Strategic priorities for tax professionals
In 2023, as businesses are trying to reclaim some semblance of normal operations after several years of pandemic-related uncertainty, accounting firms are rethinking their priorities to meet customer demand better and position themselves for future prosperity.
While overall goals for tax firm owners and leaders remained consistent in the latest “2023 state of the tax professionals report,” efficiency reasserted its primacy as a top strategic priority, client service moved up in importance, and the search for quality talent — last year’s top priority — slipped to fourth place, behind growth.
Priorities are aggregated by the number of mentions from surveys of more than 500 tax leaders around the world and grouped by theme. Going into 2023, the conversation in accounting is a bit different than in 2022.
When evaluating these survey results, you should note that although the order of priorities may have changed, this doesn’t necessarily mean firms care any less about any given priority; it’s just that respondents’ primary focus may have shifted. As a practical matter, all of these priorities are interrelated, and the statistical difference between the top three priorities, for example, is only a few percentage points. Although finding and developing talent did drop from the top spot to the fourth spot overall due to input from small and midsize accounting firms, the hunt for talent is still a top priority at large firms.
Indeed, firm size is a crucial factor in these findings as well. For large firms (30 or more people), recruiting, developing, and retaining high-caliber talent remains the highest priority. In contrast, midsize firms (between four and 29 people) focus more on efficiency and client service. Talent isn’t as much of an issue at small firms (one to three people), where there is more focus on client service and growth.
Priority 2: Client services
In our 2023 survey, enhancing client service moved up as a priority relative to 2022, when it was deemed a lower overall priority — although it’s not as if client needs were ever ignored. Still, what’s becoming more apparent to firms of all sizes is that more clients want some type of advisory help in addition to basic accounting and business services — and, since “meeting client needs” is the name of the game, firms are adapting.
For years, large accounting firms have been expanding the range of services they provide to include more tax strategy, financial planning, and business consulting services, and that trend shows no signs of slowing. In order to compete, however, midsize and even some small firms are finding other ways to improve their client service, such as providing individualized tax strategies, improving client relations, reliably meeting deadlines, and providing more personalized service overall.
More business advice, please
Respondents to this year’s survey left no doubt that their clients are looking for more business advice. More than 93% of those surveyed replied that their clients are now looking for some form of advisory services, and close to 65% said this desire was “strong.”
Clients want business advice
As for what sort of business advice clients are seeking, 91% said tax strategy was the service clients requested most, followed by business consulting (73%), financial planning (63%), decision-making support (46%), and HR or organizational issues (30%).
What advice do clients want?
In written responses, tax leaders said they were planning to “roll out advisory services to all clients and new clients looking for those services” in 2023 and develop “research tools and resources” to deliver “advisory-based services and tax/financial planning services for individuals.” Others said they plan to “increase strategic planning work” and “help clients navigate the ever-changing economic world.”
Advanced services
When it comes to providing more advanced advisory services, however, large firms still dominate the market by a large margin. While most firms offer such basic services as accounting, bookkeeping, and tax preparation for individuals and businesses, only half of midsize firms provide financial planning, and even fewer (37%) said they provide decision-making support or business consulting services.
Larger firms offer more advisory services
Larger accounting firms tend to provide all of these services and more. In this year’s survey, 68% of firms with more than 30 people said they offer financial planning, 66% offer decision-making support, and 61% offer business consulting.
Auditing is another area where larger firms dominate, with 81% offering audit services, compared to 33% for midsize firms and only 14% for small firms. If international tax advice is what you want, fewer than 16% of small and midsize firms offer those services, whereas more than half (56%) of larger firms do.
Pricing options
Pricing models are another area where firms compete to differentiate themselves and meet clients’ growing preference for pricing options based on the nature and duration of the service provided. In our 2023 survey, many firms also indicated that they plan to expand the range of pricing options available to clients in the coming year.
Some firms are introducing alternative pricing models
More than half of all firms offer the most popular forms of pricing, and a small percentage of those that don’t — between 7% and 15% — said they plan to provide them in 2023. The most common forms of pricing are currently:
- Flat fee
- Time based
- Hourly
- Project based
More than one-quarter of firms — between 25% and 29% — also offer more specialized forms of pricing, such as:
- Retainer
- Market value
- Competition based
- Cost plus
Interestingly, between 16% and 17% of firms that don’t currently offer these specialized alternative pricing options said they plan to provide them in 2023. Across the board, there is a clear trend toward introducing a wider variety of pricing options to meet client demand.
Key takeaway: clients of all types are looking for more advisory assistance, business support, and pricing options beyond the billable hour.
Conclusion
While concerns about talent were dominant in last year’s survey, those have now given way to an increasing desire for greater efficiency, along with a renewed commitment to expanding and delivering client services.
Heading into 2023, tax and accounting firm leaders reported that their top overall priority is now driving operational efficiency — which may reflect a need to contain costs ahead of a potential recession — as well as a desire to squeeze as much productivity as possible out of existing processes, systems, and personnel.
Yet, despite the importance of efficiency as a strategic goal, more than half of all firms report that they do not have a designated person responsible for driving efficiency. This lack is unfortunate because firms without leadership and a detailed plan will likely see their desire for greater efficiency remain little more than a wish.
Similarly, the expansion of client services gained some momentum in 2023, primarily in response to ongoing client demand for more advisory services, particularly in tax strategy, financial planning, and general business guidance. Small and midsize accounting firms are also interested in improving the client experience by providing more responsive, personalized service. Indeed, if there is a trend to watch for in the coming year, it’s the extent to which firms are willing to change how they do business in response to client demands for more advisory services — in addition to more flexible pricing models and added business guidance above and beyond basic tax preparation.
Growth is another strong general goal for firms in 2023, but strategies for growth differ somewhat depending on a firm’s size. Small and midsize firms’ growth strategy typically focuses on trying to expand their client base. In contrast, large firms are more likely to focus on acquiring new clients, getting higher-value work from existing clients, expanding client services, and leveraging technological efficiencies.
At the same time, the use of more automation and improved tax software is also changing how work is apportioned and prioritized at many firms, opening up opportunities for tax professionals who want to build a broader portfolio of skills.
Adaptation, evolution, and flexibility will likely become the watchwords as the industry moves through 2023 — for both accounting firms and individual tax professionals.
Credits
Mike Abbott
Head of Thomson Reuters Institute
Michael.Abbott@thomsonreuters.com
Steve Seemer
Senior Director Thought Leadership & Strategic Relations
Stephen.Seemer@thomsonreuters.com
Nadya Britton
Enterprise Content Manager – Tax & Accounting and Trade
Nadya.Britton@thomsonreuters.com
Lucy Leach
Senior Technical Research Manager
Lucy.Leach@thomsonreuters.com
Marcus Belanger
Industry Data Analyst
Marcus.Belanger@thomsonreuters.com
Tad Simon
Sr. Content Strategist (Government/Tax/Legal) Enterprise Thought Leadership
Gregg Wirth
Content Manager
Thomson Reuters
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Don’t miss this complete report that provides insights and
guidance on all four top priorities for tax professionals