but most firms still keep their accountants desk-bound.
by randy johnston and leslie garrett
accounting firm operations and technology survey
despite the increasing availability of cloud technology and mobile apps that ensure you can be instantly transported into your familiar desktop workspace while working remotely, accountants are still not working from everywhere, according to the 4th annual accounting firm operations and technology survey.
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solo practitioners are the most mobile; 49 percent work 11 percent or more time from a location other than their office, compared to 47 percent of accountants at medium and large firms, and 43 percent of small firms. very few firms are working more than 50 percent of the time from a location other than the office.
top challenges of managing a firm
a recurring theme emerges in reviewing the list of top challenges of managing a firm. decision makers are stuck in something of a catch-22.
several of the biggest challenges – attracting new clients (32%), managing workflow (29%) and identifying opportunities for practice improvement and cost savings (24%) – highlight the possibility there are better or more efficient ways to manage processes, yet the adoption of technology to resolve workflow or to maximize efficiency throughout the firm is not happening because decision makers are unsure how to identify areas in need of improvement.
until inefficiencies or opportunities for practice improvement are defined, one cannot determine a starting point from which to launch an investigation into software to resolve the issue(s).
furthermore, one can argue vendors could do a better job in the discovery process of understanding existing processes within a firm to provide a better-customized demonstration showcasing how the implementation of software impacts existing applications, process and workflow.
recruiting and retention will remain an issue in the foreseeable future. there is a shortage of accountants and cpas, resulting in great competition to recruit and retain.
for example, it is becoming more common to recruit four to five years in advance of employment.
some firms are recruiting high school seniors and guaranteeing a salary and three years of employment post-graduation, provided gpa is at an agreed-upon level. further, one should note offering value-added services (2016) was replaced by raising profitability in 2017.
top technology challenges of managing a firm
our research has revealed security (29%), which made its first appearance in the 3rd annual afot survey, has become the leading technology challenge overall, surpassing workflow and efficiency (26%). firms acknowledge getting clients on board with working with the firm in a more digital way is a leading challenge; one might argue reasoning such as the desire to deliver or exchange documents digitally (security) and ease and speed delivery (workflow) via digital means (e.g. web portal and secure email) are motivators. seventy-five percent of firms are now using web portal to share files or documents with clients; one might surmise those who have web portal capabilities are not using them as much or with as many clients as they would prefer.
of note, medium (12%) and large (11%) firms are showing some interest in examining which applications to move to the cloud.
however, only 7 percent of all firms are considering which applications to move to the cloud. in addition, medium and large firms are most interested in investigating which applications to move to the cloud, which is ironic, given they are more likely than solo practitioners and small firms to be equipped with in-house it and hardware (e.g. server) to handle on-site applications.
other key findings in practice management
- new clients: the most common channels for new clients are referrals from current clients (98%), referrals from other professionals (75%), professional partnership referrals (e.g. financial planners, law firms, etc.) (54%) and firm website (50%). we noted reliance on a firm’s website remains strong, while social networking and other internet channels decreased in popularity year by year. this was not nearly as significant to a firm’s success as referrals from existing clients or referrals from other professionals.
- time spent: practitioners are spending 50 percent of their time on client services, 15 percent on business management, and 10 percent of their time composing or responding to email. as firm size increases several factors change: 1) time spent on client services decreases, 2) time spent evaluating software and technology increases, and 3) time spent training staff and financial reporting/forecasting increases.
- paperless: fourteen percent use 100 percent paperless delivery of income tax returns to clients, 70 percent deliver a portion of income tax returns using email and 69 percent use a client portal to deliver varying percentages of the income tax returns their firm prepares. only 9 percent do not prepare income tax returns.
- cost control: to control costs, 66 percent of respondents consider examining the firm for technology, process or workflow inefficiencies to be either effective or somewhat effective. other popular methods identified as somewhat effective or effective for controlling costs include raising fees (52%) and working from home (32%). thirty-one percent identified delaying/eliminating technology upgrades as not an effective means to control costs.
- revenue: to generate revenue, the effective or somewhat effective methods include upselling existing clients (50%) and raising fees (50%), followed by adding services (45%).
- demerging: five percent are considering demerging and starting their own firm. those who have considered a demerge but have not yet done so cite several reasons for their hesitation. most commonly, they like their job and coworkers and don’t want to damage relationships by leaving; their agreement with their existing firm limits their activities if they resign, or they do not believe there is enough reward in running their own practice to compensate for the risks and frustrations.
- m&a: forty-six percent have considered expansion via merger or acquisition in the next year or more or are investigating options for being acquired; 40 percent are not and 8 percent are unsure.
- website: thirty-nine percent of all respondents have a website and plan to upgrade what they have; small and medium-size firms are most likely to upgrade, at 43% and 48% respectively. six percent have no plan or are unsure about their plan for a website.
- client communication: email (94%), phone (94%), face-to-face meetings (93%) and postal mail (70%) are the most prevalent ways firms of all sizes handle communications with their clients. communicating with clients via text messaging is growing increasingly popular for small, medium and large firms. with the exception of medium firms, firms of all sizes are increasing their reliance on web portals for communication with clients. medium (44%) and large (72%) firms have notably increased their reliance on virtual meeting technology (skype, facetime, join.me, etc.). sixty-nine percent plan on handling communication with their clients in the same way they have been operating, and 17 percent plan on investigating communication services to handle communication with customers and prospects (e.g. newsletters, reminders, information). only 3 percent plan to hire someone to manage this task in 2017.
- wireless: seventy-seven percent of the respondents indicate they already have a wireless network (including 94% of large firms and 86% of medium firms), while 15 percent have no plans for wireless (including 31% of solo practitioners and 17% of small firms).