In recent years, the accounting industry has undergone many changes and challenges. From learning to implement the new revenue recognition rules issued by the Financial Accounting Standards Board (FASB) in 2018, to the challenging onset of the global events of 2020, the industry has seen its fair share of hurdles. While the accounting industry is typically viewed as defensive due to providing essential services businesses are dependent on to operate and comply with regulations. It isn’t immune to changes in the business landscape. Accounting firms face challenges such as hiring and retention stressors, increased competition, and learning to harness disruptive innovation. The inclusion of new technological advancements and innovative practices helps firms maneuver through industry-wide pressures and strains.
In 2019, Sage reported that 90% of accountants feel their industry is experiencing a cultural shift leaning towards increased technology integration. And for good reason, some of the main challenges accountants face can be improved with innovative practices.
Current hiring trends reveal two of the biggest challenges lie in candidate attraction and employee retention. The Bureau of Labor Statistics reported a decrease of more than 300,000 accountants and auditors who left their roles in the last two years. With accounting being a pivotal need for businesses, firms can’t allow this problem to continue.
Innovation can be considered an enticing reason for candidacy attraction. Candidates naturally gravitate towards firms that are taking quantitative steps to remain in touch with the future. It proves to candidates the firm is invested in longevity and has established metrics to meet sustainability goals. Implementing innovative practices eases and streamlines current employees’ workloads. Portals or applications boost client communication management and machine learning automates tasks resulting in increased morale, a direct catalyst for talent retention. Enriching a firm’s EVP with innovation is an appealing strategy to draw in talent, and keep current employees content.
The level of competition among accounting firms has been steadily increasing, prompting firms to continuously ideate strategies to establish and maintain their influence in the industry. With such a high demand for accounting services across all industries, many firms face stiff competition for clients in the marketplace. Due to pressures to keep fees low and the complexity of accounting regulations, firms struggle to remain competitive in their respective industry.
To remain competitive in the accounting industry, firms that are innovative and efficient will always leave their competition looking pale in comparison. Innovation leads a pathway to a competitive edge, by keeping firms lean and operating at an optimal rate. When a firm is innovative, they create opportunities for differentiation of services, offering something unique that the competition isn’t equipped to follow. In addition, innovation produces highly adaptable firms, able to stay ahead of emerging trends. By constantly innovating and improving, a firm maintains its position as a market leader and secures its competitive edge.
As the accounting industry continues to undergo a rapid technological transformation, it is not uncommon for firms to face challenges adapting to the changing landscape. Learning to input new methodologies into already established workflow and ensuring employees are equipped to handle the shift are stressors firms face. It can leave them failing to harness the potential of disruptive innovation.
With an influx of new technologies available at accountants’ fingertips, firms that don’t acclimate staff and interject them into their processes and workflow place themselves at a strong disadvantage.
To address these challenges, it is essential for firms to prioritize staying up-to-date with new innovations and offering opportunities for employees to upskill. By doing so, firms effectively mitigate the stresses associated with implementing new technology. New innovations are a goldmine of solutions, and firms that dedicate themselves to learning how to utilize technology will see a high caliber of results. For example, some firms face issues with legacy applications hosted on-prem that unfold a collection of problems like maintenance, security concerns, or limited scalability. However, cloud computing is a powerful alternative achieved through cloud migration. It allows firms to modernize their process. Accounting firms that look at new technologies as an extension of their abilities and not a threat will capitalize on the advancements.
Abacus CPA is a national accounting firm responsible for hundreds of clients. One of the more pressing problems they faced was managing an influx of client communication, especially during tax season. Abacus, driven by its commitment to internal innovation and a strong emphasis on enhancing the client experience, partnered with WynHouse: An Innovation Firm to merge these two priorities into a cutting-edge solution.
To counter phone calls from clients regarding their taxes status, the solution was an application. It facilitated client communication and increased the transparency clients received surrounding their status. The application seamlessly integrated into current processes in PracticeCS and allowed for a push-updates feature. Abacus found a 51% reduction in client correspondence as a result of the innovation. Using innovative practices, allowed Abacus to reach a solution that improved its processes and upgraded how accountants and auditors communicate with clients.