Dig­i­tal trans­for­ma­tion for to­day’s CPA firms

Accounting Today - - Technology - By David Sharp

Dig­i­tal trans­for­ma­tion has been a near con­stant topic of con­ver­sa­tion among ac­count­ing and CPA com­mu­ni­ties in 2018.

The trend can be de­fined as the shift from an­ti­quated, man­ual pro­cesses to au­to­matic, tech­nol­ogy-driven ones. Think switch­ing from mail­ing out pa­per in­voices and col­lect­ing checks be­fore driv­ing them to the bank, to send­ing out elec­tronic in­voices with a “pay now” but­ton that al­lows clients to pay on­line in a few clicks.

Ac­cord­ing to the 2018 “Robert Half In­ter­na­tional Bench­mark­ing Sur­vey,” 75 per­cent of U.S. fi­nance and ac­count­ing lead­ers are cur­rently ei­ther us­ing or plan to soon be us­ing cloud-based so­lu­tions to au­to­mate func­tions such as in­voic­ing, data col­lec­tion and re­port cre­ation, com­pared to 62 per­cent in 2016.

For­ward-think­ing firms un­der­stand they need to mod­ern­ize their pro­cesses in or­der to be com­pet­i­tive, and with pay­ment col­lec­tion touch­ing ev­ery sin­gle client re­la­tion­ship, many firms choose to start their dig­i­tal trans­for­ma­tion there.

But with bill­able work tak­ing up the ma­jor­ity of staff re­sources, how do these or­ga­ni­za­tions make time to up­date out­dated pro­cesses?

Of the es­ti­mated 42,000 ac­count­ing and CPA firms in the United States, 41,500 are smaller than 20 CPAS and $3 mil­lion in an­nual rev­enue.

Smaller firms do not have the bud­get or band­width to bring on ded­i­cated hires to fa­cil­i­tate their dig­i­tal trans­for­ma­tion, and 99 per­cent of firms do­ing less than $25 mil­lion in rev­enue an­nu­ally do all their ac­counts payable and ac­counts re­ceiv­able work in-house. Only 17 per­cent of ac­count­ing and CPA prac­tices plan to ex­pand their ac­count­ing and fi­nance teams soon.

Here, we’ll ex­plore what dig­i­tal trans­for­ma­tion could look like for to­day’s ac­count­ing firm, what’s stand­ing in the way of tech adop­tion, and what firms that don’t adapt could be risk­ing.

Chal­lenges of dig­i­tal trans­for­ma­tion

As a tra­di­tional in­dus­try still helmed by an older work­force, the ac­count­ing world faces both cul­tural and prac­ti­cal bar­ri­ers to dig­i­tal adop­tion.

First, the tax in­dus­try is be­holden to gov­ern­ment reg­u­la­tions and a Tax Code that doesn’t change.

Sec­ond, the ac­count­ing work­force is ag­ing and strug­gling to at­tract younger tal­ent.

From a prac­ti­cal stand­point, tran­si­tion­ing from man­ual pro­cesses to au­to­mated pro­cesses re­quires an up­front re­source in­vest­ment in: Iden­ti­fy­ing pro­cesses to be up­dated; Re­search­ing ROI po­ten­tial; Eval­u­at­ing ser­vice providers; Im­ple­ment­ing new sys­tems and pro­cesses; and

On­board­ing staff. It’s dif­fi­cult to jus­tify squan­der­ing bill­able hours on pro­cesses that might not im­me­di­ately pro­duce rev­enue, and easy to put up­grades on the back burner in fa­vor of do­ing things the way they’ve al­ways been done. How­ever, that ini­tial up­front in­vest­ment can pay out ten­fold when ex­e­cuted cor­rectly.

Dig­i­tal trans­for­ma­tion: Why bother?

Thriv­ing in the dig­i­tal age re­quires tak­ing a long-term ap­proach to plan­ning while stay­ing nim­ble enough to weather changes. Yes, the move to­ward more ef­fi­cient, au­to­mated op­er­a­tions re­quires an ini­tial re­source in­vest­ment, but that in­vest­ment will even­tu­ally net a hefty re­turn.

What can firms that un­dergo a dig­i­tal trans­for­ma­tion ex­pect? The most im­me­di­ate and quan­tifi­able im­pact of dig­i­tal trans­for­ma­tion will be saved time.

By cut­ting down the time (and risk) associated with man­ual, hu­man-driven pro­cesses, you put hours back in your day that can be spent on bill­able client work — in­clud­ing high-value ac­tiv­i­ties like ad­vanced fi­nan­cial anal­y­sis, pre­dic­tive mod­el­ing, etc. — busi­ness de­vel­op­ment, and deep­en­ing re­la­tion­ships within the com­mu­nity.

With fewer younger peo­ple en­ter­ing the in­dus­try, more ex­pe­ri­enced pro­fes­sion­als are forced to de­vote more hours to less prof­itable work.

Dig­i­tal trans­for­ma­tion can solve this is­sue on sev­eral fronts:

1. Se­nior staff can fo­cus on the work they should be do­ing by au­tomat­ing low-level work.

2. Dig­i­tally adapted firms will have an eas­ier time at­tract­ing and re­tain­ing younger tal­ent.

What a dig­i­tal fu­ture can look like

Small and mid­sized CPA and ac­count­ing firms want to find ways to move from a com­modi­tized mar­ket to a spe­cial­ized mar­ket.

They un­der­stand they need to move into high-value ser­vices to stand out and be more valu­able to their clients. The more time they have open, the more time they can fo­cus on big­ger-ticket ser­vices that bring in more cash flow.

If your peo­ple are al­ways busy meet­ing dead­lines for bill­able work and us­ing what’s left for ad­min­is­tra­tive tasks, there’s no room for growth.

Tak­ing part in the dig­i­tal trans­for­ma­tion by au­tomat­ing es­sen­tial busi­ness prac­tices such as pay­ment col­lec­tion can give you the space to take your firm to the next level.

AT

David Sharp is pres­i­dent of Paysim­ple.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.