In this guide, I’m going to outline what the future of accounting looks like for accounting firms and how to best prepare for it in 2023.
And to be clear, this is not a prediction post.
This guide will cover trends that are happening at this very moment and specific strategies that you can use right now to better prepare you and your firm for the future.
- Get the latest emerging strategies to improve and prepare your firm for the future of accounting.
- A peek into the technology and tactics being leveraged by leaders in the profession.
- Learn actionable tips in 8 core areas to help keep your accounting career on the cutting edge.
So if you’re looking to improve your firm in 2023 and keep yourself on the cutting edge of accounting, you’ll love this new guide.
Future of Accounting Table of Contents
- Automation & Accounting Technology is Accelerating
- New Skills Required
- Emerging Business Models in Accounting
- Jump on the Client Accounting Services Train
- The Future of Accounting Services Are Found on Google
- Changing Client Expectations
- Work-Life Balance More Important Than Ever
- Compliance Services Far From Dead
1) Automation & Accounting Technology is Accelerating
Thanks to technology like cloud computing, artificial intelligence, practice management software, machine learning, blockchain technology & robotic process automation, studies have concluded that many accounting practitioners and financial professionals are at a 98% chance risk of having their job automated:
Research from the World Economic Forum also agrees that accounting professionals, in the capacity that they serve right now with a few people, are heavily decreasing in demand heading into 2025 largely thanks to the improvement of technology:
Want proof of this automation in action?
Botkeeper, a platform that provides outsourced bookkeeping services to CPA firms (to which I serve as an advisor), has applied advanced levels of machine learning and artificial intelligence to achieve exponential growth in entities served yet with only a moderate uptick in the amount of staff:
While accounting automation and artificial intelligence do present a threat to some, it’s clear from the above chart that it presents an opportunity for many.
In fact, according to a recent study, pacesetting firms, ones that are outpacing the average firm growth rates are leveraging technology more than their peers to pull ahead of the pack:
Here are some examples of how automation is helping accounting professionals this very second:
- Machine learning, technology, blockchain technology, and robotic process automation in accounting can help you to prepare the books in a fraction of the time that they used to
- The interconnectedness of third-party software vendors and your accounting system allows data to flow seamlessly between each other, reducing manual data entry and errors
- Artificial intelligence is able to quickly augment an accountant’s skills
It’s clear that one must stay current with trends in automation in order to stay relevant as the future of the accounting profession evolves.
Here are a few tips for how you can leverage automation & digital technologies right now:
Tip 1: Document and Standardize Processes First
Before you look to automate, you NEED to first have standardized, documented processes for the tasks you’re looking to automate.
Luckily, an app like Scribe can automatically produce documented processes for you. Just record your screen as you work through a task and the app will produce the documented process for you:
Once you’re clear on the process, you can identify areas that require manual entry and then shop for technology to automate that aspect of the process.
Tip 2: Leverage App Integrations
When you connect different pieces of software together, data can flow seamlessly from one app to the next, which allows you to achieve more automated workflows.
Xero’s App Marketplace, for example, allows you to shop for hundreds of apps to connect to their accounting system to transfer data back and forth seamlessly to streamline your accounting functions:
Today, this is a basic expectation when it comes to accounting automation.
The accounting automation future will become more complex, making use of the hundreds of third-party applications that may be integrated into your accounting system.
For example, here’s what Xero’s App Marketplace looks like:
Here, using an app like Jirav can help you automatically prepare forecasts, financial models, dashboards, and actual vs. budget comparisons, where the app’s software integrations look like this:
These integrations allow you to:
- Sync actual financial data from Xero/QBO
- Pull in sales pipeline data from Salesforce to forecast revenues
- Pull employee data from Gusto to forecast payroll
This allows you to then automatically produce KPIs, forecasts, financial models, and more…
Tip 3: Learn NoCode Software Development
The leading experts in accounting aren’t relying on existing apps in the marketplace to automate their workflows… they are building their own proprietary automations using NoCode software development.
NoCode allows you to build software applications and automation quicker and easier than traditional development using a variety of tools (ex: Zapier, Airtable, etc.).
