PYMNTS-MonitorEdge-May-2024

How Accountants-Turned-Advisors Can Manage The FinTech Deluge

Technology may be enabling automation in small business (SMB) accounting and financial management, but rather than cutting out the need for human accountants in the field, this tech disruption is supporting a change in the profession. Instead of number-crunching, accountants like other financial services (FinServ) providers are now expected to provide their small business clients with advisory services and guidance.

This presents a unique challenge for accounting professionals, who must understand which technologies are available to help them embrace the role of advisor by automating tasks that don’t add value. At the same time, accountants also need to be well-versed on the technologies that can help their SMB clients thrive.

For Roman Kepczyk, director of firm technology strategy at accounting tech provider Right Networks, the SMB accounting technology space is flourishing. However, he told PYMNTS, there are a few key tools that have the greatest potential to empower SMB accountants, including robotic process automation (RPA) and the ability for data to flow seamlessly in and out of accounting platforms.

“The accounting profession is rapidly transitioning from compliance to trusted advisor,” he said in a recent interview, “and these tools will allow them to develop foresight with the client, rather than reporting only on what has happened after the fact hindsight.”

Kepczyk described this market as the “wild west,” as more technologies and FinTech innovators enter the small business financial services space, not only to automate, but to provide deeper insights into company finances and enable predictive analytics involving too much data for one (human) accountant to manage. This means that in the SMB FinServ space, there is a significant market opportunity to target the accountant. Recently, several technology firms have done just that.

Last month, for instance, payroll technology firm OnPay launched its partner program to provide accountants and bookkeepers with their own dashboard so they could use the solution for their clients. Only weeks prior, ADP rolled out enhancements to its Accountant Connect platform to provide small business accountants with greater access to technologies.

Increasingly, accounting platforms are focusing on data sharing and cross-platform integration to link accountants with the additional information they need to fulfill the role of advisor.

Right Networks recently invested in this space through the acquisition of Propelware, a company focused on enabling data integration, as well as sharing between enterprise apps and accounting platforms QuickBooks and QuickBooks Online. In its announcement of the takeover earlier this month, Propelware said the deal is part of its broader “strategy of solving the movement of data between applications seamlessly and securely.” That movement of data is imperative for accountants to offer the level of automation and analysis that their SMB customers demand today.

“The accuracy and timeliness of data that impacts reporting [and] dashboards allows business owners to identify trends, mitigate risk and manage their businesses more effectively,” explained Kepczyk. “For accountants, it allows them to develop expertise in connecting these applications for their clients, who would not have an inkling [on] how to make these integrations work.”

Accountants have their work cut out for them, considering that the “wild west” of small business FinTech has led to an explosion of tools and products from which they can choose. Kepczyk noted that this can be “overwhelming” and frustrating for entrepreneurs, again providing an opportunity for accountants to offer guidance.

Accountants themselves, though, often struggle with technology adoption. In August, K2E Canada published a report, “Accounting Operations and Technology Survey,” that found only 12 percent of sole accounting practitioners said they were “very likely” to embrace cloud-based accounting apps, though that figure rose to 33 percent for accounting firms with at least 11 partners.

Since understanding new technology ranked as a top-three industry challenge for accountants, many are not adopting tools like workflow management software or updated tax software. K2E analysts noted that challenges with cross-platform integration, as well as onboarding client data, are likely the biggest barriers to accountants’ own tech adoption efforts.

Separate research by Right Networks last year, though, found that two-thirds of accountants already embrace the cloud to deepen their connections with clients, with CPAs focusing on cloud technology to fulfill their role as advisors. However, there are more technologies and products available today than ever before that vow to help accountants achieve this goal, so both small businesses and their accountants need to do their homework.

Kepczyk noted that the flood of SMB FinTech tools often include “bells and whistles that might seem cool, but are not necessarily helping [to] make better decisions.” As more FinServ technology players target the SMB accountant directly with their tools, accountants are likely to face the same challenge of understanding which products are the best fit.

IGF Invoice Finance research found that small business owners are just as likely to Google their biggest financial questions as they are to ask their accountant. That means the accounting profession will need to ensure expertise in SMB FinTech to support these data integrations, and make the most of tools like RPA and machine learning to provide the value-added services small businesses need, including forecasting and trend analysis.

PYMNTS-MonitorEdge-May-2024