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Tax Practice Development

Survey shows how accounting firms benefit from evolving business models

Thomson Reuters Institute  Insights, Thought Leadership & Engagement

· 5 minute read

Thomson Reuters Institute  Insights, Thought Leadership & Engagement

· 5 minute read

Accounting firms prosper when they adapt their business models — including service offerings, technology, and pricing — to directly address their clients’ evolving needs, priorities, and expectations.

That’s one of the conclusions of a recent study exploring business model trends among U.S. accounting firms. The study is based on a survey of more than 650 accountants and other business professionals who purchase services from accounting firms.

“The survey results suggest that buyers have shifting expectations for their accounting firms,” the study states. “Firms that are able to rise to meet these expectations face a significant opportunity to strengthen their position in the marketplace. Doing so will require embracing… emerging strategies around pricing, technology, services, and more to create lasting, mutually beneficial client relationships.”

The study was conducted by,, and the Hinge Research Institute.

“While accounting firms have followed the same traditional business model for decades — relying heavily on billing for tax and compliance services — changing market conditions and client expectations are leading to new models,” the report notes. “Non-hourly fee structures, bundling of diversified services, and greater industry specialization are some of the most notable updates to business model strategies being put to work by accounting firms today.

Factors impacting the accounting industry

The study offers five key insights that are impacting accounting firm practice management.

1. Buyers have clear priorities among service offerings

The survey found a disparity between the services clients use most often — such as tax preparation, bookkeeping, financial reporting, and financial closures and statements — and the services they value the most.

The highly valued services have growth potential for accounting firms, but most firms don’t offer them, the survey found. These include accounts payable or bill pay services (provided by roughly one-third of accounting firms participating in the study); data analytics and technology services (each provided by 14% of responding firms); and forensic accounting (currently offered by 8%.)

“Each of these services can help businesses overcome… their primary challenges,” the study notes. “For example, buyers with little time [can] benefit from data analytics and technology services, which automate manual processes while providing financial insight. Similarly, outsourcing accounts payable to accounting firms — and automating that process — drastically cut the time required for these processes and help manage cash flow.”

Further, one of the study’s findings laid bare the disconnect between the services accounting firms provide and the services their customers value most. Almost two-thirds (64%) of the accountants surveyed said they formally assess each client’s needs and offer tailored recommendations — but less than 40% of the buyers reported receiving such customized service. “Accounting firms may want to re-evaluate their overall review and recommendation processes for prospective and new clients,” the study suggests.

2. Buyers will pay more to address their most significant issues

When survey respondents were asked to identify their biggest accounting challenges:

  • 19% said planning for growth & expansion and getting expert financial insights;
  • 18% cited problems with cash flow and minimizing overhead costs; and
  • 17% said staying in compliance with regulatory requirements and lacking time to focus on financial matters.

“In the context of clients’ pressing business challenges, strategic advisory services can represent a compelling offer for companies,” the study states. “For example, buyers struggling to plan for growth and expansion may be open to strategic consultation on revenue growth and business modeling. Those facing cash flow challenges and wanting to minimize overhead costs may find budgeting and advanced reporting of key performance indicators (KPI) helpful — and worth paying for.”

3. Strategic advisory services present big revenue opportunities

“According to the survey, buyers who do not currently purchase advisory services pay their accountants on average $1,108 a month. In contrast, buyers who do purchase advisory services spend $1,585 a month on average. That represents a 43% increase in revenue,” the report notes.

In addition, survey respondents who do not currently purchase advisory services “indicate they would expect to pay 50% more for an accounting package that includes both strategic advisory and consulting services, and are willing to pay more each month for packaged services.”

Nearly two-thirds of clients said the most desirable advisory services that could receive were guidance regarding revenue growth and business modeling; followed by budgeting (46%); tax planning (38%); risk management (38%); and advanced KPI reporting (35%).

4. Automation benefits accounting firms and their clients

“Using automation, firms can assign highly manual processes (such as reviewing workflows, sending reminders and updates, and tracking progress on projects) to technology solutions,” the study notes. “This allows both accountants and the business professionals they serve to offload lower-value, repetitive, administrative tasks without sacrificing quality.”

Indeed, highly automated accounting firms report fewer operational challenges than do less-automated firms. “Automation technology enables accounting firms to better deliver on their experience and expertise, focus on servicing accounts, and provide strategic guidance and insight to their clients.” And they can successfully increase their pricing when they effectively communicate these benefits to clients, the study concludes.

5. Value pricing introduces benefits beyond the bottom line

The study also found that transitioning to a value pricing model can enhance a firm’s customer service and improve client satisfaction — because it can address the top three items clients want from their accounting firms: i) more communication touchpoints; ii) better customer service; and iii) greater familiarity with their business and industry.

How does value pricing address these needs? Consider the answers from survey respondents when they were asked for the top benefits of value pricing:

  • 64% identified “transparency between the buyer and seller”;
  • 60% selected “demonstrating the value of firm expertise”;
  • 59% cited “lack of billing surprises”; and
  • 57% said it “holds the firm accountable to deliver on expectations”.

“Each of these benefits informs the customer experience — contributing to accountability and reliability, and showcasing the shared knowledge of accounting firm professionals,” the study states. “While firms understand the profitability potential of value pricing, they also appear to recognize that the benefits extend beyond profit and can contribute to positive, long-term relationships with clients.”

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