The Journal of Accountancy asked a number of experts for their predictions of macroeconomic trends that will shape the business environment of accountants in 2016. Business accountants can use these trends to shape their service and products offerings to gain a competitive edge.
The bifurcated economy.
The world is moving towards a “bimodal” economy. Increased merger-and-acquisitions activity means large companies are getting bigger, while smaller ones are being forced into narrower niche segments.
In the near future, Zoller predicts, there will be much more acquisition activity, fueled by cash-rich companies, R&D activity, a desire for a larger market share, and complementary products or services, among others. According to PwC, 54% of CEOs in the U.S. were eyeing an acquisition in 2015.
M&A activity presents opportunities for accountants. Services such as due diligence on acquisition targets, advise for venture capitalists, and help with determining equity structure will all be popular.
Further growth of startups.
Business accountants should prepare to do more work with small and midsize businesses.
As startup culture grows in influence, accountants will have to adapt and help these start-ups scale their companies up, sell them off, and move on to the next opportunity. Accountants will have to wear more hats for small businesses, “the CPA is the proxy CFO.”
They will also have to become more niche focused. “Domain-specific expertise” will become a significant factor in the growing startup culture.
Growth of the informal sector.
As the economy changes with a rising middle class and a looming recession business accountants will also have a greater role to play in the “informal sector,” such as work that do not fall under tight regulatory control, such as freelance work such as writing and graphic design, “gig-based” jobs such as Uber driver or Airbnb owner, or day labor. This sector will likely expand as it is driven by Millennials, who now make up one-third of the population.
Today’s businesses are operating in a fast-changing and globally integrated environment, and one where risks are as much about missed opportunities as about unforeseen events.
To increase their relevance in this climate, accountants must act as strategic thinkers for businesses instead of “looking at the past to understand the present,” they will need to act as “fortunetellers” whose role is to anticipate.
Companies are also going to place more emphasis on efficiency. They’re increasingly going to be asking such questions as “Are we utilizing labor most efficiently?”—and accountants will have to give the answer. They will have to utilise Big Data. The explosion of data means there is a lot of information available that can be translated into valuable business insights.
According to the article the tools of forensic accounting will allow accountants to mine data to examine how enterprises interact with one another and how consumers make purchasing decisions. Such insights can help accountants become valuable strategic advisers in an era of rapid change.