Leaders Predict Major Shifts in the Accounting Industry Are On the Horizon
The accounting industry is about to experience a revolution, and the action has already started to occur on several key fronts.
According to three of Accounting Today’s Most Influential People in Accounting, major shifts in the accounting industry will reshape the profession, redefine the role of an accountant and bring new opportunities to firms.
Allen Koltin, CPA, CGMA, and CEO of Koltin Consulting Group, said clients today expect their accountants to do much more than prepare a tax return or financial statement.
“Accountants must evolve from being the most trusted advisor to the most valuable advisor,” Koltin said. “This requires partners to be more strategic. They need to be able to help clients grow strategically, run their businesses better and produce greater profitability.”
Angie Grissom, owner, and chief relationship officer with The Rainmaker Companies, agrees that a growing focus on strategy makes marketers more valuable than ever to their firms.
“Accounting marketers are uniquely positioned to address the changing needs of their firms’ clients, prospects, referral sources and team members,” Grissom said. “Marketers must stay informed about these changes and remain aligned with the firm’s strategic priorities. A best practice is to have a seat at the table when strategies are being defined and priorities are being set. Firm leaders should support this.”
As the future unfolds, CPAs and marketers must be able to perform higher-level consulting work, said Gale Crosley, CPA, strategic revenue growth consultant and founder of Crosley+Company.
“Accounting and advisory firms will continue to see lower margins in core compliance services, with much of that work being addressed by technology solutions like AI and bots,” Crosley said.
The industry is changing, and firms must prepare now for the future.
“Accountants need to get into the business of making money unrelated to time,” said Koltin. “There are many services firms can offer where earnings are based on the value provided or as a percentage of the savings or profits.”
Following are five areas for growth that Koltin, Grissom and Crosley said could provide firms with tremendous opportunities:
- Environmental, Social & Governmental (ESG)
- Digital Assets
- Private Equity
- Chief Growth Officers and Other C-Level Executives
- Professional Sales Teams
“Client Accounting Services (CAS) is not on the list but will continue to be a growth area for many firms,” said Crosley.
Environmental, Social & Governmental
More consumers want to do business with companies that have good environmental, social and governmental (ESG) policies. ESG goes beyond awareness of carbon footprints to encompass everything from diversity, equity and inclusion (DEI) to financial transparency. As the trend grows, companies are issuing statements on how they support ESG. All these claims must be documented and verified. No one is better qualified for the job than an auditor.
Marketers can support and expand their firm’s ESG initiatives by getting to know the terminology and latest trends, as well as investigating what other firms are doing, how they market ESG and what they communicate about the unique value they bring. Marketers can also survey clients to determine their needs, conduct focus groups, develop peer networks and use strategic tactics to position the firm as an ESG thought leader. The AICPA offers a Fundamentals of ESG Certificate for those interested in getting up to speed quickly.
Growth in Digital Assets
Digital assets are defined broadly by the IRS as “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology.” Digital assets include, but are not limited to, convertible virtual currency (cryptocurrency), stablecoins and non-fungible tokens (NFTs).
Taxpayers must report digital asset activity, gains and losses on their tax returns. Since there are limited reporting standards for digital assets, accountants are needed to track the transfer of ownership, audit the books, enter debits and credits and do bank reconciliations, among other services.
Marketers can provide value by assessing market needs, surveying clients, collecting competitive intelligence and helping develop, package and promote new product offerings. In addition, savvy marketers will learn everything they can about digital assets so they can provide advice and guidance on leveraging cryptocurrency, blockchain and disruptive technologies like AI and ChatGPT.
Alliance with Private Equity Firms
Private equity investors are changing the industry by infusing firms with cash to finance growth. Although most accounting firms will not have the chance to work with private equity firms, the ones that do will have the capital to acquire competitors, talent and technology. They will also have funds to invest in new products and services.
“Young professionals do not want to wait for a payout. They want a piece of the rock now,” said Koltin. “Instead of waiting 25 years to get a small amount of cash, they can get monetized in ways we never thought possible, thanks to investments from private equity firms.”
Marketers can increase their value by proactively bringing new ideas to the firm. Marketers should watch what is happening in the accounting industry and the industries they serve to uncover shifts in buying behaviors and client needs. Private equity firms look for progressive firms. Being on top of new developments can increase the likelihood that your firm is attractive to private equity firms, as well as potential M&A partners and the best talent.
Hiring Chief Growth Officers and Other C-Level Executives
Adding positions such as Chief Growth Officer, Chief Revenue Officer and Chief Product Officer will give firms a competitive advantage. These professionals can focus on strategic growth instead of producing work. Bringing in professionals with different skill sets can also help enhance value creation and client retention.
Marketers can provide value by keeping abreast of new developments in the accounting industry, researching trends, determining what clients want and need and learning project management skills. Once again, it is important to collect competitive intelligence. Firms must know what competitors are doing to properly position themselves.
Working with Professional Sales Teams
Accountants make money from recurring and nonrecurring revenue. Recurring revenue is typically generated from tax, accounting and audit work done on an annual basis. Nonrecurring revenue comes from special consulting engagements that may be done once or periodically. Bigger profits generally come from consulting engagements.
While consulting provides more value and higher revenue, it also requires a focused effort on new business development and delivering the work.
“As the mix of non-annuity work tilts to an annuity, there will be fewer auto-renewal projects and a greater mix of one-time projects and retainer engagements,” Crosley said. “Accountants will need a higher level of skill and more resources devoted to keeping the pipeline filled. A few rainmakers will not bring in enough new business to support the firm. An internal professional sales team can open more doors than a single rainmaker by focusing 100% of their time and effort on sales.”
Marketers can help take prospects through the buyer’s journey and support sales teams with content, education and collateral to enhance the process.
The Bottom Line
Many firms are shifting from compliance to consulting.
“Rethink the firm’s growth strategy and the talent needed to meet or exceed goals,” said Grissom. “Marketing professionals are in a great position to work alongside accounting and consulting professionals to help determine what market needs exist, where the firm can assist and what additional offerings and resources can be made available to clients. To do this, marketers need to understand the firm’s challenges and become part of the solution.”
“There have been more changes in the accounting profession in the past three years than in the past four decades. As a result, firms can no longer ignore major professional shifts if they want to remain relevant,” said Koltin. “Change is better than the status quo.”
Eileen Monesson, CPC, MBA, CEO, PRCounts. Contact Eileen at [email protected].
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