do, are a commodity. Price is the only way you will compete for business selling commodities, so no smart accountant wants to be in the market of selling a commodity. Accountants should be selling the higher level value adding services to evaluate the bookkeeping numbers and add meaning to the numbers.

Web based tools that automate tasks are in my opinion a huge value add to the accounting industry.

I don’t see a lot of negatives that e-business brings to the accounting industry, except that maybe it represents change and most accountants don’t do well with change.

 

1 thought on “How does e-business affect the accounting profession

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