Although it’s been discussed for several years as a potential gateway to growth, it appears firms of all sizes are finally seeing portions of their overall services dedicated to client accounting.
The above revelation, and other key firm findings, were announced at this week’s Digital CPA conference, hosted by CPA.com and the AICPA, as part of the 2016 National Management of an Accounting Practice (MAP) Survey. This survey of 1,800 firms of all sizes was produced by CPA.com and the AICPA Private Companies Practice Section (PCPS).
More specifically, the survey found growing penetration of the client accounting services/virtual CFO services category for larger firms. The slice of net client fees represented by that service area, which includes outsourced finance and accounting services and other back-office support for clients, more than doubled to 9 percent for the largest firms with annual revenue of $10 million or more that are active in this area, according to the survey. It also increased by double digits for the next two largest segments: firms with revenue of $5 million to less than $10 million and $1.5 million to less than $5 million.
On another front, CPA firms’ use of cloud services has grown since 2014. Some 56 percent of all firms surveyed said they use cloud-based software, up 17 percent from two years ago. Six of seven CPA firm revenue segments reported increases, with only the largest category ($10 million in revenue and up) reporting a slight decline (-1 percent). Use of cloud-based remote backup increased 14 percent to 57 percent for all firms, and an identical number reported that they capture source documents digitally.
Among other findings of the survey:
38 percent of firms provide staffers with tablets or mobile monitors to work remotely, with 91 percent of the largest firms ($10 million in revenue and up) doing so.
49 percent of firms are using social media for business development, while 29 percent are using it for recruitment, although the latter is far more common for larger firms.
43 percent of firms text clients to obtain information, although the practice is far less common in larger firms with more formal client communications.
30 percent of firms use Skype to communicate with colleagues and clients, compared to 10 percent in 2014.
Only 7 percent of firms indicated that they do not operate in a paperless environment.
In commenting about the findings, Mark Koziel, CPA, CGMA, vice president of firm services and global alliances at the AICPA, gave some insights behind the numbers and stressed there was more to the stats.
“I hear instances of client accounting being more profitable, but it was difficult to get more hard stats about that. Also, in smaller firms, in many instances, they may have shown greater profitability but only because they lost a key person and overworked everyone else,” said Koziel. “The largest growth in fees we saw were for firms earning under $200,000 [up 10.5 percent year-on-year). We are not quite back to pre-2008 growth numbers, but we are strong today though.”
Feel free to look at more MAP Survey results here, and heed Koziel’s parting words: “The best advice I can give firms today is do not manage to be average.”