Some accounting firms have even built out teams of NoCode software experts that provide custom automation solutions to their clients.
Here’s just an example of what’s possible:
Tip 4: Future of Accounting: Use Technology to Close Technical Gaps
One of the things that advancements in technology are bringing to the future of accounting is the democratization of technical knowledge.
For example, tax planning experts have long been in high demand.
But now apps like Corvee can build out automated tax plans with the click of a button:
Tip 5: Familiarize Yourself with ChatGPT
ChatGPT is an artificial intelligence technology that interacts with you in a conversational way.
We are on the brink of a major transformational time in life where AI is used on a day-to-day basis to perform our tasks.
It’s not hard to see think accountants, tax experts and bookkeepers will be leveraging it in the future.
Check out this simple prompt I created and what was returned:
Register for a ChatGPT account today and get yourself familiarized.
2) New Skills Required to Stay Competitive
The recent World Economic Forum “Future of Jobs Survey” reports that 50% of complex and technical activities are expected to be automated by 2025 (up 40% since 2020):
The trends are clear:
Technical accounting & tax knowledge are becoming less important than one or two decades ago thanks to new technologies and the emergence of data analytics.
This means that to stay competitive, the accountancy profession, compared to other professions, will require new skills over and above just technical and data management.
Simply, many accounting teams are opting to hire candidates with other skills instead of those with technical knowledge.
And because of this, who you hire in your firm and how you train them should greatly differ in order to prepare for the future of the accounting profession.
Here’s how you can look at hiring and training in accounting at the moment:
Tip 1: Onboard Technology Expertise
As more and more gets automated and switched to machine learning, you’ll need people on your team with the required skills to manage and lead technology initiatives.
In fact, when I ran my firm, I hired a full-time software engineer very early on to take over technology at the firm:
The role included everything from researching new ways to automate to implementing custom tools to training the team on technology to helping with data analytics and basically quarterbacking technologies at the firm.
Do you need a full-time person on the team to handle quarterbacking all of your firm’s technologies and security?
I think so.
Just look at part of this firm’s About Us page which contains a mix of software engineers, accounting professionals, and tax experts:
They basically resemble many of the accounting tech startups popping up at the moment.
I very much believe the future of the accounting profession will be a mish-mash of accounting professionals and technology. We’re already seeing this happen right now.
Tip 2: Recruit & Train for Soft Skills
We often hear about the rise of the “trusted advisor” in today’s world. The fact is that a “trusted advisor” is not a number cruncher but an advisory role that possesses a host of soft skills and business skills to interact properly with people and manage their work.
While there are tons of important soft skills, firms should prioritize hiring and training for the following two:
1) Problem Solving
A key ingredient of being able to problem-solve is to be adaptable. As the world moves quickly, high performers need to roll with the punches and use creativity to solve problems and analytical tasks when it comes to their work.
Problem-solving skills also come in handy to analyze data and big data coming from the technologies that we’re leveraging to help future-proof the careers of accountants.
This was one of the top things I tested for when I hired accountants to the team for a few reasons:
a) Good communication is one of the core competencies of the future accountant and the cornerstone of good customer service, critical for advising clients through advisory services.
b) Accountants work in a digital world, often working from home. You can no longer read visual cues that you see when working in an office. Those who communicate openly and who write well are highly valuable.
c) Technologies are already doing a lot of the heavy lifting. Accountants, therefore, need to properly communicate to clients and team members what the technologies have done in order to guide them through complex situations.
If you want more proof of skills or data that are trending and ones that are in decline (and that managing technologies are on the incline), check out this labor statistics table from a recent World Economic Forum Future of Jobs Survey:
3) Emerging Business Models in Accounting
When someone needed help with their accounting processes, they’d hire an accounting firm.
Now, consumers have more choices than ever before for how to get their work done.
Here are two emerging business models that affect the future of accountants and the accountancy profession:
i. Marketplace Platforms
Uber popularized the marketplace platform by providing software where suppliers and customers can connect effortlessly and have their needs fulfilled.
Now, software companies are trying to play the same role in the accounting profession where they will match accounting professionals to businesses.
