The Commonwealth Bank recently released its bi-annual Accounting Market Pulse report, which is developed in partnership with Beaton Research + Consulting. The report is based on a survey of the top accounting firms across Australia, identifying a number of key industry trends and insights.
The latest report aims to provide accounting firms with reliable forecasts on industry confidence and other financial performance indicators to inform strategic decision making, benchmarking and to budget more confidently.
The latest survey of top-tier accounting firms, restructuring firms and other firms reveals short term expectations across the sector have softened. The outlook across the next 24 months however remains squarely in positive territory, and steady when compared to the previous report.
When looking at the split in results between the different segments, over the short-term, large firms remain more optimistic than the rest of the market with the perception of other firms building over the longer-term.
Despite a subdued outlook, we saw that 40 per cent of firms are planning to expand geographically, with Brisbane flagged as the top destination for expansion. The primary reasons for geographic expansion is to pursue strategic alliances or mergers with an existing firms.
While negotiating prices with clients eased moderately when compared to the previous report, it remains as the top challenge for firms. Client-led price negotiation can often lead to margin compression, and as a result firms appear to be implementing a number of methods aimed at reducing costs and increasing efficiencies.
The Report reveals that 55 per cent of firms expect an increase in IT software and hardware investment, and many anticipate an increase in knowledge management investment as firms continue to identify ways to reduce their overheads, streamline administrative activity and focus on the value-add services such as business advisory offerings. This was driven primarily by firms outside the Big Four as they seek to remain competitive and manage costs.
In an ongoing trend towards diversification in service offerings across in the sector, the flight to providing non-accounting services continues, with all large and restructuring firms and 77 per cent of other firms indicating they offer non-accounting services. This shift was further evidenced by the fact that these firms reported an increase in revenue from non-accounting services.
As outsourcing and offshoring remain prevalent trends amongst Australia’s leading firms, we saw an expected decrease in hiring for shared services, secretarial and admin staff. Conversely, firms are seeking to increase fee earning and salary/equity partner numbers, as they report that keeping quality staff has become substantially more difficult over the last six months.
For more insights on mid and top-tier firms, view the full CommBank Accounting Market Pulse Report. For more information, contact Marc Totaro, National Manager, Professional Services, on 02 9303 1940 or via email at marc.totaro@cba.com.au.
- Confidence rises as accountants seek new revenue streams - 18 June 2018
- CommBank Professional Services Insights – Feb 18 - 8 March 2018
- CommBank Business Insights Report: Professional Services - 2 July 2017
