What this means for tax and accounting firms

CPA firms have also been evolving. They understand that market needs are shifting — and they are attempting to stay ahead of those changes. To do that requires firms to invest in the following:

• Acquiring new tools and content
• Attracting and retaining new skills and capabilities
• Developing their own technology roadmaps
• Building expertise in emerging industries

Firms that successfully evolve their business can serve as the model for clients working toward modernization. This is important because regulatory changes and the availability of software services mean less traditional tax and accounting work — mostly tax compliance work — is being passed to CPA firms.

By focusing on higher-value advisory services, firms can replace that vanishing revenue.

For businesses, this is a good deal as well. Collaborating with partners in a professional services firm lets companies focus on core challenges and leverage specialists’ required deep expertise. This shift will enable them to be more agile and proactive in their financial and business strategies.

Tax and accounting firms understand the value and need of this relationship due to the dynamics driving change for them. That understanding makes them a good partner for this modernization. Specifically, they understand that:

• Diversification is the key to ensuring success in a tight market
• A new generation of professionals wants work that is engaging and meaningful, not just data
• entry and form completion
• There is a new world of technology-driven information and how that impacts business

Businesses look past traditional tax and accounting services, seeking to collaborate on new opportunities

Here is how CPA firms can help businesses at various stages seeking help to evolve and what firms must do to offer collaboration.

Businesses looking to optimize workforce growth. Some companies have no finance or accounting professionals in-house and no desire to change. These businesses typically outsource most — if not all — of their finance and accounting needs to focus on core business and customer needs.

These businesses need work plans that enable work to happen quickly and efficiently to maximize team time and talent. These plans can include payroll, accounts receivable and payable, and bookkeeping. But those are just the basics; any financial function — from these basics to advanced forecasting — can be made programmatic and predictable.

Tax and accounting firms can be there to handle these traditional CPA roles and create needed work plans. They can also help businesses understand how business intelligence (BI) and analytics can help them spot trends and opportunities — and how they can act on them.

To do this, firms should use solutions that help simplify and speed workflows, enable accuracy and collaboration, and give clients confidence.

Businesses that require occasional additional services or staffing. Some organizations have resources on staff to “cover the basics.” Outsourcing finance and accounting services give these businesses an effective way to bridge the gap between predictable needs and everything else.

These additional services can scale and adapt as the needs of the business change, and smarter tax and accounting firms should be ready to provide this flexibility.

Firms need to meet their clients’ business demands for service while still managing the challenges of seasonal compression. If every business needs extra help at the end of the year, the stress can be immense, and firms are simply multiplying their compressed workload problems.

To get ahead of this challenge, firms can deploy technology and market research to gain insights to be predictive and proactive. Doing so enables them to manage resource compression better while providing the trusted advisory services clients need.

Firms can also offer senior staff in a “fractional CFO” capacity. This not only enables small and growing businesses to get outside help, but it’s also a great way to expose senior staff to a wide variety of industries and challenges.

Businesses that need expertise in improving technology and process best practices. Some companies with solid financial or accounting expertise are not ready to scale alongside other modernization efforts. They need help making processes more efficient and impactful without sacrificing security or dependability. They’re not outsourcing day-to-day operations but need consulting expertise in building the best systems.

Firms can become advisers for these businesses by first becoming experts on their own technology while also understanding the greater impact of technology on a specific industry. Becoming an expert means not just with hardware and software but also utilizing advanced tools like artificial intelligence (AI) and analytics. These skills are necessary for firms to offer client advisory services but can also be leveraged to fill gaps in client business capabilities.

Businesses facing change, from new markets to mergers and acquisitions. Entering new markets or growing through mergers or acquisitions can significantly impact compliance and other needs. Imagine a wellness product enterprise suddenly deciding to move into medical cannabis or a company that, through acquisition, is now managing employees in two countries.

Tax and accounting firms can offer their compliance and regulatory expertise to ensure these companies smoothly grow into their new markets or a new, larger company.

Businesses seeking visibility through metrics and benchmarks. Organizations are often familiar with their own data. They know their performance and its trends, quarter to quarter and year after year.

But for many business decision makers, this isn’t enough. They want visibility into how competitors are doing and organizations with similar sizes and missions are performing; they want to know what lessons can be learned and leveraged. Since their competitors won’t just turn that kind of information over, businesses need help from trusted advisers. 