For instance, look no further than one of Intuit’s core strategies with QuickBooks Live and TurboTax Live:
ii. Do-It-Yourself Models
The online education market is exploding and is expected to hit $350B globally by 2025. Never has it been easier to learn new skills through various online communities, courses, and self-learning systems.
What this means is that your clients have yet another option:
Learn how to do things themselves rather than hire a firm.
And many accountants are already jumping on this wagon.
Take Smart Monkey, run by a couple of savvy, experienced bookkeepers who developed a super scalable bookkeeping service who, for $149/month, teach their customers how to do it themselves through online education along with some expert support:
The above models suggest that certain segments of the market are looking for different ways to get their accounting done, which erodes market share in the traditional services delivery model.
Here are a few tips to consider to help you prepare in this area:
Tip 1: Add Personal Touches
There’s a lot of talk about automation, but today, and certainly in the future, the personal human touch cannot be ignored.
If you want proof, you can read Scalefactor CEO’s message about why their $100M venture-backed accounting service operation shut its doors in 2020:
It’s easy to get wrapped into just focusing on technology and automation, but the future of accounting is very much still people-driven. Consider how you can add more personal touches to the services that you offer.
By adding personal touches that improve the customer experience, you can sidestep some of the threats discussed in this section.
Great, personalized service will never go out of style.
Tip 2: Break Out of the Box
As the world evolves, so should your business.
Your business exists to solve problems. And there are likely lots of problems that you’re still not solving for your clients.
Meet regularly with your own team and list problems and points of friction that still exist among your clients, rank them in terms of pain points, and brainstorm ways on how you might solve them.
You might just identify new ways to serve these clients that fit into one of the emerging business models I listed above.
4) Jump on the Client Accounting Services Train
Client Accounting Services (CAS) include things like bookkeeping, bill pay, accounts payable, payroll, etc., and as a service offering, it’s growing fast among the top 100 US firms:
That’s probably because 77% of business owners polled in a recent survey stated that they’d pay accountants to take this work over to help see major changes:
The implication for the future of accounting is that firms and accountants must prioritize the development of this service offering. As accounting niches grow in popularity, it will be essential for accounting firms to define their specialty and provide services that match the requirements of their niche market.
Here are some ways to do so:
Tip 1: Power the Service with Cloud Apps
CAS services should be powered by cloud computing to automate workflows to the fullest:
- Xero or QuickBooks Online for the general ledger
- Dext or Hubdoc for expense management
- Gusto or OnPay in the US for payroll; Wagepoint in Canada
- Bill.com or Plooto for bill pay
- InvoiceSherpa for accounts receivable management
For more apps, check my Big List of 147 Cloud Accounting Apps.
Tip 2: Modify Your Discovery Call
Part of what your clients are paying for when they offload bookkeeping, payroll, bill pay, etc., is for accountants like you to make the process more efficient and easier on them.
What this means is that during your discovery process you need to be learning about their current processes, in as much detail as possible, to understand how you’ll improve them.
For example, if you’re taking over the bookkeeping for a business, move beyond just asking how many transactions the business has and instead focus on the client’s business model and their processes.
How many revenues streams do they have?
How do they invoice each?
How do they receive payment for each?
What kinds of expenses do they have and how do they pay for them?
Make sure you’re getting a clear understanding of a business’ processes before signing the client up.
Tip 3: Productize Your Offering
The beauty of CAS is that the service is repeatable which makes it a prime target to offer on a subscription basis. Doing so involves properly productizing your offer in order to make it as attractive as possible.
Essentially you’re turning your offering into a subscription, as Pilot has done here:
Once you create your tiers, you can present them for acceptance in an app like Ignition (affiliate link), which will look like this in the app:
5) The Future of Accounting Services Are Found on Google
There are an estimated 4 billion users globally and the average user spends close to 18 minutes per day on Google.
And the accountants and firms that have tapped into Google have seen exponential growth.
No longer do more clients first seek a referral for modern accountants, they head to Google for more data.
In fact, one of the reasons I was able to take my own firm from zero clients to being acquired in just 5 years is because I relied heavily on Google to bring me business, not referrals.
