Over recent years, the impact of technology has added a new dimension and a new landscape for accounting firms in developed countries. The so-called ‘Digital Disruption’ is really changing the way clients value the services provided by their accountants and the way accounting firms view their relationship with clients.
The 2014 Good Bad Ugly Report published by CCH Business Fitness NZ highlighted a few salient points about changes in the accounting industry:
- Compliance fees as percentage of total revenue are continuing to fall. Australian statistics indicate that it is currently around 60%. The 2015 report is currently being collated which will accurately report the impact in New Zealand. However the figure is anticipated to be similar to Australia.
- 23% of firms are engaged in outsourcing services (16% within New Zealand and 7% offshore). An additional 23% of forms are also considering outsourcing activities.
- Improving productivity and efficiency was noted as the top challenge accountants perceive that they face. This has consistently been the primary concern for the last decade.
Sara Weaver, Manager at Business Fitness, noted that when it comes to productivity and efficiency, “There appears to be many changes facing the accounting industry such as technology and the perceived shift from compliance to advisory services. However despite the advances in technology in particular, we are yet to note a significant change in productivity levels across the board.”
Many western countries including New Zealand have embarked on programs to reduce the regulatory burden on businesses with the implementation of Standard Business Reporting. Greg James, Inland Revenue Department Deputy Commissioner has recently commented that new software development initiatives represent a significant step towards a “simpler, more effective tax system.“
Based on experience in other countries, accounting firms have nothing to fear in the long run. Whilst there have been short term pains, revenue and profit will continue to increase in the long run with a shift in focus from compliance to advisory work.
What should accounting firms be doing to remain sustainable and competitive in the new accounting landscape?
- Work out who you are and what services you want to provide to your clients. You should ask your clients what they want from their financial adviser. Also ask your employees what they want to be doing in 5 years’ time. They’ll help you develop a clear vision of your firm’s future.
- Clients are not engaged by a list of services you provide. They want to know what these services mean to them, how they will help them achieve their financial objectives. You should develop and communicate your firm’s value proposition in a clear and emotionally engaging way. Use stories and case studies to support your firm’s value proposition.
- Fine-tune your firm’s approach to workflow management. Flowchart all stages of workflow management and put systems in place wherever possible to reduce bottlenecks. This should include taking control of workflow scheduling and work-in procedures, fine-tuning the client liaison role in your firm and establishing a leveraged approach to the review of work.
- Use technology to really streamline and simplify the processes that clients regard as transactional and lacking in real value. Then create capacity to focus on better understanding client needs through active listening and financial analysis.
- Over time, develop a service platform that reflects your clients’ financial objectives and needs rather than the services you feel comfortable in providing. Valuable clients of accounting firms are already voting with their feet – by actively seeking advisors that can engage with them and help them make the right decisions for their financial future.
Do you have a plan in place to ensure your firm has a sustainable future in the new accounting landscape?
Dale Crosby, Director of Training Beyond Accounting and Business Aptitude, specialises in helping small and large accounting firms navigate through the new accounting landscape to remain sustainable and profitable into the future. For more information, visit www.trainingbeyondaccounting.com or Ph +612 9904 8400.