The accounting industry in North America has long been recognized for its vital role in ensuring financial compliance, transparency, and accurate reporting. However, in recent years, the sector has experienced a capacity crunch, primarily driven by increasing demand, complex regulatory requirements, and a shortage of skilled professionals.
This blog will delve into the challenges posed by the capacity crunch and explore viable solutions to the Google search phrase: “How to create capacity in my accounting firm”. Here’s how firms can bridge the gap and maintain the industry’s growth and efficiency.
Understanding the Capacity Crunch
What Accounting Firms Can Do to Create Capacity
The capacity crunch in the accounting industry is a multifaceted issue, influenced by several key factors:
Rising demand requiring more services
As Jennifer Wilson (Convergence Coaching) notes in the 2023 Rosenberg Survey, “Client demand for services has never been greater and firms have many opportunities to sell new services to both new and existing clients.” Jennifer further states that “The high client demand has contributed to overselling in most firms, creating a feeling of overwhelm – even burnout for all staff levels including partners.”
Regulatory complexity putting pressure on already overextended staff
Government bodies continuously revise and add new financial regulations, making compliance a challenging task for accounting firms. This increases the workload and creates a strain on existing resources.
A skills shortage that isn’t budging
According to Matt Rampe (The Rosenberg Associates), “Staffing was a red-hot challenge” over the past year. What’s worse Matt says, is that the fallout of this shortage leads to:
- Slowed revenue growth as firms slow or halt the acquisition of new clients.
- The retirement of baby boomers and a lack of qualified successors posing difficulties in transitioning clients and buying out partners while maintaining firm sustainability.
- Escalating staff costs, coupled with recruiter fees, exerting pressure on profitability.
Accounting firms can create capacity through various strategies, both with their current teams and by looking elsewhere for skills. Here are some approaches for each:
Maximize current resources
- Process Automation: Invest in software for task automation, freeing up staff for higher-value work.
- Workflow Optimization: Identify and eliminate inefficiencies in internal communications, processes and workloads.
- Training and Skill Development: Upskill employees to take on more complex tasks.
- Talent management: Encompassing training and development to allocate resources effectively, this also includes succession planning and engagement strategies to maintain a competitive edge and minimize talent gaps.
- Client Segmentation: Prioritize profitable clients and reallocate resources.
Extend capacity beyond current capabilities
- Hiring Specialized Talent: Recruit experts in growth areas – on or offshore as skills availability allows.
- Strategic Alliances: Collaborate with other firms, freelancers, or consultants for specific projects.
- Technology Adoption: Invest in advanced tools and analytics.
- Mergers and Acquisitions: Consider merging with or acquiring complementary firms.
- Offshoring: Access specialized skills to free up your in-house team for more advisory and strategic work.
As Matt Rampe (The Rosenberg Associates) notes, firms who navigate this crisis well, found success in “leveraging more technology, outsourcing, and hiring non-accountants to help boost capacity.” - Client Advisory Services (CAS) accounting: As the U.S. faces a CPA shortage this is leading firms to adopt CAS practices that don’t exclusively require CPAs, making them accessible. CAS offers comprehensive service suites that boost revenue, ease hiring, and enhance client relationships.
The Potential of Offshoring
Offshoring, or outsourcing accounting tasks to professionals in other countries, offers a promising solution to address the capacity crunch. The 2023 Rosenberg Survey is using 2023 as its base year to study outsourced labor uptake in the industry.
| If “yes” to outsourcing, what are your plans for next year? | |||||
|---|---|---|---|---|---|
| Outsource staff | Outsource tax returns | Increase | Same | Decrease | |
| >$20M | Yes: 55% | Yes: 47% | 74% | 26% | 0% |
| $10-20M | Yes: 49% | Yes: 31% | 63% | 27% | 10% |
| $5-10M | Yes: 33% | Yes: 18% | 59% | 32% | 9% |
| $2-5M | Yes: 11% | Yes: 2% | 34% | 66% | 0% |
Source: The Rosenberg Survey 2023 pg. 32
By leveraging offshoring, accounting firms like those represented above are mitigating the challenges they face while maintaining efficiency and client satisfaction.
Here’s how:
- Cost Savings:
Offshoring allows accounting firms to reduce operational costs significantly. Countries with lower labor costs can provide quality services at a fraction of the expense, allowing firms to allocate resources more strategically. - Access to Skilled Talent:
Offshore BPOs have a pool of highly skilled and trained accounting professionals. By tapping into this talent, firms can expand their capacity without compromising on quality.