Here’s how you can do the same:
Tip 1: Optimize for Local SEO
Search Engine Optimization (SEO) is the process of optimizing your website to be more easily found on Google when people search for keywords relevant to your business.
The interesting thing is that 46% of all Google searches are seeking local information, which means that if you’re looking to start with SEO, improving your local SEO rankings should be your first move.
To do this, I recommend getting your firm set up on Google My Business, which is basically just a free business profile for your firm.
By doing so, you’re giving Google relevant information about your firm which helps improve your chance of ranking for popular local keywords.
For example, you can see when I search for “montreal accounting firm”, the firm I sold, Xen Accounting, pops up at the top of the search results because I was able to optimize the Google My Business page:
Tip 2: Get Google Reviews
Getting Google reviews for your firm will serve two purposes.
First, it will help accountants like you rank more favorably in local Google search results.
According to a recent study, Google places a high emphasis on reviews when determining how to rank your firm in local search results:
Sidenote: Notice how Google also places a very high emphasis on your Google My Business profile which we covered just before this.
Second, prospective clients are more likely to select a firm that has positive reviews than one with no reviews at all. People like social proof.
And getting Google Reviews is super easy:
1) Once you sign up for a Google My Business page is live, perform a Google search for your firm. Then click the “reviews” area:
2) Then click on “write a review” on the window that pops up:
3) Copy the URL that shows in your browser
4) Then email your best clients and ask them to click the link that you copied in step 3 to complete a Google review of your firm
You can replace step 4 with some more technical automation, but that’s a good way to start!
6) The Future of Accounting Includes Changing Client Expectations
Clients today value ease of use above all else.
If you want proof, a recent study indicated that millennials list seeking an advisor that’s “enjoyable to work with” topping their list of desires:
They want the Uber experience. They want easy & frictionless with everything at the push of a button.
Unfortunately, it seems that accountants and other professionals aren’t getting that message with the same study indicating that 50% of millennials polled are looking to replace their chartered certified accountants.
Accounting service providers, like Pilot, smell this opportunity and are trying to disrupt the industry.
In fact, Pilot is now worth $1Bn+ after Jeff Bezos’ personal investment in the company.
This valuation puts it on par with the largest firms in the US according to the Accounting Today Top 100 rankings!
At the end of the day, the future of the profession will be dictated by whether accountants are providing their clients with a service experience required for the times that we’re in.
Here are a few simple ways how:
Tip 1: Make Cloud Accounting De Facto
Younger generations have internet-first preferences, yet only 7% of millennial business owners are using cloud technology for their accounting:
Here’s a simple fix for improving the client experience:
Make sure all your clients are using cloud accounting software.
Tip 2: Ask for Feedback Often
The best way to know what to improve when it comes to the customer experience is to simply ask!
Accountants should be constantly asking their clients what you can be doing better.
And it doesn’t need to be complicated either.
You can simply ask them what you could do to make their lives easier when you have your annual meetings with them.
Or you can send out Net Promoter Score surveys which help assess where you are now and monitor your NPS score as you implement improvements to see if it moves the needle.
Surprisingly, only 18% of accountants are asking their clients for feedback, which likely backs up why that same report finds that millennials are so unhappy with their firm.
Tip 3: Map Out Your Customer Journey
Documenting every single point of interaction with your firm is a good way to identify points of friction, dissatisfaction, and inefficiency:
The customer journey most likely starts on your website and ends with the service being delivered and the client re-engaged.
So document each point of interaction and eliminate and/or improve the points that are painful or of no value-add.
7) Work-Life Balance More Important Than Ever
Let’s face it.
Working in the accounting industry has had a terrible rap when it came to achieving a balanced lifestyle.
We’ve all heard (and some have lived) the horror stories of crazy hours and awful busy seasons in public practice.
In fact, the results of a Deloitte survey which indicate that almost 50% of millennials & Gen Z report being stressed out all or most of the time:
People are quitting their accounting jobs in droves like never before.
We must tailor to proper balance and proper mental health, not just for the sake of ourselves and our team, but for our business as well so that work-life balance for accountants can improve. We can grow our firm if we’re not adequately filling the accounting jobs we have open.
