Five Questions Finance Executives Have About the Future of Work
by Michelle Wang, on Jan 8, 2019
Freelance is booming. Since 2014, the freelance workforce has grown three times faster than the U.S. workforce overall. This rapid and profound shift in how business operates has shaken the accounting sector as much as any other—and it’s here to stay.
In a recent webinar, Michael Burdick, co-founder and CEO of Paro; Chris Downing, Director of Product Management for Accountants and Bookkeepers of Sage; and Kenneth Fick, Senior Manager at MorganFranklin Consulting and Paro freelance CFO discussed how this change will impact finance teams in the future. Below are a few questions, some of which the trio considered directly, and others that arose from their conversation, that finance executives face as the industry transforms.
- Do we consider freelancers to be independent contractors?
Short answer: yes, in essence. But, as all businesses know, language and branding is key, so it’s better to think of freelancers in a broader scope—one that more fully recognizes and honors their expertise.
“Using today’s terminology and language, I would say they’re the equivalent of an independent contractor,” Burdick said. “But freelancers don’t necessarily like to be thought of that way because it essentially objectifies their skill sets.” Basically, these are extremely qualified, very highly talented workers who happen to value the choice and flexibility that freelancing, affords—specifically hourly-based or project-based work versus “the confines of a fulltime, full day job.”
- How do employers and clients embrace the fact that some of their dedicated full-timers work freelance on the side?
Good fences make good neighbors, and firm borders between freelance projects and firm-employment work—for those who do both—similarly guarantees harmony.
“I do not work on freelancing at all while I’m at work, while I’m on time for the company,” said Fick. “That is unethical, and I would never do that.”
Fick’s anecdote in the webinar is edifying: an external client calls at 8pm, “right before I put my kids to bed.,” concerned about a revenue shortfall. (A majority of his clients are smaller businesses for whom a large, high-overhead consulting firm is simply not cost effective.) Fick assures her with a plan to address those shortages and get the earnings on track.
That kind of client focus—clearly delineated away from the firm’s hours—not only benefits that particular business owner, it burnishes Fick’s reputation, which in turn reflects well on his employer.
“I would not say [FTE employers] encourage [outside freelance work], but they support it.” Fick notes.
- What will AI look like in the future, where should freelancers focus learning related to AI?
Even as it becomes more and more sophisticated, AI still requires direction, Burdick notes. Even as tasks are increasingly automated through machine learning, flesh-and-blood financial experts are vital even in mechanized processes, particularly in identifying and adapting to fringe cases that resist routine automation.
Even in a technology-driven atmosphere, ”the future of work is all about the people, having a growth mindset, and being a problem explorer,” Burdick notes. “That mindset is incredibly important, and that’s how you succeed in this future.”
And with a resilient, growth-focused core inputting and guiding the variables, AI can offer major dividends, particularly in auditing. “Audit is almost seen as a compliance exercise, so where is the value?” asked Downing. In fact, “AI offers an opportunity to create real value from audit, by identifying opportunities for change, efficiency gains, productivity, and opportunities for growth,” he added. We can audit almost 100 percent of finance data—and interpret potential risks—at lightning speed nowadays, which offers up occasions for earning that were previously invisible. We just need the right people manning the machines.
- What software platforms are most appropriate for freelancers to master?
Being a freelance accounting professional means sporting a lot of hats. You have to process payments, generate reports, keep in touch with clients (who are often remote), manage projects, and more. The more technology can ease those burdens, the better.
QuickBooks is of course a popular option, offering both cloud-based solutions and on-premises software, and incorporating a host of integrations, from remote access and payroll assistance to Excel import. And some CPAs swear by its capability to scale up as clients do. Xero has also positioned itself very well in recent years terms of practice management, invoicing functionality, customer-relationship management functions, and other helpful highlights. On the other hand, suites like NetSuite ERP are popular among larger firms. It’s important for the freelancer to think about what kinds of clients they want to be servicing--small, middle-markets, or enterprise businesses--and in what industry--different industries rely on different tools--and ensure they have those tools down.
It’s probably also a good idea for freelancers to familiarize themselves with communication tools like Slack and Basecamp for messaging and Zoom for tele-conferencing. But the best answer might be for freelancers to tap their own colleague network, as needs may vary widely depending on a professional’s specific focus.
- Will the state reciprocity requirement for CPAs limit freelancing for CPAs?
Like so much commerce in the technology age, a massive amount of the accounting done between financial professionals and their clients happens across state borders, through the digital space—and that opens up questions about compliance.
Luckily, a template is in place that has successfully streamlined legal requirements throughout almost the entire country in terms of allowing CPAs to work across state lines. The long-running Uniform Accountancy Act, published by The American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA), has provided a framework for most state statues in the United States related to reciprocity.
“In the interest of uniformity and to promote mobility through the substantial equivalency standard, the AICPA and NASBA strongly urge states to adopt the entire UAA,” urges the AICPA in the most recent edition of the UAA. And states have by and large cooperated.
As of 2016, every state (except Hawaii) plus Washington, D.C., Puerto Rico, and the U.S. Virgin Islands has embraced individual mobility, according to Lindsay Patterson, AICPA’s communications manager of State Regulatory & Legislative Affairs, and 15 states have implemented firm mobility.