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Why accounting firms should improve their tech stack

· 5 minute read

· 5 minute read

Keeping pace with the latest innovations in technology is important for any firm looking to remain competitive and better serve clients in today’s challenging environment. This is especially true for firms eyeing a capital infusion from private equity investors. 

While such investments may not have been much of a consideration in prior years, times have changed. Today, a growing number of private equity investors are entering the accounting market as they’ve discovered that investing in accounting firms can yield great returns. That is, if the firm is a good fit and has the right appeal.

Meanwhile, accounting firms are recognizing that private equity investments can be a great way to future-proof the firm, accelerate growth, and expand service offerings.  

Accounting firms looking to attract investors should ensure their tech stack is up to date. And if it’s not, now is the time to make improvements. 

Why is an accounting firm’s tech stack important to private equity?

Private equity investors are interested in firms that are profitable. A firm’s profitability stems, in large part, from it having the right technology solutions in place to work smarter and faster and deliver on higher-margin services.  

Investors are not interested in firms operating on antiquated, legacy systems that are a drain on staff, resources, and profitability.  

However, even firms that have newer technology in place may be in need of upgrades to enjoy the full benefits and draw greater appeal from potential investors. 

What are the benefits of an improved tech stack?

Improve efficiencies

A complex regulatory environment, rise in client expectations, and greater competition means that today’s accounting professionals need to work smarter and faster. Leveraging automation capabilities as much as possible enables firms to improve efficiencies by eliminating time-consuming, mundane tasks. It also helps firms to better maintain their competitive edge. 

Streamline workflows

When data is siloed in separate applications and disconnected systems, it hurts productivity and profitability. However, in order to effectively build streamlined systems, accounting firm’s tech staff must be able to support integrations quickly and effectively. This can be achieved through such tools as APIs. 

Unlock higher-margin services

When there’s a solid foundation of automation and streamlined workflows, it frees up time for accountants to focus on more higher-margin, value-added services like advisory services.

By shifting from a compliance-based business model in favor of more advisory services that are backed by an up-to-date tech stack, firms can experience more sustainable revenues. 

Better attract and retain talent

Forward-thinking firms have a greater advantage in the war on talent. Today’s talent, especially up-and-coming professionals, expect innovative technology to be in place. When accounting firms invest in improving their tech stack, it sends a message to both current and prospective employees that firm leaders want to ease the strain on associates and understand the role that up-to-date technology can play. 

Boost client loyalty

Today’s clients have grown accustomed to the convenience and speed of technology. They expect the same of their accounting firm. Firms that are able to better serve clients by providing the following, via technology, stand to benefit: 

  • Fast and trusted answers to their tax-related questions 
  • Strategic, data-driven insights for more informed decisions 
  • Secure collaboration tools for an improved client experience

Is your tech stack in need of improvement?

Firms that operate on outdated software will find it challenging to remain competitive. You may have an existing tech stack, but can it be improved? 

To answer this question, first identify the pain points and consider what problems can be resolved via technology. Identifying your firm’s pain points will give you a better idea of how to personalize your tech stack for your firm’s unique needs.

Rather than updating technology for the sake of technology, ask yourself: How can technology solve my firm’s problems? 

Consider the following commonly cited grievances of gaps in software to help determine if your tech stack needs improvement: 

  • Staff is spending too much time on time-consuming tasks like repetitive data entry or data clean up.  
  • There’s a lack of efficient integration across systems and with many third-party applications.  
  • Staff is spending too much time on tax research and keeping pace with legislative changes.  
  • Software does not automatically download and install subsequent releases and updates.  
  • Too much time is spent communicating with clients requesting documents. 

Examples of tech improvements

Leveraging APIs can be an attractive option for firms looking to unlock improved efficiencies, drive greater profitability, and improve the appeal for private equity investors.

Consider the following examples of tasks made easier with APIs:  

  • Automate tax workflow processes related to e-filing, printing, and importing/exporting tax return data. 
  • Combine document management, scanning, and workflow technologies into a single cloud-based solution to streamline these services and create a truly paperless office. 
  • Extract data to use in high-level analysis, and take advantage of process automation and the power of artificial intelligence to take your tax data to the next level.

Keeping pace with the latest changes in technology is important. The efforts are worth it, especially for firms considering private equity investments.  

Take steps today to help ensure your firm maintains its competitive edge. To learn more, read our white paper “How APIs can help transform your practice. 

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