Accountants can look to the manufacturing sector for lessons on risk management.
Key points
- Accountants are facing challenges as the business landscape shifts.
- We look at where accountants can take the example of the technology, banking and manufacturing sectors.
- Embracing the lessons can help accountancy firms navigate the changes and continue to thrive.
The accountancy sector is grappling with seismic challenges. Firms need to navigate the shift of client expectations for strategic insights and advice on top of basic accounting services, address productivity concerns and ensure compliance with evolving regulations. They must also keep pace with digitalisation if they are to remain competitive in an increasingly complex landscape.
It’s a lot to manage – but there’s no need to reinvent the wheel. Other industries face similar problems, and learning from their solutions can give accountants valuable insights into how they can best respond.
Prioritising productivity
As tax deadlines approach accountants brace for increased workloads – but many face overwhelming demand all year, with data from CV Library showing that 45.7 per cent of accountants worked over 13 extra days last year. Under these circumstances, managing a healthy work-life balance while keeping on top of work can be difficult.
For Cameron Ford, UK General Manager at Silverfin, too much of accountants’ time is spent on repetitive, low-value tasks like data entry, reconciliations and manually moving data between systems. This weighs heavily on accountants’ shoulders, says Ford, along with pressures to meet regulatory requirements and internal recovery demands, and build client relationships.
Ford says one way accountants can ease their burden is through following the example of the software and technology industry’s focus on productivity. Often lauded as one of the most productive sectors, software companies tend to emphasise automation and adoption of new technologies to free up time for the things that matter – innovation and creativity.
The technology sector also invests heavily in other productivity initiatives. Google, for example, allows employees to use 20 per cent of their work hours for personal projects that interest them, aiming to foster creativity, prevent burnout, and improve productivity. Microsoft Japan’s 2019 four-day week trial resulted in a 40 per cent productivity boost, attributed to better work-life balance and efficient use of working hours.
Says Ford: “If accountants can reduce the time they spend on mundane tasks and error checking, they can shift their focus to higher-value services like advisory. It’s these more ‘human’ interactions that clients appreciate, and which technology can’t replicate.”
Embracing Artificial Intelligence
Artificial Intelligence (AI) is increasingly becoming a necessary investment for businesses. One sector that has charged ahead in terms of integrating AI into their operations is banking, where machine learning algorithms are being used for fraud detection.
Mastercard, for example, uses the technology to scan transaction data across billions of cards to find and flag unusual patterns and trends. Using AI for fraud detection saves bank employees time previously spent on manual processes, which they can use for more strategic tasks and client interactions.
Accountants can take inspiration from the banking sector and integrate AI-driven insights into strategic decisions whilst building their status as an adviser to clients. Andrew McGain, Partner at Monetta Chartered Accountants, recommends using AI to facilitate real-time reporting and the automation of routine tasks such as transaction processing, budgeting, and compliance checks.
McGain says: “Certain AI-powered technologies shine in processing large volumes of data with speed and accuracy, which enhances capabilities in areas like predictive analytics, risk assessment, and decision-making.”
For McGain, success relies on using AI to enhance accountants’ strategic skills while ensuring an ethical, human-focused approach to financial management, “This balance is necessary to harness the benefits of AI without sacrificing the foundational principles of trust and personal service that define the industry.”
Accepting the risk and turning it to your advantage
With change comes new risks to manage and being on the front foot to navigate them is key. Richard Seiersen, Chief Risk Technology Officer at Qualys, says that successful accountancy firms have a good idea of where they can “win”. However, he adds that operationalising these opportunities can expose firms to risk: “It is that exposure that can lead to business-impacting financial losses.”
Accountants can look to the manufacturing sector for inspiration on dealing with risk. Risk management is crucial in this sector, which has had to manoeuvre supply shortages, bottlenecks, and rising costs for years.
Manufacturers have taken matters into their own hands. Companies such as Ford Motor Company have mitigated supply chain disruption through diversifying its supplier base to reduce dependency on one source and strengthen supplier relationships to improve response times during crises. A stronger supply chain means Ford is prepared to handle future disruption.
The risks in accountancy aren’t as tangible as supply chain issues, but like these companies Seiersen says accountants must face uncertainty head on. Seiersen stresses the importance for accountants to understand potential risks and their financial implications.
A proactive approach helps maintain stability. A risk management plan must be developed to manage any losses so that the business can continue meeting its commitments to stakeholders, customers, and employees.
As the landscape shifts, looking to other sectors can provide accountants with valuable insights. Embracing cross-sector strategies can give accountants the tools not only to navigate these challenges but also position themselves for future growth and success.
The IFA’s International Conference Online 2024 on 7 November explores AI and risk management. Register HERE.