Today, every industry is being radically reshaped by technology, the need to attract and retain top talent, and the growing importance of investing in human expertise. The accounting industry is no exception, with both traditional and progressive firms encouraged to integrate new tools and capitalise on burgeoning revenue streams.
Spotlight Reporting’s recently released 2023/2024 Global Advisory Trends Report, created in collaboration with Karbon, explores the biggest changes facing the accounting industry. The report offers the opportunity to zoom out and gain a greater perspective of the industry’s critical challenges and opportunities.
From compliance to advisory: Firms turn towards value-add services
While compliance continues to be the backbone of many firms, advisory services are quickly becoming the predominant way accounting businesses stand out from the crowd and offer new, diverse revenue streams.
The COVID-19 pandemic was undeniably a catalyst for this growth in advisory services. The uncertainty of the pandemic led clients to reach out to their accounting partners for more direct, tailored and expert advice.
Spotlight’s report found that 65% of firms identified themselves as ‘progressive’ firms offering mainly advisory services, or as hybrid firms offering both advisory and compliance services. On top of this, a notable 57% of firms are currently interested in expanding the range of services they offer. With only 2% of respondents uninterested in advisory services, it’s clear that the time is now to be investing in value-added services.
One key benefit of investing in value-added services is the revenue that they can bring in. The report found a significant 42% of firms are looking to grow future revenues from advisory services, to make this category account for a majority of their fees.
As highlighted in Spotlight’s recent webinar about the report, Ian Vacin, Co-Founder and Chief Customer Officer of Karbon, commented that these figures represent a monumental shift, and that leading firms are already experiencing growing profit margins as a result of offering advisory services.
He writes in the report, “Continual innovation and flexibility are key to sustaining growth and improvement over time. You must constantly refine, improve and reinvest your business strategies. Otherwise, your firm’s growth may eventually taper off.”
Advisory services powered by accounting software solutions
The report also highlights that firms implementing advisory services are more likely to succeed when they also adopt purpose-built technology solutions and employee training.
On the technology side, the report finds that in 2023, firms are mainly looking to integrate or revisit reporting and forecasting software (42%), practice management and operation software (38%), and automation (46%).
Such technologies can support conversations with clients, laying a strong foundation for a trusted advisor relationship. However, firms will realise the best ROI with software vendors that provide adequate training and onboarding, as well as regular updates to services and solutions.
The Importance of People
The report also highlights the necessity to bring a firm’s people along for the ride. It indicates that satisfied and skilled staff members are more likely to deliver genuine value to clients and promote new value-added services.
Regarding employee experience, remote and flexible working has become more normalised, with 61% of firms stating they offer flexible working options. While this is a new normal for many firms and businesses, in-person trainings and meetings go a long way towards building experience and trust with clients
Striking the right balance to ensure employees are engaged and satisfied will be increasingly important over the next 12 months, with respondents citing hiring staff as the biggest foreseeable challenge (36%), followed by economic impacts (34%), and work-life balance (33%).
Future of accounting: What sets the leaders apart from the laggards?
Spotlight Reporting’s 2021 Global Advisory Trends Report cited the war on talent and the variety of service lines as two key themes. This year and next marks a pivotal time for accounting firms as these two themes expand and evolve, encouraging industry leaders to invest in advisory services such as virtual CFO offerings, and effectively attract and retain top talent.
2023-2024 also marks a time when the vast majority of firms are looking into or actively engaging in the development of advisory services. Paired with purpose-built accounting technology and software solutions, firms can deliver recognisable value to their clients, and begin to develop in-house expertise and a meaningful line-up of services.
Richard Francis, CEO and Founder of Spotlight Reporting, comments, “Virtual CFO work is very human. Allow your staff to be part of that journey so they can understand the human dynamics of the accountant-client relationship. If they are sitting in the back office focusing only on financial statements they aren’t going to learn what are the right questions to ask, what we need to focus on. It’s about being the best general practitioner you can be for your clients.”
Ian Vacin says, “The change management journey is solved by training, including technology training. When you have the downtime it’s good to look at your strategy, which includes technology, and then to make that move forward. There’s no single right answer for each firm, it depends on where you are on your progressive journey.”