The Top 5 Biggest Challenges for Accounting Firms
Any decision-maker within an accounting firm knows the industry has evolved at a rapid rate – undergoing many drastic changes over the last few years. As the world becomes more digitally connected than ever before, dramatic changes are hitting accounting firms at every level – from client demands to employment practices to day-to-day operations and everything in between. Naturally, you’re dealing with the same challenges as every industry in terms of staffing, succession planning, and profitability, but you have your own challenges that must be considered. In this article, we’re going to take a look at the 5 biggest challenges for accounting firms.
1. Innovative technologies
We’ve seen a range of innovative technologies, such as artificial intelligence, bots and drones, and tools for automation, provide the opportunity for incredible change within the accounting profession. These innovative technologies help improve services – from auditing to bookkeeping to tax prep – but they also change the role of accountants. Nowadays, accountants need to take a strategic advisory approach with their clients rather than simply crunching numbers. As they continue to automate and streamline processes, they’re able to better focus on providing data-driven recommendations.
2. Commoditization of services
Consumers are starting to view the services your accounting firm provides as interchangeable with the services competitors provide. They feel as though they can buy the same exact service from another firm, whether it’s a small 2-person firm or a large corporation. This can be incredibly hard to swallow, especially if you’ve spent years trying to build a firm that stands out because of its reputation. So how do you handle commoditization? The answer is simple: differentiation. It’s all about evaluating what makes you different from other firms in your location.
3. Adapting to change
At the core of all the challenges facing accounting firms is the ability to adapt to change. As new tools become available to streamline and automate tasks, accountants need to find new ways to show value to their clients. This is particularly important for young accounting professionals who are new to the industry and need to gain a reputation. Although adapting to change can be hard for everyone in the industry, young accounting professionals in particular need to gain experience and knowledge faster than ever before to be able to avoid automation minimizes their ability to gain entry roles.
4. Complicated regulations
The Tax Cuts and Jobs Act is a complicated regulation that quickly became a huge challenge for accounting firms. Essentially, it impacts absolutely everything from entertainment expenses to depreciation. The 186-page document outlines the details, but for most people, it creates more questions than answers. At the end of the day, if you’re using an accounting and tax software that’s up-to-date, you’re able to handle all of the new rates with it. But it’s still helpful to understand the regulation and how you can take full advantage of it, especially when it comes to strategizing and planning for upcoming years in terms of budget.
5. The threat of cybercrime
Lastly, the threat of cybercrime is a huge challenge for many accounting firms. Small businesses, in particular, face a huge risk as they’re typically lacking the budget and resources to implement the proper security measures and/or policies. As an accounting professional, it’s vital to safeguard the sensitive financial information of your clients, employees, and service providers. In fact, failure to do so will result in huge penalties. So how do you handle the threat of cybercrime? The best way to ensure you’re safe is working with an IT company that knows what they’re doing.
Let’s talk about how we can help you address the many challenges facing modern accounting firms. Contact us to learn more.