The accountancy sector is at a pivotal moment as it navigates a rapidly changing landscape shaped by technological advancements, economic fluctuations, and evolving client needs. Here, we explore the key trends and challenges that will define the future of accountancy in 2024.
Addressing Skills Shortages
The accountancy industry is grappling with significant talent shortages. A recent study by the ICAEW highlighted that over two-thirds of mid-tier accountancy firms find recruiting qualified staff to be one of their top challenges, with 60% also struggling to retain these employees. The future-proofing of skills is another major concern, identified by 43% of firms as a critical issue.
To bridge these gaps, firms must broaden their appeal to a diverse range of candidates by emphasizing the broader skill set required in accountancy, such as problem-solving and strong communication abilities, rather than just mathematical prowess. Moreover, promoting the meaningful impact of accountancy work can attract candidates looking for rewarding careers. Accountants play a crucial role in the success of individuals and small businesses, offering support and guidance that significantly impacts their clients’ journeys.
Diversifying Service Offerings
Many accountancy firms are expanding their services beyond traditional areas like audit, tax, and accountancy to meet the changing needs of businesses. Emerging fields such as technology application advisory and Environmental, Social, and Governance (ESG) services are gaining traction. According to ICAEW research, at least 10% of firms see these areas as major growth opportunities over the next three years.
This diversification not only helps firms stay competitive but also positions them as comprehensive advisors capable of addressing a wide array of business challenges.
The Continued Trend of Offshoring
To cope with increasing demands and the need for a broad spectrum of services, many firms are turning to offshoring. Half of the ICAEW survey respondents have already outsourced at least one service line, with accountancy, tax, audit, and payroll being the most commonly offshored tasks.
Monahans, for example, has offshored some of its audit work due to the scarcity of audit resources in the UK. Martin Longmore from Monahans said, “We began offshoring audit work because of the lack of audit resource here in the UK. Whilst our preference would be to hire in the UK, it is a strong employees’ market at the moment, making it exceedingly difficult to compete with other firms for such a small talent pool. However, it was really important to us to choose a partner that would be the right fit for Monahans, not only for our employees, but also to ensure that our clients would be continuing to receive the very best service.”
Technological Advancements
Artificial Intelligence (AI) is set to revolutionise the accounting industry over the next year. AI is expected to automate repetitive tasks such as data extraction, entry, and invoice processing. This automation will free up accountants to focus on more complex, value-added activities that require human insight and expertise, while also reducing the risk of human error.
Economic Outlook
The economic forecast for 2024, as presented by PwC, offers a cautiously optimistic view. With headline inflation nearing the 2% target and improving living standards for low-income households, the outlook is positive. However, challenges remain, such as consumer prices staying elevated and a rise in corporate insolvencies.
Government legislation continues to play a significant role in the finance and accountancy sector. With a general election on the horizon, firms like Monahans are committed to keeping their clients informed about any financial changes or new regulations that could impact their financial planning and operations.
Conclusion
In summary, the accountancy sector in 2024 will need to navigate a complex array of challenges and opportunities. By addressing skills shortages, diversifying services, embracing technological advancements, and staying attuned to economic and legislative changes, accountancy firms can continue to provide vital support to businesses and individuals, driving growth and success in an ever-evolving landscape.