Companies may not necessarily need more raw data; instead, they might need help figuring out what to measure from the data. They need to know things like:

• What are the most appropriate key performance indicators (KPIs) to assess financial health?
• What benchmarks are the best way to establish baseline success and measure future success?

Firms can be there to help these companies answer these questions and get the most out of analytics. But first, firms need to invest in their analytics capabilities, which means bringing in data scientists or recruiting team members who understand the entire “data supply chain” where information moves from raw data to a valuable resource.

As technology gets more refined, the possibility of being a “citizen data scientist” draws closer, where a non-expert can, with the right technology, unlock the power of analytics even without advanced training. Firms can also train staff on next-generation analytics and reporting tools and always ensure some team members are watching the AI- and machine-learning space. It’s a perfect match for the detail-oriented, analytical minds most tax and accounting professionals already possess.

Businesses needing auditing and assurance work. While CPA firms are typically qualified to perform traditional financial audits “right out of the box,” the growing influence of regulatory frameworks means non-financial audits covering cybersecurity, quality, or performance claims are becoming more popular.

As these frameworks become more complex, companies need to be able to understand requirements, build controls, and then demonstrate compliance. Firms can meet these business needs: to prepare for this service, firms should add specialist staff or create opportunities for existing staff to become certified in these specialized audits.

Firms should also invest in content and best-practice tools that support these efforts. These can include specialized audit workflow tools and evolving content that ensures both the firm and clients are up to date on the latest version of a specific framework.

Conclusion

The world is changing for tax and accounting firms and their clients. For firms to survive and thrive, CPA firms must help their clients do the same. They must build a more adaptive business model, mitigate risk, and adapt to evolving customer expectations. Doing so requires a culture change; when a company focuses on the day-to-day business operations, the transformation may get pushed to the back burner or executed in a rushed, ineffective way.

Many businesses will turn to professional service firms to get it done right. For CPA firms, this presents an opportunity to transform from merely a provider of traditional tax and accounting services to a strategic partner for modernization.

Tax and accounting firms that have successfully managed their evolution in this new business environment can pivot from being a traditional service provider to one that focuses on offering higher-value — and higher-margin — advisory services. Firms will then better weather the changes in the profession and replace vanishing revenue from declining tax compliance work and strengthen the relationship between their firm and clients.

Now is the time to start building the internal expertise and skills to become the partner that clients need.

Here are some resources you might find helpful:

Practice Forward

Let us guide you through developing a progressive business model for your firm. Forward-thinking firms can expand into advisory services, improve margins, drive growth, and elevate client service with Thomson Reuters Practice Forward content, tools, and guidance. Learn more.

Onvio Firm Management

Onvio Firm Management is a comprehensive, cloud-based software that lets you run your accounting practice more collaboratively than ever — from anywhere. Your firm can create the perfect client communication hub by combining document storage with secure online client accounts. Your staff and clients will always stay in sync with centralized data management and real-time updates. Plus, you can work from anywhere using convenient mobile apps. Learn more.

UltraTax CS

Thomson Reuters UltraTax CS automates your entire business or individual tax preparation with powerful, time-saving tools. You’ll access a full line of federal, state, and local tax programs, including 1040 individual, 1120 corporate, 1065 partnership, 1041 estates and trusts, multi-state returns, and more. UltraTax CS seamlessly integrates with other Thomson Reuters solutions, including CS Professional Suite and Onvio cloud software, so you never lose any billable hours to manual processing. Meet all your tax workflow needs with a customized, end-to-end solution built on cloud computing, advanced data sharing, and paperless processing. Learn more.

Checkpoint Edge

Built to deliver the latest in artificial intelligence, cognitive computing, and machine-learning technologies, Checkpoint Edge is a tax and accounting research tool that provides a more fluid and intuitive user experience, enabling you to find fast, accurate answers. Using this tool, you can spend less time on tax research and more time doing what matters most to your business. Learn more.

Cloud Audit Suite

Future proof your audit capabilities with Cloud Audit Suite. This solution helps accounting firms through real-time digital collaboration, engaging employees with progressive technologies, and improving client retention by delivering actionable insights and value-added services beyond the audit report. Learn more.