In the fast-paced world of accounting, firms face numerous challenges that can hinder their growth and success.
Private Sector Business Success or Failure
Source: LendingTree analysis of U.S. Bureau of Labor Statistics data
With the global accounting services market expected to grow to approximately $735.94 billion by 2025 at a CAGR of 6%, it’s clear to see that there is a distinction between firms set up to benefit from this market growth, and firms set to struggle to adapt.
We explore the top challenges and solutions for your firm’s growth.
Challenge 1: Shift in Service Demands
Traditionally, accounting firms focused on providing compliance services for a fixed fee. However, the industry has evolved, and firms need to adapt to changing client expectations.
As the industry evolves, firms that continue to define their success by the low-yield, low-margin work they traditionally hung their hats on, are projected to continue seeing diminished profits, despite resource-deployment comparable to their competitors.
Agile accounting firms determined to stay relevant have shifted their focus to more comprehensive, professional client-services offerings, including advisory and consulting solutions.
Solution 1: Build Stronger Client Relationships
To stay relevant and profitable, accounting firms should shift their focus to value-add, comprehensive advisory and consulting solutions.
By building stronger client relationships and monetizing these services, firms can secure long-term success.
As the CPA Practice Advisor outlines: “successfully providing advisory services is dependent on compliance work. To advise and guide your clients, you need a foundation of current, accurate financial data”.
Challenge 2: Shortage of Accountants
The accounting industry is facing a significant shortage of accountants, with a decline of 11.6% in the number of accounting graduates between 2018 and 2020. This shortage poses a threat to the future of many firms, making it crucial to address the issue proactively.
Solution 2: Talent Acquisition & Retention Strategies
For forward-thinking firms, there are solutions available in mitigating the effects of the global-industry shortage of accountants.
By implementing short and long-term talent acquisition strategies, your firm can secure the right talent at the right level and cost.
“The industry is under so much pressure with the volume of work, which means business leaders often find themselves focused solely on what they need to do now to get the work out as opposed to developing and growing their people. The benefit is that the more you grow your people, the more output they’re capable of and the more potential there is for them to add real value to your business” – Nick Sinclair, Founder of TOA Global.
With the right approach, firms can navigate the current talent crisis and emerge stronger than ever.
Challenge 3: Evolution of Technology
Technology is rapidly transforming the accounting industry, requiring firms to adapt to new practices and leverage emerging technologies. Cloud-based accounting software, data analytics, and automation are becoming crucial for efficient operations and staying competitive.
Solution 3: Adapt and Upskill
As technology continues to transform the industry, it’s critical for accounting firms to focus on adapting and upskilling, ensuring they are well-placed to benefit from the changing landscape.
According to Oracle Netsuite, “the latest innovations around real-time analytics, robotic process automation (RPA) and AI will depend on having a sound, reliable, clean data infrastructure. But many companies are working with legacy, on-premises accounting systems that are outdated.”
Challenge 4: The ‘New Way of Work’
Like many industries, accounting is experiencing a shift towards flexible and remote work models. While remote work offers benefits such as increased flexibility, work-life balance, cost savings, and access to a broader talent pool, it also presents challenges in terms of cybersecurity and adjusting to new work arrangements.
Solution 4: Prepare for Hybrid
Accounting firms adapting to hybrid and remote working models should take key steps.
- Establish a clear policy outlining expectations.
- Promote communication systems for effective collaboration. Assess technology infrastructure for remote work support.
- Prioritize cybersecurity measures with authentication protocols, VPNs, and encrypted communication.
READ: How TOA Global can protect your firm from cyber-attacks.
Challenge 5: Regulatory Changes
Accounting teams face ongoing challenges in order to ensure compliance, maintain professional competence, and provide accurate and reliable financial information. It is essential for accountants to stay updated on:
Tax Regulations
Accounting Standards
Audit and Assurance Standards
Regulatory Compliance
Data Privacy and Security
Professional Ethics and Independence
Financial Regulations
For example, Neil Fishman, the president of the National Conference of CPA Practitioners, highlighted in his January 2023 newsletter that practitioners must prepare to incorporate 5,593 pages of new provisions from the Consolidated Appropriations Act (also known as the COVID stimulus) amidst a new tax season, including tax extenders and PPP loans protocols.
Solution 5: Research, Participate, Track and Implement
To address regulatory changes effectively, accounting firms can:
- Stay informed by monitoring official websites and industry publications.
- Encourage employees to participate in regulatory compliance-focused professional education.
- Designate a team to monitor and interpret regulatory changes and develop compliance strategies.
- Foster relationships with regulatory bodies through open communication and participation in consultations.
- Conduct regular internal audits and implement compliance management systems.
These measures, along with fostering a compliance culture, engaging external experts, participating in professional associations, and developing a regulatory change management plan, help accounting firms navigate regulatory changes and ensure compliance.
Challenge 6: AI
AI is a disruptive technology that is having a major impact on the accounting industry, but what are the top concerns?
Job Displacement:
The automation capabilities of AI can handle certain repetitive accounting tasks.
Data Privacy and Security:
AI can handle large volumes of sensitive financial data, raising concerns about privacy, security and compliance with data protection regulations.
Ethical Considerations:
AI algorithms currently face challenges like biases, lack of transparency, and the potential to act without human oversight or accountability.
Technical Integration:
Implementing AI systems requires technical expertise and resources.
Solution 6: Responsible AI
While there are some very real challenges associated with AI, it also offers a number of solutions that can help accountants to work more efficiently, accurately, and effectively.
- AI automates repetitive tasks, freeing up accountants’ time to focus on higher-value activities.
- AI systems can analyze vast amounts of financial data with greater accuracy, reducing the risk of human error.
Algorithms facilitated by AI enable accountants to gain deeper insights, identify trends, detect anomalies, and make more informed business recommendations while contributing to a more robust and secure accounting ecosystem. When used responsibly, AI can empower accountants to provide more valuable advisory services to clients.
How can TOA Global assist your firm?
Increase capacity with global staff that can scale with your firm.
Free up onshore teams to provide more client-facing services.
Rest secure with 24/7 enterprise-grade security and leading technologies.
Improve processes and profitability through experienced global accounting professionals with mapped out career plans.
Gain a proven accounting partner who has managed remote accounting teams for over a decade.
Find accounting talent trained in the latest U.S. principles.