Here are a few ways how to ensure proper balance in accounting life:
Tip 1: Engage in Capacity Planning
Most people in firm life are overworked and stressed because of poor capacity management.
Capacity planning involves comparing an individual and firm’s available capacity at a future point in time to the work that’s assigned to them.
For example, if someone is able to work 100 hours in a given month and they have 120 hours of work assigned to them, then there’s a capacity issue that must be fixed.
You can create capacity planning reports in a spreadsheet, or you can use a tool like Teamwork:
Tip 2: Future of Accounting: Assess What You Really Want Out of Life
If you’re running an accounting firm, the tendency is to blindly grow without thinking of the consequences and whether it’s what you really want.
Take a step back and assess your personal goals first. Then make sure the direction of your business is consistent with them.
The future of accounting involves work that’s a little less crazy and a little more calm.
Tip 3: Implement Work From Anywhere (WFA)
A few years back, the trend in accounting was about remotely working from home.
Then the pandemic hit and working from home was no longer a discussion, but a fact of life.
And it’s clear that people are already used to working like this and the number returning to the office once things clear up will greatly reduce.
And according to a recent Deloitte survey of millennials and Gen Z, the appetite to work from home as the new norm remains strong:
And the difference between working from home and working from anywhere in the world is basically nil for the business but provides a ton more flexibility for your team.
As such, it should be encouraged to allow your team (and yourself) to Work from Anywhere (WFA).
Here’s a pic of my previous Tax Manager working by the pool in Mexico:
Forget Work from Home, those searching for accounting jobs want Work from Anywhere to help live a less stressful life in accounting.
8) Compliance Services Far From Dead
Sure, the way compliance services are being delivered might be changing, and yes, more of it is being automated, but the high demand of ensuring compliance is not going anywhere anytime soon.
In fact, it was recently found that compliance-focused firms have been growing faster than their counterparts.
That being said, when it comes to the future of accounting and compliance services, they are certainly becoming more automated, more based on technology, and more competitive.
As such, there are a few things to keep in mind to make sure that you’re efficient and profitable in this area:
Tip 1: Don’t Stray Too Far From Your Sweet Spot
I often see firms offering services that they probably shouldn’t be offering. These are things that they only perform a couple of times a year to only a handful of clients, like audits.
Compliance services should be viewed as a well-oiled machine where there is a set process that’s followed.
If you don’t have a good process for a compliance service and if you don’t plan on building it out, I’d argue that you shouldn’t be offering this service in the first place. Think of your client experience as well.
Tip 2: Seek Education in Accounting Technology
Even though compliance services aren’t going anywhere, they are becoming more fully automated with businesses actively seeking to replace human accountants with machines.
In fact, a recent World Economic Forum’s Future of Jobs report stated that companies expect machines or artificial intelligence to handle the majority of complex and technical activities by 2025:
Someone still needs to manage the automation, however. This is where understanding how to automate becomes valuable.
Seeking to sharpen your skills in this area, therefore, becomes crucial.
Sure, there’s a whole bunch of accounting blogs you can read, like this one (!), CPA Journal or Accounting Today, but there are other tools as well.
Luckily there are online communities for entrepreneurial, technology-forward accountants to help provide this education, including my own Future Firm Accelerate® community, where members can chat about all things technology:
Tip 3: Only Accept Clients That Follow Your Process
If you want to win in the compliance game now and in the future, efficiency is key.
Earlier, we looked at standardizing processes and then leveraging automation to automate those processes.
Once you have a process in place that works, this means that clients must follow it.
For example, if you’ve built your firm around QuickBooks Online and the client wants you to use an accounting system you’ve never used before, you would reject that client.
The days of having a super customized, highly profitable compliance service are numbered.
Stick to your process, make your clients follow it, and reject the ones that don’t.
The Future of Accounting – Over to You
I hope this guide on the future of accounting helped you better prepare for 2023 and beyond.
What tip did you find the most helpful?
Was there something you disagreed with?
Which tip will you implement first?
Let me know by commenting below!