There are many issues, threats & changes (aka opportunities in disguise) in the Accounting profession right now. Some are short term some are long term. They are happening all around the globe and to ignore them will be to your detriment. Your role is to work out how you can capitalise on each one as you shape your firm over the next 5-10 years. In no particular order…
Bookkeepers. They will fall into 2 categories. Dinosaurs or competitors. Why would any business pay $60 per hour for a service they can get done for $7 per hour off shore? It doesn’t make sense. Cloud accounting nearly eliminates the need for them. However, if they are half smart they will evolve into business advisers with snazzy software and content to help your clients. A threat looms!
MOOCS. Massive online open courses. Almost every major university on the planet offers a free course that you probably paid $100K for – minus the certificate. You can learn anything you want for free via consolidators of university content. In 15 months the leading content consolidator (www.coursera.org) has amassed 3.6M students. A business owner or start up entrepreneur can learn content that you currently know. A threat to your IP base looms!
SMSFs. Self-Managed Super Funds (Australia only). If you have been charging $3K+ to set up a fund and $3K to audit it – forget it. Those days are gone. Online providers are charging as little as $800 to set one up and similar for the annual compliance. Unless you are adding value to the fund it’s a commodity. An opportunity to get real on pricing!
Graduates. Statistics are showing that Grads’ are not getting placed in firms as quickly as they normally are. Nor are they getting the high 1st year salaries of the past 3-5 years. Why? Low level roles are getting outsourced for a fraction of the labour cost. An opportunity to add value!
Succession. Right now in Australia 50% of all partners are over 55 years old. The average age of a partner in New Zealand is 58 and in the USA 50% of all partners are over 60 years old. The next 10 years will be a huge succession planning era. Time to retire for a big chunk of the profession globally. What an opportunity to buy firms and consolidate!
Social change. A new KPI for you – how many of your team aspire to be a partner? Probably not many. A new model is needed – a corporate model. What an opportunity.
Internet advice. Uncle Google can answer just about anything I need to know. Why should I pay you for hints, tips, skills and strategies when I can get them for free by searching? To remain relevant you’ll need to offer more than a search engine can. Big opportunity!
Time X Rate. The old model of charging clients is dead. If you are still pricing in arrears based on the time taken multiplied by the rate per hour (which is derived from a salary cost multiple – bizarre!) then you are living in the dark ages. Get with the program and give a fair price for the scope of work – in advance. Big opportunity – however new skills will be needed.
Globalisation. I have a friend in Australia ($3M pa business) who hires a 6 year experienced CPA in the Philippines to be his CFO. For $12 per hour! There are millions of people currently employed in Asian countries (who you might call outsourcers) who are doing the work for Western companies. Tens of thousands of Accountants doing the same work that local people charge 4-6 times more for. It’s an opportunity for the firm to lower their labour cost and a threat to ‘processing’ accountants who offer little value to clients.
Lite data. With internet technology comes ‘lite’ data. Data that can be easily transported (its’ only a login) to any location. I no longer need to send in the stick or disk to the Accountant. I can email my login details to someone in another location (or country) for them to review and process. That’s cool. With it comes commoditisation and intense competition. You no longer own your geographic area. A threat and an opportunity!
Technology convergence. The hype is around ‘cloud’ accounting. It’s not just that. It’s the convergence of accounting, logistics, CRM, warehousing & point of sale that is the big opportunity – and a threat. It means that a super computer is doing a lot of the checking of data (which Accountants used to do) and it means for more accurate reporting. Another friend has just introduced an app for his distribution business that manages all stock, ordering, invoicing and accounting – and he doesn’t need to employ 12 people in the future! More accurate data means less compliance costs. What an opportunity to add value.
Switching costs. We all hate changing banks, lawyers and dentists due to ‘switching costs’. What about Accountants? Should we stay with the same one that has their head in the sand and is totally reactive? I hope not. It’s easy to change Accountants. Find a new proactive one that is progressive and savvy and ask them to send a letter (called an ethical clearance letter) to your new one and let them deal with it. You shouldn’t need to put up with slack service that is expensive because it adds no value to your business.
To beat these rising tides you need to know what is going on and more importantly have a strategy to combat it. Each issue is an opportunity in disguise for progressive nimble Accounting firms. The industry needs to beat these rising tides to remain relevant.
If you are an Accountant and want to remain relevant then you’ll need to attend my ground breaking seminar “Remaining Relevant” in June & July across Australia this year. If your Accountant needs a push then get them along to it and I will sort them out!
You can’t stop a rising tide. The next level is a tsunami!