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Digital transformation for tax & accounting firms starts with the cloud

Samantha Mansfield  Founder of Samantha Mansfield LLC

Samantha Mansfield  Founder of Samantha Mansfield LLC

Given all the emerging technology surrounding us today, why are we still talking about the cloud? Because cloud technology is still driving transformation — but only for those that choose to transform, not just digitize.

The cloud was pivotal in our professional and personal lives over the last year, even if we didn’t always recognize it. Remote working has been proven to be viable, and numerous surveys show that it is unlikely the post-pandemic working world will return to a 100% in-office work environment.

Cloud technology will allow the tax & accounting industry to address these new working trends, as well as demographic shifts that are ongoing and were in place before the pandemic. The cloud also allows those accounting professionals making the necessary move toward client advisory to create a “frictionless” experience for their clients while increasing the accountants’ own tech-driven value.

Demographic changes

More than 60% of the accounting workforce is made up of women, according to the 2020 U.S. Bureau of Labor Statistics. McKinsey & Co.’s Women in the Workplace 2020 report found that one-in-four women are considering pulling back or leaving the workforce all together. For more than two decades the accounting profession has cited staffing as one of their top 5 challenges; so clearly, the accounting profession would be heavily impacted if one-quarter of women left the workforce.

Given the demographic changes of adults having children later, women — more so than men — are feeling greater pressure to care for the home, and that was even before the pandemic, which only exacerbated these issues.

Leaders of tax & accounting organizations need to consider these trends and then work to transform the work environment. These trends are not only impacting professionals in the accounting industry, but the industry’s clients as well.

Fortunately, cloud technology provides an infrastructure where the typical workday can flex to the person, allowing accounting professionals to more easily set their schedules to meet their own idea of work/life balance and, possibly, encouraging them to stay in the profession.

Empowering advisory services

Over the last several years there has been a movement for accountants to fulfill their role as advisors rather than compliance technicians. One driver for this change is cloud technology.

With the cloud, clients and accountants have access to data at the same time. Many cloud solutions offer an application programming interface (API) which allows for various cloud-based systems to share data between their platforms. This means that accountants have access to more information and can reduce their transactional workload; at the same time, they have the time and information to provide clients with high-value insights and foresight. Of course, this dynamic works the best when the systems are fully leveraged.

Further, when accounting professionals dive deep into a niche area, the cloud allows them to market to a targeted client who is most likely seeking those accountants’ expertise. Also, geography is not a factor when the cloud is used. Indeed, clients — especially younger ones —  are comfortable working with an accounting expert even if they cannot meet face-to-face.

cloud

Industry experts Joel Sinkin and Terry Putney noted recently that advisory services — and especially those invested in technology — are seen as higher value and therefore are more sought-after for industry mergers. Again, the pandemic increased the demand for advisory services from businesses and individuals.

Not surprisingly during this time of remote working, the cloud is how we meet and collaborate. Granted, there may be some clients insisting on face-to-face meetings, but many more appreciate the frictionless convenience and ease of working in the cloud while still having access to your expertise.

Competition for the opportunity

While the push to offer client advisory services, instead of mere transactional works, is perhaps the biggest story in the tax & accounting profession over the past several year, the interest in client advisory services is not limited to accounting firms. Indeed, other industries are very interested in the growth opportunities in advisory services and could make a foray into the tax & accounting field to go after some of these opportunities.

Pascal Finette, co-founder of be radical and Advisory Board Chair of EY wavespace, asked a recent gathering of accounting professionals what services they offer that Amazon.com might want to compete with, making the point that brand loyalty was fading because Amazon.com has made online purchasing so frictionless.

Should this be a real concern to those professionals who offer accounting services? One might think not. However, in late-March, an investment fund headed by Amazon CEO Jeff Bezos invested $100 million dollars in a company that offers back-office accounting and CFO services to small and medium-sized businesses (SMBs).

“A number of potential buyers from outside the accounting profession have become active in accounting firm M&A,” observed Sinkin and Putney. “Private equity concerns, wealth management companies, overseas buyers, and IT firms are now competing with traditional accounting practices for acquisitions.”

For some accounting firm leaders, this may be discouraging news. However, I encourage them to see the opportunities. CPAs are generally regarded as the most trusted business advisor — leverage that brand. In the Fall of 2020, a top-level domain was made available only for licensed CPAs and CPA firms, domain.cpa, assisting those in the accounting profession in differentiating themselves and adding creditability to their web properties. If your firm hasn’t already, it is time to address the challenges you and your clients face and begin transforming what the future accounting firm and its accountants look like.

The key to this may be in the cloud. People are looking for ease of use and frictionless experiences — would you describe the engagement process with your team that way? How do you think your clients describe it?

As use of the cloud increases and people become more familiar with it and prefer operating there, your firm should see how it can transform your business model to better engage with those that rely on your expertise.

Remember, your client service is not just about the deliverable, it is about the experience your firm creates for your clients. And using your expertise and the tools available, like the cloud, can change the way you offer accounting and tax services and create a frictionless and higher-value experience for your clients.

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