Accountants – take a long-term view on IT as tech costs rise

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Don’t get angry, get even, says Vipul Sheth, as accounting practitioners ponder investment in an inflationary period.

There has been much reporting about accounting tech providers upping their prices – much to the consternation of accounting practitioners.

Some sympathy is due – it’s hard for practices to manage client pricing, particularly when their key software partners have taken a ‘fluid approach’ to pricing structures.

We are a tech-focused outsourcer, and therefore anything that might put doubt into accountants’ minds about the importance of technology – or that discourages adoption – is negative for us. That’s because we work with practices that have strong processes and, inevitably, that means they lean on technology to help them manage workflow and operations.

The harsh reality 

But there are some stark truths that practitioners must face. Firstly, software companies, as well as practices, are looking to make a profit. Price increases are a natural part of a functioning economy – sadly, they’re also inherently linked to an inflationary one, too. Another issue is that the tech providers often make ‘too good to be true’ offers to early adopting practices – and these offers never last.

We’ve also gone through what some might call a ‘wasted’ period, where the accounting tech industry has looked to drive automation and workflow to help practices and their clients surmount MTD – which has of course been watered down and delayed again.

Not only are tech providers having to cover their costs, but practitioners have encouraged clients to improve their record-keeping – which also needs paying for. So, practices have had to make several changes: they’ve increased prices for their clients; evolved the client offering; and possibly changed their pricing structure. Therefore, if software providers move the financial goalposts by more than expected, that has led to some difficult discussions between the practitioner and the client base.  

Look to the future

My worry is that accountancy firms will look in the short-term at the cost of adopting tech, without considering the longer-term view. And this longer-term view isn’t simply that ‘tech is important’, but appreciating what you want your firm to be in five years, and how it will offer a great service, will require IT investment.

I’d also hope that practitioners are working hard on both their pricing strategy and their client communication – there are two fundamental aspects to running a profitable firm. Having good technology and processes in place gives you the potential to broaden a client offering – whether it’s tax mitigation, cashflow or forecasting to name but a few examples.

And the more that’s automated and outsourced, the easier it is to set in place a value-driven pricing structure – you will also have more time to communicate with your clients. Finally, value pricing is an opportunity to split out client software subscriptions from your main billing.

None of this is easy or straightforward. But I hope that the software pricing discussion moves towards a more sober and value-driven assessment of your technology needs, rather than a knee-jerk dismissal of its benefits.

Vipul Sheth is MD of Advancetrack

If you’d like to talk to us about your firm’s approach to tech, outsourcing and offshoring, please get in touch by clicking here.

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