How to Solve the "Nightmares of the Accounting Profession"
Today I read Daniel Hood’s article about the “Three Nightmares of the Accounting Profession” It was difficult to read such a doom and gloom article with a straight face (but really, “nightmares?”). As much as I personally would like to think the U.S. is modernizing and SMBs want the latest cloud technology, I know it isn’t true (yet). Clients are not pounding on our doors asking for advisory services, and most don’t care what advanced technology we use to get them their reports and prepare their taxes. A few commenters even noted that their strictly compliance accounting practices are, in fact, thriving as the market springs back from the last recession. So, I thought I would write about how technology is at once the instigator of some “nightmares” and also the solution driving opportunities for CPAs and their firms.
Nightmare of Irrelevance = Opportunity to Enhance
The shift that is occurring is not that clients are demanding something new, it’s that technology is allowing us to provide more services. It’s up to us in the accounting profession to take advantage of this looming opportunity to provide proactive advisory services to our clients. No, clients aren’t demanding more services just yet, but if we listen to them silently or pay closer attention to their financial reports we’ll hear the message. Maybe their costs have been slowly creeping up, or their collections are down. Perhaps they are at an expansion point, but don’t know how to raise additional needed capital.
If we can pinpoint our clients’ pain points and explain how we can help, more clients would be interested in business advisory services. Technology is NOT taking away jobs from accounting. It is fueling the feasibility of adding more proactive services. It’s making it possible to take the client relationship to the next level. For me, it’s all about providing value. I don’t want my clients to look at me as the CPA who tells them how much money they owe in taxes. I want them to look at me as a trusted advisor who will look at the overall picture of their business and provide actionable feedback on increasing revenues, decreasing costs, tax-saving strategies, and, in many cases, recommending and implementing technology to make those changes.
Nightmare of Staffing = Opportunity for Rebranding
No, accounting is not a sexy profession, but that doesn’t mean it can’t be. The traditional accounting industry is perceived as boring, stagnant, and, well, safe. It is a secure industry where good-paying jobs are easy to find. In fact, the 2015 AICPA Trends Report states that in 2013-14 hiring reached record levels after a 7% growth in all new hires. Fortunately, as well, enrollment reached an all-time high in both master’s and bachelor’s degrees, with 19% and 3% increases, respectively. While overall degrees awarded remained steady, one disappointing trend is that bachelor’s degrees awarded decreased by 11%. If enrollment numbers have remained steady or increased, why have awarded bachelor's degrees decreased? Are millennials enrolling and deciding accounting is not for them?
As a millennial myself, and one who not long ago was enrolled in accounting courses at university, I found one major component lacking – practical knowledge and application. Although I believe students should be taught their T accounts, more emphasis should be placed on real life accounting and business applications. Students should learn that there can be more to an accounting career than just tax work, audit, and compliance. Accounting is the language of business and the perfect foundational framework for a career in business advisory and management consulting services.
I also believe accounting information systems should be a required course in every accounting curriculum. This will both allow students to have some practical knowledge when searching for a job and internships and, more importantly, allow millennials to see how technology has and will continue to improve the quality of information we use to advise our clients. The truth is accounting can be boring, but technology is interesting and most cloud applications (at least the ones I use) are, dare I say it, fun!? Not surprisingly, a study by PwC found that 59% of millennials say that an employer’s provision of technology was important to them, and 78% said using technology they like makes them more effective. Hopefully connecting accounting with technology will change the millennials’ image of the industry into a more progressive one, which is a win-win for accounting students and their future employers.
Nightmare of Change = Opportunity for Progression
Technology is an opportunity, not a threat. I don’t see a flurry of clients demanding cloud accounting technology and advisory services or else. It’s the accounting professionals who are at a vantage point here. They have a chance to take advantage of new technology to enhance their firms and deliver more value to their clients. I believe that those accountants and firms that embrace the new vision of an accounting firm will prosper, but that doesn’t mean the traditional accountants will be pushed out, at least not for the immediate future.
Just as the accounting industry has been slow to change, so have many business owners and managers. Furthermore, I am convinced that most clients really don’t care what technology we use to perform our work. Again, the technology really benefits the accounting professionals who utilize it to sell more value-add services. Even with the shifting technology, clients are still just seeking accountants to help with bookkeeping, tax, and compliance work. It’s up to the accountants to sell themselves as business advisors, that is, if they choose to pursue adding these proactive services.
At the end of the day, technology may replace transactional and some compliance related activities, but it’s no substitute for the relationship a client builds with a trusted business advisor. Traditional accounting will have its place as the majority of SMB clients are looking for bookkeeping, tax, or audit work from their accountants. However, progressive accounting professionals, CPAs, and accounting firms who can understand the big picture and provide strategic guidance with the help of new accounting technologies will really take off as the accountants and accounting firms of the future.