“Sorry. H&R Block will not be supporting Donald Trump, I can tell you.”
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Those words were said by the president recently during a rally where he promised tax reform that, at its center, would be "fair, simple and easy to understand."
The inference is that large tax preparation services like H&R Block and Jackson Hewitt would lose business. It seems that Wall Street agrees. H&R Block's stock has dropped more than 8 percent after releasing its earning last month, with some of that decline being attributed to tax reform. Depending on what legislation ultimately gets signed by the president, as I see it tax services like H&R Block could indeed suffer in the future.
But what about accountants? I'm a Certified Public Accountant. Is my job in potential jeopardy? Quite literally, yes.
Sure, tax reform may make it easier for many of my clients to do their returns on their own. But it probably won’t be tax reform alone that will turn my profession upside down. There are certainly other factors that will impact us over the next few years.
- Importance of tax reform, skilled labor on businesses in the U.S.
- Tax reform then and now: Art Laffer explains
- H&R Block CEO: There are ways to simplify the tax code
- How the Equifax breach could hurt Google, Amazon ... and my small firm
- Attention Amazon sellers: This tax amnesty program could save your business thousands
That's the conclusion from a recent analysis conducted by software selection service GetApp. Their research shows that it will be new technologies – and not just tax reform - that will soon replace many of the functions being performed by today's accountant. Which means that CPAs like myself better be prepared.
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What kind of functions?
Financial accounting software leaders like Intuit and Xero have already automated processes from billing to cash payments. Xero, in particularly, is developing artificial intelligence to suggest the right account codes for recording transactions without human involvement. Fintech stars like Bill.com and EntryLess are automating accounts payable data entry using optical character recognition (OCR) by being able to "read" and then process scanned bills and invoices sent to an accounting department. Even companies like Avalara are automating how ecommerce and other firms collect, file and pay their sales tax in multiple states - a time-consuming task that once required full time accountants to perform. (My company, the Marks Group is a technology consulting firm and sells and works with the above companies and technologies mentioned).
The cloud is quickly disrupting the accounting profession. GetApp's research found that cloud and mobile based accounting applications will surpass native ones by 2025 and that will enable business owners – my clients - to rely on automation to do their billing, cash receipts, disbursements and other accounting functions that an employee now needs to do. And, as mentioned above, as OCR technology matures, any scanned document - from invoices to sales orders to service agreements - will soon be automatically read, recorded, processed and filed without human interaction.
In my opinion, it’s inevitable that businesses will reduce their headcount in the accounting department as technology replaces them.
But it's not just internal accountants who will soon be competing against technology. The research found that processes driven by blockchain - which “creates a digital record of transactions made with cryptocurrencies like bitcoin” is exploding in its popularity and is likely to be implemented in some form by the world's largest financial institutions and financial software providers. Blockchain will automate the auditing process by better authenticating and tracking transactions and actions and providing traceable audit trails. This type of technology will soon eliminate much of the day to day work performed by the outside auditors who examine the books of the Fortune 2000 and others with public reporting requirements.
The media likes to report how technology is putting low-skilled people out of work. McDonalds, Wendy's and other restaurant chains are replacing workers with self-service automated kiosks. Amazon is creating self-service grocery stores. Large manufacturers are replacing people with robotic machines. Self-driving cars and autonomous trucks could soon eliminate jobs. But the fact is that we accountants have also earned our livelihood by performing some unskilled data entry and filing tasks that could also soon be replaced by technology.
If you're in the accounting profession, it's time to take a hard look in the mirror. Are you really providing value to your employer or client?
Gene Marks is an author, columnist and President of The Marks Group, a ten-person technology consulting firm near Philadelphia. Gene is also a Certified Public Accountant and a small business expert.