ACCOUNTING

Millennium fever has gripped the finance function. This is not gazing wide-eyed at your computer and realising nothing will work after 1999, but deciding that as the clock slips from the 1990s to 2000 nothing will ever be quite the same again.

A brace of recent predictions have painted a mixed picture of the current state of the job of finance directors and their staff at the present time, giving gloomy predictions for those who wish to pursue finance as a career in the next millennium.

The Institute of Chartered Accountants in England & Wales recently published a wide ranging piece entitled Added Value Professionals – Chartered Accountants in 2005. While concerned with the chartered brand, the issues and drivers it identifies in commerce and industry have pretty much universal application.

The group behind the report identified four key drivers of change: internationalisation of economic activity; social pressures for greater accountability; information technology; and work patterns. The authors say individually these key drivers for change are not new, however, taken together they are going to have a much greater impact.

Competition from inside and outside the accounting profession will become much more intense. The report says: “Technology, competition, deregulation and the maturity of the audit market could leave too many accountants chasing too few jobs in their traditional areas.” Qualified accountants over 45 – remember this is 10 years hence so we are talking about those now in their mid-thirties – will be particularly vulnerable. Many will need to find employment outside accountancy and will need broader skills in order to achieve this.

Older members especially will tend to gravitate towards small business, small practice and opportunities overseas. In business, the most successful accountants will be those willing to learn new business and specialist skills, some of which will be outside the scope of traditional finance and accountancy. Accountants will only reach senior corporate positions by making a major contribution to the strategy and success of their organisations.

Many would argue the bulk of these trends are actually with us today.

Just prior to releasing CAs in 2005, the Board for Chartered Accountants in Business (BCAB) released a report, Changing Working Patterns carried out by the Industrial Society exploring the changing work patterns experienced by almost 1,200 finance directors and senior financial officers.

The way we work is changing rapidly. On average, respondents are spending 41% of their time on accountancy or management accounting work. Five years ago, finance professionals were spending 50% of their time on these duties. The rest of the time – in other words, the majority of their time – is spent on general management duties both inside and outside the finance function – and much of that is spent on managing IT and legal work. The smaller the organisation the more likely the finance function is to be involved in office management, while the older FD is less likely to be involved in IT management. The Industrial Society says the trend is towards individuals becoming less specialised.

The good news is that most finance professionals, 61%, think their job has actually become more interesting over the last five years. The Industrial Society believes the increase in de-specialisation, the inclusion of other roles and responsibilities in the finance function and the impact of changing work practices, has increased the breadth of the job and FDs are finding it more interesting. You may or may not be surprised to know that the higher the salary the higher the interest.

This interest factor comes at a price. The most common career change in the last five years, experienced by 39% of those surveyed, was promotion within the same organisation. But perhaps the most staggering finding of the whole research was the fact that almost as many as 36% said they had been made redundant in the last ten years. Of those, 14% moved straight into another job, 8% were unemployed for under three months, 12% took between three months and a year, and 2% were unemployed for over a year.

What is equally staggering is that a significant proportion of these qualified accountants now appear to be accepting redundancy, voluntary or compulsory, as increasingly becoming part of the tapestry of their working lives.

When asked what might happen to them over the next five years, 21% thought it was possible they would face redundancy, and 9% also thought unemployment was a possibility. Such lack of job security is staggering and a generation ago would have been unheard of among such professionals.

According to FDs and their colleagues, the most important factor in the creation of their present environment over the past five years has been the increase in regulation, followed by takeovers and mergers. Many people also believe internationalisation, globalisation and centralisation within their organisations have had a significant influence. However, over the next five years other factors will assert themselves. Finance directors and senior financial officers reckon Europe and outsourcing within the finance sector will have a much greater impact.

Businesses are facing increasing competition, legislative and social pressures and are responding by placing new and increased demands on their employees, particularly the senior members of staff. Musing on the results of this survey, Richard Close chairman of BCAB, said FDs clearly believe the only sustainable competitive advantage is change.

According to Close, accountants in business are left balancing the conflicting requirements of more and earlier management information with less resources and more flexible working practices. Outsourcing is currently one of the most fashionable of these flexible practices. NatWest has just launched a corporate billing service offering to print and post invoices and statements.

But outsourcing the finance functions goes far beyond how the bills are sent out.

The Big Six now reckon picking up outsourced finance functions to be one of their biggest growth areas. The potential savings are in the region of 30% and those offering outsourcing say accountancy services offered to other parts of the organisation can actually be improved. If outsourcing does take off it will have a profound effect on traditional organisational structures and traditional career paths. Sober analysis is needed from a corporate and personal view point about outsourcing and a range of other issues.

Hands up those who entered the finance profession because it was a secure career for life.

Peter Williams is a freelance journalist.