For the second year in a row the New Zealand Accounting profession has gone backwards.
According to the popular “Good, Bad & Ugly” report by businessfitness NZ the median profit per partner was a paltry $187,001. Over an eleven year period of monitoring this number, the median profit per partner has gone from (in 2004) $176,163 to this years result of $187,001. If a 5% profit growth target was applied (CPI plus a bit) then the profession in NZ should be at $301,299 per partner. Sadly there is a $144K gap. So why is this so?
It’s really quite simple. In NZ around 40% of small businesses have their accounting systems on the internet. New Zealand has the highest proliferation of cloud accounting in the world. This has created enormous efficiency for the NZ Accounting profession. Efficiencies mean less time on the client work. Less time means a lower price, costs go up, nimble players enter the market and if you don’t add value then margin will decrease.
This is a classic case of a industry/profession not re-inventing itself in the face of digital disruption. Technological change is awesome for the user of the tech. However if the users’ vendors do not adapt their business models (with new services and a different strategy) then they will continue to reduce profits.
We can’t stop cloud accounting happening. Social behavior and massive technology companies are driving it. What has happened in NZ will happen in other parts of the world unless the Accounting profession adopts a different strategy.
You need to become a Firm of NOW and do something different. #firmofnow