In addition to ringing in the new year, and new decade, January is also the month when predictions arrive en masse. Whether you are following profession news, societal changes, or tech trends – everyone enjoys the reminiscent end-of-decade recaps. Just as surely as the end of the decade is an opportunity to reflect on the previous 10 years, it is a chance to look forward to what the next 10 have in store.
There are countless topics worth discussing when it comes to the outlook of the accounting profession during the 2020s. Many would point to advanced technologies like machine learning and blockchain as potential most impactful dynamics, but I believe they are a subset of a much larger trend. When I look to what lies ahead, I think one question looms larger than any other: How will accounting firms and tax preparers evolve their service offerings to emphasize their value add expertise and rely less on traditional services that are trending less relevant?
The Roles of Traditional & Value-Add Services
For longer than anyone reading this post has been alive, accounting firms have been offering a tried-and-true suite of services, largely based on the technical skill required to crunch the numbers and report on the past. For the last 20+ years, offering these compliance services has become more efficient and automated for practitioners thanks to technology advances. This same technology has also extended to consumers and business owners providing new, do-it-yourself solutions that challenge the basic accounting firm value proposition.
This is not news to practitioners and firm leaders that have an eye on the horizon, but the pace of change and the ubiquitous nature of how DIY solutions are now embedded into the social and mobile eco-systems of consumers and businesses suggest a looming tipping point. Tapping into the true expertise of practitioners and tax preparers such that proactive guidance and valuable insights are captured and packaged for the client has a greater significance today for any firm wanting to rise above and differentiate themselves.
Automation: Friend or Foe?
The alarmist take on this trend is to wonder whether automation will spell the end of tax and accounting services as they exist today. While those fears may well be overstated, I do believe that firms and practitioners will end up falling into one of two camps as we move through the new decade.
1. Traditional Firms
The what I’ll call traditional firm group will be characterized by people and firm leaders that are resistant to change, fearful of moving out of their comfort zone, and more likely to hold close their relationships and service routines around long time, legacy clients. These firms will find it harder to attract new clients, attract and retain employment talent, and will be more at-risk to fee pressures as client’s see less value in compliance products like tax returns and financial statements. Even if they see the value in adopting better workflow technology and improving their overall efficiency, this may not be enough if more priority is not placed on engaging clients with proactive, forward looking planning services and business improvement guidance. The traditional firm group will be at a distinct disadvantage if their value proposition to clients does not evolve beyond just compliance-oriented products like tax returns, financial statements, and payroll reports.
2. Progressive Firms
The progressive firm group, on the other hand, will be the firms that proactively engage clients with value added services above and beyond the traditional compliance services they will still anchor their practices. These firms will leverage automation and digital workflow to achieve peak efficiency with compliance work, thus freeing up time for the professional to engage clients with their expertise and forward-looking guidance. They will position themselves as insightful advisors to the businesses they serve; helping them improve performance and growth. These accounting professionals, already skilled data analysts, will be in perfect position to provide guidance on everything from succession planning to operational efficiencies. And technologies like advanced analytics and AI, will help them offer high level projections and planning advice in a more automated way. In a world where computation does not take up time and energy, firms will have more opportunity to focus on these intricacies. These advisory and consultation services will increasingly become the cornerstone of the progressive firms’ identity.
Opportunity in Transformation
This transformation of the accounting landscape is exciting and presents a tremendous opportunity for forward-thinking firms and professionals who have the expertise to offer their clients more. As we embrace the new decade, it is important for the profession to adapt and evolve. Personally, I find the AICPA’s Journal of Accountancy to be an excellent resource on future-facing accounting topics, along with the various other trade publications.
The bottom line is that as we enter 2020, it is important to have a clear vision on the future. Our profession is at a crossroads. The traditional services that have been our foundation for decades will continue to be important offerings. But as client needs and expectations have changed, it is critical we seize the opportunity to develop as trusted advisors to our clients and leverage our domain expertise to help them navigate the future.
This can only be accomplished by putting to use automation and digital workflow technology, using predictive analytics and emerging technology, and thinking differently about how to position your services and your value to clients. Maintaining the status quo is risky and firms unwilling to adapt risk being left behind. It remains to be seen exactly what the next decade will bring, but it is safe to say that progressive accounting firms who are already looking to provide higher value services stand to benefit greatly.
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