INDUSTRY PROFILE: Accountants & Bookkeepers

Accountants and bookkeepers practice as sole practitioners or in partnership with other firms, offering services based around the preparation of annual financial statements, tax returns and advising small businesses. As online tools become more intuitive and cost-effective, small businesses can often access the same information or receive the same insights. This means accountants will increasingly require a more holistic approach to business support to justify their fees.

The main challenge accountants face is the need to evolve with new technology and client expectations. It’s predicted that robotics, software and contracting out compliance or transactional tasks will remove a large portion of transactional accounting work in the near future. The profession will therefore need to invest in deeper strategic partnerships with their clients who will be wanting an accounting partner who not only understands tax and compliance but can advise on how to survive a crisis, recover, build resilience and grow their business with new opportunities.

Success characteristics

As technology such as cloud accounting platforms and artificial intelligence is automating many transactional functions, employers are now seeking professionals with the commercial expertise and analytical skills to drive greater business results. Employees of accounting firms often want alternate ways of working, such as remote working. Firms have realized that it’s possible (and sometimes preferable) to work from home for a portion of the week.

Successful accounting businesses share these common attributes:

• A strong company culture with work/life balance and a feeling of belonging, caring and safety

• Being able to work from home or have flexible work hours based on their needs

• A definitive career path for employees

• Active owners or partners in the business who are highly qualified, of high business intelligence, dynamic, outgoing, proactive and personable

• Focused business objectives, specific marketing plans and dedicated time to pursue client acquisition

• A regular client base and income that is not reliant on contingent or speculative work

• Integrated technology and tools that increase the efficiency of services

• Business coverage and/or specialization matching owners/partners strengths

• Membership in relevant professional associations

• Utilization of progress billing, periodic rate reviews, partner/staff utilization rates and time recording

• Beneficial referral arrangements for financial planning and other consulting

• Effective credit controls and sound debt collection systems

• Budgetary controls to monitor overhead

• Understand and utilize the various grants which are available to small to medium businesses to employ the services of professionals for business growth and development

• Ability to recruit and retain skilled staff

Challenges

As in any professional service business there are issues to watch out for and solve. The changing needs of customers, more complicated supply chains and business models and even the way intellectual assets are valued mean firms will be required to expand their knowledge.

Other specific challenges include:

• Staff who may lack expert industry knowledge

• A billing base that is reliant on a few large customers

• Rapidly evolving tools such as cloud accounting services, online business registration and app bundling that could dilute the services a customer needs

• Creating opportunity for new partners to buy into the practice so the business can continue to grow

• Succession planning as the baby boomers reach retirement

• Outsourcing certain parts of legal or business services to lower costs while maintaining excellent customer service

• Globalization of professional services

Opportunities

There are several new factors continuing to contribute to the growth of the accounting industry. The pandemic pushed many businesses along the development path and accountants are no different.

These factors include:

• Greater overall demand for high-end accounting services, alongside the uptake of computerized accounting packages among businesses

• Partnering with state and federal government in providing services that support local needs

• Increased demand for business growth, succession and resilience services

• Steady growth of the small-to-medium business market. While the pandemic saw a number of businesses close, there has been a surge in new start-ups.

• Various government grants and funds are available to assist small-to-medium businesses with funding professional consultancy services

• Growing diversification in the range of legal services offered (e.g., competencies in tax matters and asset management as an add-on for traditional legal and accounting work)

• More complex business problems associated with management and financial consulting, international trade, free trade agreements, etc.

Accounting trends

Cloud-based accounting solutions

Cloud-based technology will gain even stronger momentum in the future with the continual updating of information which allows accountants and clients to analyze data and make decisions based on daily information. As intelligent technologies progress and more companies move their information to cloud-based systems, accountants need to become proficient in leveraging the cloud to offer clients upto-date financial analysis and to stay competitive.

Growth of business apps

Increasingly businesses are using apps to manage most of their business; although they can also be the source of growing pains among even the most tech-savvy advisors (namely, the risk of app fatigue and, less discussed, the struggle with managing staff and client expectations regarding the capabilities of automation).

The growing app ecosystem seems to promise that every part of a business’ workflow will be automated. Instead of seeing automation as a “set it and forget it” solution, it’s critical to understand it as an evolution. Committing to cloud technology means trusting in its progression as it continues to create efficiencies in accounting and improves over time.

Using social media to connect

Accounting firms are beginning to use social media to communicate with their peers and colleagues and to get updates on the latest business, political and accounting developments that may impact their work. Today, social media provides businesses with a free and easy way to market services and connect with clients and potential clients.

Automation of the accounting function

Accounting can now be highly automated without the need for significant physical intervention as the latest accounting software requires minimal data entry. Formerly labor- and time-intensive tasks of accounting (audits, tax preparation, banking and payroll) can all be automated. Technological systems will take on repetitive and timeconsuming jobs, leaving the analytical and managerial tasks to humans.

Outsourcing

For businesses, outsourcing their accounting allows them to focus on their core business and better utilize their resources which could result in fewer in-house accountants employed at larger companies.

For the accountant, it’s possible to also outsource back-end functions such as data entry and tax return filling to contract employees in lower wage countries. This reduces the cost for the accounting firm and can speed up delivery, leaving more time for customer-facing business advisory work.

Connecting to bank data

Business owners are asking their accounting professionals to provide their businesses with value through up-to-date insights and analysis as opposed to looking for historical information based on prior year data. Accounting software (like Xero and Intuit) can link via an API into bank data to allow accountants to evaluate and review business data daily.

Changes in accounting standards

Accounting standards are continually being revised and updated, including many of the standards that were developed before the advent of social media, ad-tech (digital advertising) and the “shared” economy (shared rides, lodging, etc.). These new business models have a significant impact on accounting. A good example is the rise of intellectual assets such as brand, number of followers or traffic, which is difficult to value on the balance sheet.

Growth of advisory

Accountants offering advisory services to their small business clients is more important than ever. It’s estimated that only 51% of small businesses will survive more than five years; however, that number jumps to 85% when they work with an advisor. Similarly, seeking proactive advice is often cited as a top reason why businesses switch accountants.

With the increasing significance of and demand for advice, it’s also important to note that client expectations regarding the services they receive from their accountant or bookkeeper are also changing.

Mobile accountants

A new generation of business owners is emerging who are digital natives, and many have never had to conduct business in a world that did not include the internet and smart phones. This new generation of business owners is looking for immediate insight delivered to their devices, whether that is a smart phone, tablet, laptop or other mobile device. Consumers are expecting that their accounting professionals can provide the same instant access.

With the emergence of cloud computing, and acceptability of electronic documentation in place of traditional paper-based documents (invoices, receipts, etc.), accountants are now increasingly more mobile. Accountants can work remotely and there are currently many team sharing tools to enhance remote collaboration and work.

Resources

American Institute of Certified Public Accountants

aicpa.org

International Federation of Accountants

ifac.org

U.S. Bureau of Labor Statistics

Info on the occupational outlook for accountants and overview of pay rates, nationally and by state

www.bls.gov

American Institute of Professional Bookkeeping

aipb.org