What trends will have the biggest impact on accounting firms and their clients over the next five years? How well-prepared are accountants to take advantage of these trends? These two questions were the focus of a new report released on Monday by Wolters Kluwer, CCH, a global provider of tax, accounting, and audit information, software, and services.
Close to 500 accounting professionals who specialize in tax, audit CFO/consulting, and other financial services at CPA-led firms with as little as two to more than 500 employees were polled in August for the 2014 Wolters Kluwer, CCH Preparedness Survey.
Key results of the survey were presented by Wolters Kluwer, CCH President and CEO Teresa Mackintosh during her keynote address on Monday morning at the CCH Connections User Conference 2014 in Orlando.
“There are ample opportunities for all accounting firms to boost productivity and profitability, but what’s critical is knowing where those opportunities exist and how to leverage them to improve client satisfaction,” she said. “The combination of understanding these survey results along with listening to industry peers describe how they capitalize on key trends to succeed can be highly influential in charting a course of future business growth.”
The report reveals that the most significant outcome of well-prepared firms isn’t just a high overall level of confidence, but results. In addition to reporting being more productive and more profitable, “very prepared” firms strongly believe that technology is the key to managing change and driving better business results, according to Wolters Kluwer, CCH.
However, the survey found that only 18 percent of accounting firms say they are “very prepared” to take advantage of the top five trends Wolters Kluwer, CCH identified as having the most significant impact on the future of the profession. Eighty-two percent of firms are “less prepared.”
According to the report, the five top trends facing the profession are:
1. Increased focus on client service:Providing enhanced customer service, leveraging technology to automate processes and free up staff, while providing more personalized and strategic advice and counsel to clients.
Client service has progressed from the traditional one-on-one, face-to-face connections of the past to a continuous loop of client engagement opportunities. The connections between a firm and its clients have shifted from infrequent and deep to ever-present and open-ended.
“Agility trumps ability,” Doug Sleeter, founder and CEO of The Sleeter Group Inc., said in the report. “The pace of change is faster than ever, and accountants who focus more on agility than on raw ability will thrive in the coming years.”
According to the survey results, eight in 10 “very prepared” firms say that placing an increased focus on client service will have a huge impact on the future of their business. Also, when asked to rate the importance of technology across a variety of functions essential to accounting firms over the next five years, 76 percent of those who feel they are “very prepared” said technology will have a major impact on their ability to provide service, support, and added value, as well as to retain existing clients.
2. Technology integration challenges:Making sound and strategic investments in technology today, while providing a smooth migration and integration path to new and emerging technologies.
What are the rewards for integrating technologies? According to the report, the average time it takes a firm to go from initial client engagement through invoicing to cash in the bank varies significantly between the “very prepared” and “less prepared” groups. The survey found that the “very prepared” group is 10 business days faster – with an average of 14 days compared to “less prepared” with an average of 24 days.
3. Digital mobility opportunities:Reducing capital costs; increasing service and employee productivity by leveraging mobile devices and digital platforms; and consolidating and integrating cloud-based information repositories.
Nearly 80 percent of “very prepared” firms say digital mobility opportunities will play a “very significant” role in their business within the next five years, according to the survey results.
In addition, among the 93 percent of accountants who say they’ve already implemented mobile solutions or have plans to within the next three years, the No. 1 benefit they’ve realized, or hope to realize, is improved client service (58 percent), followed by improved productivity (55 percent) and improved work-life benefits for staff (49 percent).
The survey also found that more “very prepared” firms have already adopted cloud technology compared to “less prepared” firms (62 percent versus 55 percent).
4. Talent management and succession planning:Identifying and managing talent, developing new and different skill sets, and managing the retirement of senior leaders.
According to the survey, nearly seven out of 10 “very prepared” firms are ready to take advantage of talent management and staff succession planning in looking at the future, compared to only 30 percent of “less prepared” firms.
More than 60 percent of equity partners in US public accounting firms are over the age of 50, and 75 percent of the membership of the American Institute of CPAs will be eligible to retire by the year 2020, Bill Carlino, managing director of Transition Advisors, noted in the report.
“That translates into a huge talent void,” he said. “Larger firms with 50 or more employees typically have formal succession plans in place, with efforts to retain talent. Among smaller firms with less than 25 employees, roughly 70 percent do not have any type of succession plan in place, nor path to equity among their employees.”
5. Social media as a business tool:Becoming more sophisticated in the use of Twitter and other social media to market their business, finding and engaging clients online, and monitoring the competitive landscape.
Sixty-nine percent of “very prepared” firms have already implemented social media as a business tool, while 28 percent plan to in the future, according to the survey. Among “less prepared” firms, 55 percent are already using social media platforms, while 34 percent plan to in the future.
Firms say the greatest benefits to having a social media presence are to enhance client satisfaction, followed by the benefit of attracting and winning new business.
“Using social media to ‘listen’ to clients and understand their industries is a powerful way to connect and deepen your client relationships,” Tom Hood, CEO of the Maryland Association of CPAs, said in the report. “Re-tweeting, ‘liking,’ and sharing their news and stories can keep your firm in front of the market continuously.”