Find out about TOA Global’s expert outsourced accountants trained in U.S. accounting standards who are available to integrate into your team today. - Scalability:
Offshoring provides accounting firms with the ability to scale their workforce based on demand.
- Focus on Core Competencies:
By delegating time-consuming tasks to offshore teams, accounting firms can concentrate on core competencies, such as advisory services and building client relationships.
- Business Continuity and 24-hour Possibilities:
Time zone differences can be leveraged to ensure round-the-clock operations. While the local team works during regular business hours, your offshore team can handle tasks outside these hours, resulting in greatly improved turnaround times.
Challenges and Mitigations
Though offshoring offers numerous benefits, it is essential to acknowledge and address the potential challenges:
- Cultural Differences:
Effective communication is essential for successful working relationships when collaborating with BPOs or offshore teams. Hiring talent with strong English skills and choosing English-proficient locations like the Philippines can eliminate language barriers. Promoting open communication and cross-cultural training, along with the use of collaboration tools, fosters teamwork, creating a successful formula for global teams. - Data Security and Compliance:
Ensuring data security and compliance with regulations, especially across international borders, is paramount. Establishing robust security protocols and selecting reputable offshore partners is necessary to safeguard sensitive financial information.
Find out why TOA Global chooses the Philippines’ supportive BPO environment and data security regulations. - Quality Control:
Maintaining consistent quality in deliverables requires stringent monitoring and feedback mechanisms. Regular audits and performance evaluations can help ensure that offshore teams adhere to the desired standards.
The Philippines boasts a vast pool of highly skilled accounting professionals with the country’s education system producing many graduates annually.
Case Study: How a U.S. Accounting Firm Leveraged Global Talent with TOO Global for Capacity Growth
Sexton & Schnoll, a top accounting firm in Florida, faced a local talent shortage in their pursuit of scalable growth in 2022. To bridge the capacity gap, they integrated a team from TOA Global, leading to remarkable outcomes.
“I consider TOA Global to be a strategic partner helping us fuel our growth,” says Marc Schnoll, CPA. “The experience has been nothing but positive.”
- Enhanced Focus on Client Excellence:
With a bolstered team, they could dedicate more time and energy to delivering exceptional services to their clients, achieving faster turnaround times. - Rapid Returns on Investment:
Just six months after incorporating the global team, they witnessed impactful returns, a testament to the effectiveness of their new approach. - Team Expansion:
Their workforce grew from 4 to 7 members, with 4 based in the U.S. and 3 in the Philippines, enabling them to scale operations effectively.
“With TOA Global as a partner, I am confident we can find all the staff we need.”
This strategic shift to a global talent solution effectively addressed local talent challenges and set them on a path to success in their competitive industry.
Did you know?
By partnering with a global staffing solution like TOA Global, offshore teams are 100% dedicated to the accounting industry and also available to work in U.S. time zones.
The capacity crunch is a pressing challenge that demands proactive solutions. Offshoring presents a viable and effective strategy to expand capacity, access skilled talent, and optimize resources. By embracing offshoring as part of your strategy, accounting firms can navigate the complexities of the industry while continuing to deliver top-notch services to clients.
With TOA Global you’ll get
Experts in all things accounting
TOA Global is celebrating 10+ years dedicated to serving the accounting industry with elite talent in the Philippines.
Each role carefully shaped and developed
Empowering your staff with role-aligned training and career development.
Sensitive information and data kept secure
Advanced security platforms and training focused on your needs.
Support as and when you need it
Dedicated client support through 24/6 service including live chat and knowledge base articles. 360° team management and engagement through a custom-made people management platform.
More about TOA Global
TOA Global is so much more than a BPO. We helped over 1,000 international firms grow on their own terms by adding elite offshore accounting talent to their teams. With over 10 years of exclusive service to the accounting industry, we have helped more than 3,700 accountants and bookkeepers in the Philippines find more rewarding careers.
For firms that want to stay updated on the latest developments in talent acquisition, people management, and training for your accounting firm, check out our monthly newsletter, Firm Forward. We regularly explore these and other offshoring and accounting industry trends.
More about TOA Global
TOA Global is so much more than a BPO. We helped over 1,000 international firms grow on their own terms by adding elite offshore accounting talent to their teams. With over 10 years of exclusive service to the accounting industry, we have helped more than 3,700 accountants and bookkeepers in the Philippines find more rewarding careers.
For firms that want to stay updated on the latest developments in talent acquisition, people management, and training for your accounting firm, check out our monthly newsletter, Firm Forward. We regularly explore these and other offshoring and accounting industry trends.
