Over the last decade, the rapid development and implementation of financial technologies (Fintech) have made the future of accounting a hot topic. The entire profession is undergoing a fundamental transformation leaving many accountants to wonder, “Will I be replaced by computersaltogether?” (Relax though, you won’t.)
Are you losing sleep over what the profession will look like years down the road? While looking to the horizon helps you plot course and imagine, worrying about it doesn’t do a thing to help. Not to mention, if you get too hung up on the future, you lose sight of the present.
With that in mind, think of tech as a harbinger; a herald highlighting what’s coming, leaving you with a firm dose of reality instead of panic.
What’s the future saying?
Plastics. Okay, maybe not. If you quiet your mind, you’ll hear the future whisper a single word—commoditization.
When something that formerly wasn’t widely and readily available becomes easily accessible, it becomes more of a commodity. Commodities tend to be seen by purchasers as interchangeable—no one vendor’s products or services are markedly better or worse than any others’. Without any discernible differentiation, customer purchase decisions tend to rest primarily on price. (In this case, the commodities are certain accounting services your firm provides.)
Bookkeeping, payroll, accounts receivable, and even taxes (to a certain extent) have multiple software solutions. AI and Machine Learning now perform services that, in decades past, made up the lion’s share of a firm’s labor and time costs.
While that might sound initially like a bad thing, it’s actually good news for firms and employees. Because honestly, there are services your clients need your very human brain on.
There are many positive developments in the accounting world. Believe it or not, one of them is this very commoditization we’re seeing. It’s possible to leverage the Fintech revolution and drive your firm into a healthier and more profitable business. Let’s look at what you can do now to leverage the very things causing many to fear the future.
Now is all about value
In the past, accounting focused on necessary evils. Even the names for service categories are tied to obligation. Who gleefully searches for terms like “compliance” and “audit?”
You don’t need to live in the future to know that if people feel forced into a service, many choose the easy, fast, and inexpensive route. It’s here we discuss a somewhat recent buzzword in the financial space—value.
“Charge based on experience.”
“Become a trusted advisor.”
Add a couple articles about accounting tech and IRS slowdowns and it looks like your news feed, right? But selling value (as opposed to obligation) is deeper than any of these things. It’s about positioning your firm in a way that resonates with what excites clients, or at least that helps them avoid a deeper pain than filing their taxes.
Here’s a quick example: You have a couple who own a small business. They are in the 35% tax bracket.
A normal firm offers to do their taxes for a set fee (hourly or otherwise). Your firm offers detailed tax strategies, based on their particular situation and nexus. After a couple of planning sessions, you lay out how you’ll help them over the next several years, not only this season.
Restructure their business entity
Give to causes they believe in while ensuring the best benefit
Navigate the health insurance component of tax
Take advantage of applicable credits (like the R&D tax credit)
The list of potential strategies continues, but based on a 35% tax bracket, there’s at least the potential of a $30,000 reduction of the tax bill to those implementing the mentioned tax strategies. That’s so much better than selling compliance to the IRS. It’s also something not every tax accounting firm does for their clients.
Instead of selling services by saying, “Well, you gotta do it.” You’re exciting the client by providing a demonstrable ROI for your services, which are (for good reason) higher than other firms.
But what about value to your firm?
Again, pricing and tech are two of the hottest current topics in accounting. Arguably, both share value as their core idea.
One communicates value to clients in order to charge fair fees based on what clients receive.
The other is about the (potentially untapped) value your firm receives from employing financial automation tools.
$45,000 divided by 19 clients worth of bookkeeping = roughly $2,368.42 per client.
An automated bookkeeping solution, when properly implemented, costs a fraction of someone on your staff to do it. Cost isn’t the only value, though.
It can change staff focus: Accountants on your team need to see the value they provide, not be overwhelmed by manual tasks. Bookkeeping is necessary in nearly every accounting service, but it’s hard for your team to feel involved with the result if they’re head down in the books all the time. Automation allows you to better connect your staff to meaningful work, improving retention.
It provides an easier transition to value pricing: All of the time and effort spent bookkeeping transitions to planning, advisory, and strategy for your clients. Not only are you likely saving on your bookkeeping service, but you’re also tracking their books monthly. The added capacity and constantly clean numbers make it much easier to communicate the value of your services.
It can offer additional automated features: With the right solution, you’ll get more than reconciled accounts. For instance, Botkeeper not only automates bookkeeping, but presents useful reporting for you and your clients. It turns numbers into easily-communicated data you and your team use to truly add value.
Focus now to improve your future
Is the future of accounting changing? Of course. And it’ll be full of ups and downs, wins and losses, good times and bad.
But how do you prepare now? By embracing new ways of working and billing. Interested in learning about some more ways to focus on the now of your practice? Client advisor services are the perfect expression of firm value. And finding a great niche for them can help you drive all new success.