Accountants need to update their practices if they want to prosper in the recession says Neil Davidson
YOU’D BE FORGIVEN for thinking the ups and downs of the economy in the last few years resembles a rollercoaster, and has left many accountants with their hearts in their mouths. For some accounting firms the economy has brought great opportunity, as the number of mergers, acquisitions and insolvencies has increased creating plenty of financial transactions and therefore business.
However, it has also brought with it considerable challenges including greater competition, new technology and clients looking for greater return on investment for the services they receive. As such, if accounting firms do not want to find themselves lagging behind in this new economic climate, they must become agile enough to offer new value-added services and ditch the archaic pricing strategy of recoverability. This is only achievable if firms truly have an insight into their business processes including engagements, client servicing levels and profitability.
For too long many accounting practices have functioned using old-fashioned practices for reporting time management and billing. Those firms are now finding themselves ill-positioned to take advantage of the potential the modern world offers. Evolutions in technology mean much of the traditional information processing work, previously undertaken by accountants, is now automated and accountants are finding their role is shifting from an information processor toward a data analyst or advisor.
Accountants are now largely expected to offer advice and insight into broader strategic issues which may impact their clients. Additionally, with the ever increasing levels of regulation many industries now face, accountants are also filling the role of regulatory policemen, ensuring the business remains compliant with a number of global and regional legislation.
As a result, this shift in focus means firms need to adapt internal reporting practices to reflect the different types of service they can now offer. Furthermore, in order to benefit as much as possible from this shift in practice, a complete insight into the engagement pipeline, servicing levels and profitability is vital to enable firms to identify future opportunities to sell additional value-added services to clients.
In order for firms to have the agility to adapt to these types of market changes, a clear insight into their business data is crucial. It goes without saying that clients expect their accounting firm to be good at accounting and have a near- real time insight into the business numbers. Internal best practice is essential to this. This is not achievable by inputting disparate data into a myriad of spreadsheets but by having one version of the truth via an integrated software system that consolidates all business data – front and back office. With this insight, firms are better positioned to build stronger relationships with clients and identify potential areas of growth where value-added services can be sold.
Accounting firms will no longer be measured and defined on their number crunching abilities but by the quality, consistency and price of the value-added services they offer. For accounting firms to stay ahead in this new economic climate, a clear insight into client delivery levels, internal productivity, profit shortfalls and potential areas of growth is essential if they want to grow in the 21st Century and not remain stuck in the past.
Neil Davidson is managing director UK of Deltek