When Worlds Collide: The CPA’s Future Is Now

Non-CPAs are increasingly influencing the accounting industry. So, what can CPAs do about it?

How often do we talk about the firm of the future—the one that is three, five, and even 10 years out? What if I challenged that the firm of the future exists today? In fact, your firm is one of them. Call me arrogant or call me naïve—you can even call me both. But I’d like to argue that the game-changing differentiator between the firm of today and the firm of the future is as simple as this: Discomfort.

You’ve read a paragraph and are probably convinced that I’ve lost it. Hear me out, and consider a few things:

• Intuit now directly offers to consumers (our clients) software and cloud applications in three core business areas of many CPA firms (bookkeeping, payroll, and tax).

• There are major software companies improving payroll administration to such a degree that CPA firms could be pushed out of performing payroll services for good.

• The increasingly easy access to outsourced and even offshore bookkeeping outfits, combined with advances in automation, are already resulting in fewer opportunities for CPAs.

If you’re a CPA, these developments should make you uncomfortable. If you run a small or midsize CPA firm, you should be concerned about what your future holds. And if you happen to be in a large firm, don’t think you’re in the clear. The non-CPAs, and even non-accountants, that are impacting our industry are making it easier for smaller firms to compete with you as the attention of all CPAs must turn to providing more than just traditional accounting, audit, and tax services. I predict that the more service displacement we see in the near-term, the fiercer the competition between all firms will get.

THRIVING IN DISCOMFORT

The firm of the future is the uncomfortable firm. Adapters will win. The exponentially increasing rate of disruption in our industry magnifies the importance of adaptability. Adaptability, however, is not a one-time thing—it’s a continuous process, a consistent state of being. Discomfort is a sign that a firm is aware of the challenges and disruptions around it and that it is seeking to adapt in order to thrive.

In the martial art of Judo, the technique of Kuzushi is employed to deflect an attack and use an opponent’s momentum against them in order to gain control over them. Rather than putting energy toward resisting the changes in our profession, leaders in the firms of the future embrace change as an opportunity and seek ways to exploit the competition of both the non-CPAs and non-accountants entering our space.

How do you know if you’re a firm of the future or a firm of today? Here are a few examples of how each firm might respond to a few relevant professional topics:

POSITIONING FOR SUCCESS

Not all the firms of today are going to die off—but I’m willing to bet they’re not experiencing meaningful growth or crazy success. In order to ensure you’re positioned for success as a firm of the future, you’ll need to carefully examine your processes, services, and business model.

Start by mapping out your processes, from onboarding clients to service delivery. Don’t document what SHOULD be happening; document what IS happening. Think of the following: How do you onboard new clients and load them into your platform? How do you define and communicate expectations? Are your clients clear on what will be required of them? How do you obtain the necessary information from clients, and how is it distributed to your team? Have priorities and timelines been properly established and communicated? Do you know if you’re on schedule? Do you have defined deliverables? How do you collect payment? What are the routine bottlenecks and obstacles in your processes? Can automation, increased training, improved communication, fewer touch points, or additional people be solutions?

Next, examine your services. How much of what you do falls into the compliance category? Realize today that compliance work will only continue to become more automated, offering less work (and declining revenue) for CPAs in the future. You must begin to determine how you can spice up your services to be value-focused versus compliance-focused. Consider a few of these examples:

• Shift your focus to tax planning versus tax preparation (and charge a premium for it!).

• Provide a few observations and insights with clients’ monthly financials.

• Leverage reporting software to elevate your deliverables and provide more insight.

• Begin communicating to clients how they compare to industry peers and benchmarks.

• Proactively introduce clients to new tools or approaches that could help them achieve their goals (ahem, you’d first have to understand what their goals are to do this, by the way, which is another client engagement opportunity).

Finally, examine your business model. Your firm’s structure could be in direct opposition to its goals. For example, while your expertise may be in business tax planning and compliance, over the years you may have taken on a substantial amount of payroll administration for your business clients. But payroll administration is never ceasing, and the revenue-per-hour ratio is not all that high, which could make it difficult to grow your practice in other areas without making some structural changes.

It’s not at all uncommon for client relationships to be in the hands of one individual or a small handful of staff, thereby consuming significant chunks of their time and creating bottlenecks. Intentionally shifting points of contact early on in a client relationship could improve service delivery and client experience, while also elevating your team’s ability to serve and communicate with clients. This may require more structured training for your team, or even enhanced titles for your team members to improve the client’s perception of their point of contact.

Also consider creative measures to incentivize your team’s performance. And when I say creative, I don’t mean off-the-shelf bonus plans—think profit sharing based on performance metrics or establishing an employee-owned entity designed to attract and grow a certain niche. Remember, you didn’t get to where you are alone, and you certainly won’t emerge as a successful firm of the future alone.

I contend that adaptability, flexibility, and creativity will be the keys to success for firms of the future. With firm size and structure having a lot to do with how adaptable, flexible, and creative you can be, I think small and midsize firms can realize the greatest opportunities for success as non-CPAs and non-accountants disrupt our industry. If you can get comfortable being uncomfortable, then becoming a firm of the future is about continually reimagining your firm of today.