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Look out, there’s a skills crunch ahead!

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Demographic trends and changing work patterns have set the profession on the road towards an inexorable collision between supply and demand. What can accountants caught up in the skills crisis do to come out unscathed?

There’s nothing more frustrating than watching a situation unfold where you can see the underlying causes, but you can’t do anything to prevent it.

That’s the feeling I get from watching accounting’s increasingly acute skills shortage. As we near the end of 2022, it feels like we’ve careered down the mountain road, the brakes aren’t working properly and we’ve crashed through the wooden roadblock marked “Danger steep drop ahead”.

The warning light started flashing as far back as 2018–19, when we could see staff retention and recruitment climbing up the list of concerns for entrants to our annual Accounting Excellence Awards. Progressive practitioners were clearly beginning to see that the lack of available talent was cramping their ambitions for growth.

Thanks to Covid, this storyline went a little out of focus during 2020–21, but when things settled down this year, we found that as with technology adoption and flexible working, the pandemic greatly accelerated the underlying trend. Making Tax Digital (MTD) and its more sophisticated cousin Digital Transformation might have been the focus of public conversations within the profession, but recruitment, retention and the lack of skilled people to tackle all these new challenges has become a persistent and ominous throb in the profession’s background soundtrack.

While regulatory shocks like MTD and the ever-changing nature of accounting services have intensified the squeeze in 2022, the current talent crisis goes back more than a decade to the profession’s response to the global financial crisis, when firms large and small reined in their training budgets. And the signs are that the downward cycle is starting to repeat itself this year. While the skills gap we’re seeing is entirely predictable, the extent of its impact is adding to my sense of delayed and slightly helpless shock.

Escape routes

The sound of people raising alarms echoed around the AccountingWEB Live Expo hall last week, along with indications of how accountants were adapting to the post-pandemic skills crunch. In his talk about how private equity investors were putting money into accountancy firms, Sam Edwards from PwC’s Strategy& consultancy commented that talent and skills featured in every conversation he and his colleagues were having.

“Accountants operate in a very constrained talent market,” said Edwards. “Everyone talks about how difficult it is to keep the talent you have. If you could just turn the talent taps on, there’s so much work out there you could be doing.”

For years and years, the software industry has been telling accountants that automating mundane tasks will increase their capacity and free their people up to do more valuable work. As Edwards put it, “Using technology will create more capacity in your team for you to take on more core work or cross-sell some of those interesting advisory services.”

The flow of traffic to stands of expense and data capture, accounts payable, payment apps, practice management and CRM suppliers showed that a lot more accountants are responding to those calls.

Other avenues are opening up, including a bigger role for bookkeepers and a surge in outsourcing. The roll call of providers at Coventry included Affinity Outsourcing, befree Global, Diamond Outsourcing and GI Outsourcing, not to mention IRIS, which runs a managed services division. Circulating among the crowd were well-known outsourcing faces Alex Falcon Huerta (Smart Offshore) and Vipul Sheth (AdvanceTrack).

“Outsourcing is not the dirty word it was,” said Jim Scott, managing director for accountancy at IRIS, during the future-gazing power hour with leading tech players at the event. “It’s a realistic option to make your business more efficient.”

Limits to the tech solution

During an Expo roundtable discussion, Can technology solve the skills shortage? Bobby Lane from Factotum warned of the danger that technology wasn’t so much the solution as a cause of the problem because of the way it was changing the kinds of skills and people needed. 

“We used to recruit people who could process accounts,” said Lane. “Now with technology, people assume that if the data goes in there, it passes across to the right destination in the accounts. How do you find people who can translate these numbers and advise businesses?” 

FreshPay founder Nicola Hageman agreed: “Automated tools like Dext Precision can help, but you still need the skill to be able to review figures and tell if they are correct. That’s the skill we’re losing.

“At FreshPay, we hear so many horror stories about people running payroll who aren’t up to date with the regulations. And sometimes software houses don’t help with sales pitches about how easy it all is, without mentioning what a disaster it could be if you get it wrong.”

Uh-oh! Things are getting scary…

At times like this I’m aware of the risk of sounding like one of those irritating locals by the side of the road muttering, “You need to watch out for that steep ravine…” Hundreds of articles have been published on AccountingWEB and other outlets about recruitment, motivation and retention.

But when the car is hurtling off the cliff, there’s not a lot of helpful information you can give to the people trapped inside. With January looming, accounting practitioners in particular are heading for a very bumpy ride.

Maybe you’ve seen the resource shortages coming and successfully implemented remedies, whether through automation, outsourcing or internal training and development. But if those routes haven’t steered you out of trouble, the only thing I can think to say is: don’t panic. Maybe slow down a little and put as much effort and time as you can into looking after your team. It also helps to know where you want to go so you can plan your route to bypass those resource barriers. You know where to find us if you want any more help or advice.

Writes John Stokdyk in AccountingWeb