Accounting firms must invest the time understanding and adapting to new technology if they’re to capitalise on business opportunities and improve workflows and efficiencies.The so-called ‘digital disruption’ is leading to significant changes in the way that the leaders of accounting firms manage their work, their people and their clients. Cloud accounting, bank feeds, client portals, standard business reporting and eLearning platforms are just some of the ways that leaders are really leveraging their time and capability to provide better value to their clients and make work a lot more interesting for their people.Technology’s impact on revenue and profitIn theory, these technological changes should be leading to increased capacity, revenue and profit. However, most firms are not seeing clear benefits at this time. Last year’s Good Bad Ugly National Benchmark Report highlighted that, for the first time in 14 years of reporting on industry KPIs, there was a reduction in both average revenue and profit across the industry. What’s happening and what can firms do to return to solid growth and profits?
There’s no doubt that effective use of technology is leading to increased efficiency of compliance workflow. However, in the absence of significant development in the value of services provided to clients in the short term, firms are experiencing clear challenges in converting capacity into revenue and profit. The J curve of change is a good analogy, with an initial decline as firms adjust, followed by significant growth, especially for those firms that are able to adapt more quickly.
Making the most of technology
It’s clear that IT investment on its own will not generate productivity and profitability benefits. IT must be combined with business innovation to yield significant ‘bottom line’ improvements. This means that a focus on business culture, values, behaviour and processes is just as important as technology in driving change.
Remember that relationships are at least as important as technology. They serve as the basis for competitive advantage, whilst technology serves as an enabler to build relationships that influence client acquisition, retention, loyalty and profitability. The key is to align processes between client and firm, so that it becomes easier for clients to work with you and more difficult for them to move to another firm.
Realistically, smaller firms are in an ideal situation to lead the pack in transitioning from a compliance to an advisory focus with the ability to change and adapt rapidly.
In the midst of doom and gloom, there are certainly some great examples of firms that are already achieving strong growth through a change in ‘the way we do things’.
The real opportunity is to use technology as a key mechanism that accounting firms use to define who they are. It’s how they do business, how they communicate, how they engage their staff and, most importantly, how they engage their clients that really matters.
10 ways accounting firms can use technology
There are a number of ways accounting firms can use technology to improve team engagement and client relationships. Here are 10 suggestions:
1. Automate processes and improve business process mapping to create significant efficiency gains.
Start with compliance workflow. This should free up more time for client engagement and advisory work.
2. Wherever possible, take administrative tasks away from relationship managers.
Develop stronger administrative support roles and give partners and managers more time to focus on client needs and solutions.
3. Wherever possible, transfer clients to cloud accounting software for greater timeliness and quality of financial data.
Be aware that clients need to be educated and trained on how to process information in a timely and accurate manner.
4. Use client portals to make it easy for the firm and client to share financial information.
Firms should also think about how they can use technology to share information on the status of workflow. The more information available to the client, the more they are able to make decisions on the level of support they need.
5. Get a better understanding of CRM software and how it can be used to improve the quality of engagement with clients.
Just one example is using existing data to trigger engagement points with clients in specific ways by using predictive intelligence software.
6. Explore how you can use your website and social media to really engage with prospective and current clients.
Don’t allow your firm to drift into complacency by believing your clients are not interested. Increasingly, the evidence suggests they will engage online.
7. Implement client engagement tools to streamline the process whereby clients accept and pay for compliance and advisory services.
Tools like Practice Ignition allow firms to on board clients, create proposals, deploy workflow and collect client payments within one platform.
8. Use collaborative tools to improve the sharing of knowledge and information internally.
Traditionally, emails and workflow management systems have been used. Firms should also explore Wikis, weblogs and collaborative online workspaces to create greater staff engagement.
9. Explore the use of eLearning platforms
Move from a centralised approach to training, where people assemble for scheduled general training, to a decentralised approach when training is delivered on demand, to individuals and teams based on specific learning objectives.
10. Engage with similar-minded firms to discuss what they are doing to effectively utilise technology to drive production and engagement with clients.
Be aware that few firms are doing it right. Most, like you, are struggling with the ‘soft touch.’
Be aware that many of your clients are also struggling to really see how they can use technology to drive growth. A recent Deloitte report Harnessing the bang; stories from the digital frontline suggested that around two thirds of businesses are still not using cloud technology. Many still don’t understand the positive impact that technology can have on how they run their business. This is a real opportunity for progressive accounting and advisory firms.
Of course, there will always be clients and firms who continue to do things the way they’ve done them in the past. For firms, increasing price competition will force their hand in the long run. For clients, they will also need to adapt to ensure that they have access to the same information and resources as their competitors.
Where should your firm start?
When implementing major change, it’s best for firms to work in 90-day cycles. This gives you the opportunity to set some tangible short-term objectives and focus your team on what needs to be done.
As a first step, focus on client relationships and needs rather than available tools. Don’t be sucked into purchasing a technology solution when you don’t clearly understand the client need. A great place to start is with client engagement.
Month 1 – Identify areas of opportunity to engage with clients.
Look at the client experience, what’s working well, what could be improved. For example, go back to the client engagement process (scope of work, fee, and terms of engagement). What can you do better?
Month 2 – Explore tools and systems that are available or could be developed to drive the client engagement process.
Often, the best place to start is with client understanding of scope of work, terms of engagement and fee for service. It’s a lot more than simply providing an engagement letter.
Month 3 – Start to implement specific changes in the way the firm engages with clients.
Pilot the process with some clients and get their feedback. Ensure that your team is committed to the process. Measure and monitor results.
Always remember to practice ‘high tech with a soft touch’. Success in growing your firm is all about leveraging technology to improve relationships and communication with employees and clients.