Like most industries, the accounting industry is changing due to economic, demographic and technological factors. This post summarizes five key trends that are already impacting the industry and that will continue to do so in the coming years.
Small to midsize business (“SMB”) owners should be aware of these changes so that they can understand what they can expect to see in the coming years.
Outsourced Accounting
I am hearing from businesses every day that they want to focus on what they do best and outsource the rest. If you are not an accountant, or accounting is not core to your business why would you want to manage this function? Business owners are increasingly realizing that their time is better spent focusing on building a better product or service rather than dealing with accounting. Keeping focused on your core business should allow you to simplify your business and reduce your office overhead. SMB owners should realize that the opportunity cost of their own time is too great to invest it in accounting when someone can do it more efficiently and can produce more useful and timely output.
Improved Technology
Huge strides are being made on the technology front that are enabling accountants to minimize the amount of time they spend on data entry. In addition, the concept of sending a shoebox to your accountant which would create hours of painful work (believe me) is being mitigated by the availability of tools like receipt management software and online invoicing that can be sent directly to your accountant or bookkeeper from your vendors. An accountant today should be helping you figure out how best to streamline the process to minimize your involvement in gathering information.
Value-based Pricing
Value-based pricing provides business owners with certainty on fees and prevents surprises. In addition, value-based pricing forces accountants to be efficient and focused on the issues that matter to customers. Technology has made accounting work more efficient and easier to predict making value based pricing possible. In launching Enkel, we have tried to keep our pricing entirely value-based. While some clients initially experience a little bit of a shock at a recurring monthly fee, once they consider the benefits of always knowing what they will pay they quickly see the benefit.
Demographic Shifts
Millennials are shaking up the accounting industry, questioning historical hierarchical firm models. Increasingly, niche firms are popping up. We saw this in the SRED (Scientific Research and Experimental Development) space as well as practices that focus on specific industries. We also see accountants trying to stick to their core and increasingly accountants are getting away from offering bookkeeping services. All of this is occurring while large firms continue to expand their footprint by acquiring other smaller firms (remember MNP LLP’s acquisition of KNV Chartered Accountants LLP?). It is unclear what the industry will look like in 10 years time but there is a good chance that your current firm will get acquired and you might be working with multiple service providers instead of a one stop shop.
Valuable, Real-Time Data
Business owners are now able to get more timely financial reporting as long as their books are kept up to date. In addition, cloud-based accounting systems offer better quality reporting than their non cloud-based counterparts. In a time when small businesses are feeling intense competitive pressure, the need for more robust, up-to-date reporting is greater than ever. Realizing this, accountants are focusing more closely on providing clients with useful and timely reporting so that SMB owners can make their businesses better. If there is financial information that you have always wanted from your business, there is a good chance that your accountant can now pull it for you and it will be even more valuable if your bookkeeping is up to date.
Though the accounting industry is changing, overall this should benefit SMBs through simplified, transparent pricing and through better quality information. There are a greater number of alternatives than ever before so if you are looking to make a change you will have more options than ever before.
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