crisis brings needed change and new opportunity.
by allan koltin
the most significant changes our profession have seen so far are remote workplaces and, not surprisingly, remote client service. i think the dust has settled at this point and firms understand that these are not flavors of the month, but rather permanent changes to the landscape of our profession.
more: pandemic lesson: innovate faster | remote work success helps solve staffing shortages | you like being remote, but what about your clients? | covid-19 shakes up m&a activity | survey: we adapted to remote work … now what?
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it’s fascinating that the covid pandemic was responsible for speeding up what otherwise would have taken 5-10 years into 5-10 weeks.
for the most part, firms are doing extremely well (although there are certain exceptions based on client mix and geography), and i anticipate that most firms will come close to their 2020 budget, both in terms of revenue and profitability.
maybe the most surprising trend so far has been that cash collections at most firms has tracked consistently with the prior year (although, again, there are some exceptions to this).
as firms prepare for the new normal and move more into a remote workforce, i anticipate new recruiting strategies, whereby firms will be going after talent that may not necessarily be in their backyard and using that to shore up some of the weak spots in their depth chart. historically, i believe most of us have chosen only to recruit in places where we had existing offices (clearly there have been some exceptions to this already).
i also believe that niche practices that were previously local in nature will become regional and those that were regional will become true national practices (without necessarily having to have the bricks and mortar of a local office in the client’s market).
my guess is, when all is said and done, we will look back at 2020 as a year of great transformation and that most of these changes, from an implementation standpoint, will continue into 2021.
for the most part, 2019 was a very good year for most cpa firms. they enjoyed strong growth, with corresponding increases to firm profitability. that being said, many firms continued to invest heavily in technology, innovation, product development, talent and training, while others continued to do things on “the cheap.” we are continuing to see greater separation from firms, whereby you have firms that are truly sustainable and built for the future and others that are struggling on most “good hygiene” areas that matter.
without a doubt, more firms are facing succession issues than ever before. what we’re hearing all too often is that they have great technicians, but don’t have the requisite number of rainmakers and leaders to drive the firm once the older group of partners retires.
interestingly, on the m&a side, we are seeing more firms that don’t have a succession issue, but that are also exploring upstream merger because of the strategic and capital benefits that go with it.