FP-Practice-FutureThe accounting industry is continually expanding and changing, and it’s important that you and your firm not only adapt to these realities, but also take advantage of the potential opportunities. My piece below highlights some trends, opportunities and situations for you and your firm to do just that. Either grow and adapt, or fall and decline.

Client Accounting Services will grow substantially within all firms

Client Accounting Services has come full cycle and become a core service of most CPA firms of all sizes. I have spent the last year visiting firms all around the country, and it is apparent that high-growth firms are the ones that are implementing “Digital Technology” and “Cloud Computing.” Digital Technology is changing the nature of accounting. Double Entry recording of transactions, in terms of debits and credits, is transparent or not seen. Data comes in (money in) and flows out (money out). Information flows directly into the general ledger accounts, but there is no longer a process of posting and then preparing a trial balance. Digital Data actually works its way through the entire accounting system in “real time” at the moment a transaction occurs. The creation of the document generates the debit and credit behind the scenes. A sales invoice is prepared and generated and the business owner can see the affect it has on his/her business instantly. The same holds true when a deposit is made or a bill/invoice is paid. The owner can actually look at a dashboard similar to the one below, which tells them how they are doing and what needs to be done next.

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Trusted Advisory Services will grow

This means that the nature of what an accountant does needs to change. Compliance work is becoming automated at a commodity. Accountants need to change their model to be one of reliance work rather than compliance work. This means that they need to adopt the role of trusted advisor and consultant, rather than historian.

This slide by Edi Osborne of MentorPlus is the best way to describe the role of a trusted advisor:

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SMB’s want their accountant to help them solve what keeps them up at night, rather than prepare reports that are automated. The owner of the business can press a button and look at their A/R Aging and A/P Aging Summary anytime they want.

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They want their advisors to automate their bill paying and approval process using tools such as Bill.com, as well as their expense reporting with apps such as Tallie. Since the SMB wants to be efficient in their operations, their accountant has to take on the role of consultant/advisor in order to be of value. If the accountant does not know of ways to utilize the digital applications that are available in the cloud, they cannot advise their clients.

App usage will rise

Accountants also need to become knowledgeable in recommending tools to help their clients be more efficient. Accountants often do not realize the influence they could have in this area. They should not only learn particular apps, but also become trained and certified, and be aware of additional enhancements or apps that are compatible with it. QuickBooks Online (QBO) is a perfect example of a tool that is continuously changing as the ”internet of things,” or ecosystem, grows around it. Many applications or tools are being created, but not all of them will survive. As you can see from the illustration below, there are many choices. While Intuit vets the apps in its app center, the accountant/ProAdvisor needs to recommend the apps and set the best practices for his/her client.

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The Changing Role of the CPA

CPA practices and the overall accounting profession will change as baby boomers retire. However, CPAs will not feel like retiring when they enjoy what they are doing. They just use their knowledge more as trusted advisors and less as compliance providers. Younger people entering the profession bring a different mindset to the profession, and relate to technology as “digital natives.” I note that the bulk of the services being provided to SMB’s come from solo practitioners and/or small firms that do not provide audit services, while large firms provide these same services and missing opportunities if they do not have a line of sight to these type of opportunities.