Four Attributes of Future-Ready Accounting Firms
Accounting firms are facing an increasingly competitive market as a staggering number of new business opportunities emerge every day. Being a future-ready firm means being able to take on these new opportunities at scale, ensuring firm longevity and profitability.
Firms that embrace future readiness have a strategic advantage. A 2021 Accenture Report found that future-ready organizations that invested in digital transformations are shown to be two times more efficient and three times more profitable. Despite this, only 8% of CPAs view their firm as future-ready.
Time is of the essence for firms hoping to thrive in the post-pandemic market. According to McKinsey research, the top 20% of companies earn up to 95% of economic profit - any organization not looking for new approaches is on borrowed time.
What steps can firms take now to prepare themselves for the future?
What Makes a Future-Ready Firm?
Several studies have been conducted over the last two years to examine what makes an organization future-ready. From McKinsey to Harvard Business Review, we reviewed the research and broke down the four attributes that show up again and again in each study. Future-ready accounting firms:
Focus on process improvement
Prioritize client experience
Build the best teams
According to the Accenture Report, the majority of future-ready organizations (90%) use cloud infrastructure at scale, while 78% are exploring new areas to maximize value and scale. 71% have incorporated machine learning technology into their tech stack, and 67% have implemented automation. The majority of organizations that are future-ready (52%) use analytics at scale to generate actionable insights and inform decision-making, along with better and more diverse data sets.
Despite all this, 82% of CPAs self-identify as needing to better understand digital innovations. Simply put, accounting as an industry is falling behind.
Fortunately, many future-ready solutions are available for accounting and advisory firms specifically. Strongbox, for example, was designed for accounting firms and enables instant access to financial data. It incorporates machine learning and provides more diverse data sets than many practices traditionally use.
Prioritizing the development of a tech stack that incorporates cloud infrastructure, machine learning, automation, and data analytics will put your firm ahead of the curve.
Focus on Process Development
Another area future-ready practices excel in is continually iterating and improving internal processes. Firms should be relentless about finding ways to improve efficiency. The McKinsey study observed, “Visit a future-ready organization and you’ll observe that speed is both a preoccupation and a cultural bias… [T]hey need to optimize for speed. Operating models need to be fast, nimble, and frictionless to create ways of working that foster agility and simplicity.”
Keeping an eye on efficiency and turbocharging decision-making enables firms to adapt. The Harvard Business Review research found that “Knowing how to make decisions quickly is essential to surviving in a fast-paced industry.” McKinsey echoed the sentiment: “Many decisions and processes require less than half the steps executives imagine are necessary.”
With a solid tech stack and better data to work from, decision-makers should be able to move faster without sacrificing thoroughness. Internal tools can report on efficiency making it much more obvious where improvements need to be made. And as software and other technologies continue to advance, implementation time has shortened for many tools.
Prioritize Client Experience
Technological advances have made it easier for organizations to tackle some of the repetitive bookkeeping tasks that they previously outsourced. However, the need for accounting firms has increased. That’s because most businesses now expect accounting firms to do more than just outsourced bookkeeping. They expect firms to provide valuable insights, subject matter expertise, and advice on how to keep their business financially healthy.
The firm’s tech stack once again comes into play to help meet this objective. Tools like Strongbox can streamline valuable advisory tools like data visualizations and KPI/performance metrics that firms can share with clients.
Technology can not only offer deeper analytical insights that can be shared in advisory situations, but it can also help satisfy another client demand: digital experiences.
Prior to Covid, roughly 41% of customer interactions in North America were digital. That number jumped to 65% by July 2020, accelerating adoption rates by three years. Clients will expect seamless, digital options for everything from submitting and sharing documents to signing closing documents. Building a nice tech stack and efficient processes only work if the client experience rises right along with internal operations.
Build the Best Teams
The great resignations, talent crisis, quiet quitting, quiet firing. The list of buzzwords surrounding staffing issues continues to grow with few signs of resolution. Accounting graduates continue to be below the enrollment needs required to fill anticipated vacancies at accounting firms in the coming years. According to the McKinsey study, the way future-ready organizations reduce this risk is to “treat talent as scarcer than capital.”
Future-ready firms create purpose, wellness, and culture that retains top talent and encourages recruits to apply. Purpose and culture are not empty words at these organizations, but rather are central to every decision the firm makes. Having a clear purpose helps to create environments that keep team members engaged, innovative, and successful.
It’s also essential that organizations set their teams up for success with the new technology and processes via ample training and learning opportunities. Automation, machine learning, and other technologies require new skill sets, so any plan that involves new tools without a skill development plan is dooming itself from the start. No firm wants to invest heavily in a tech stack that no one uses because they don’t know how.
However, with the right skill development, technology and being future-ready significantly helps with staffing issues. According to the Accenture report, future-ready companies reported an 80% improvement in employee engagement and retention.
At Strongbox, we’ve helped hundreds of firms with their digital transformation efforts, from the Big 4 to top regional firms and boutique firms. Strongbox has proven to be a valuable part of any firm’s future readiness plans. Contact us today to see how we can work with your firm to prepare for a scalable, sustainable future practice for years to come.