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 2021.

And to be clear, this is not a predictions 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.

So if you’re looking to improve your firm in 2021 and keep yourself on the cutting edge of accounting, you’ll love this new guide.

Let’s go.

Future of Accounting Table of Contents

  1. Automation is Front & Center
  2. New Skills Required
  3. Emerging Business Models in Accounting
  4. Jump on the Client Accounting Services Train
  5. Google Reigns Supreme for Client Acquisition
  6. Changing Client Experiences
  7. Decreased Stress in Accounting Life
  8. Compliance Services Far From Dead

1) Automation is Front & Center

The biggest technological development that accountants have seen in the last decade has been the emergence of the cloud. Thanks to the cloud, we have seen the rise of artificial intelligence, machine learning, robotic process automation, and various other technologies that have allowed us to automate far more.

The future of accounting is not just about technology, but it sure is being driven by it.

Studies have concluded that accountants are at a 98% chance risk of having their job is automated:

accounting automation job percentages

Research from the World Economic Forum also agrees that accountants, in the capacity that they serve right now, are heavily decreasing in demand heading into 2025:

And while accounting automation does 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:

future of accounting pacesetting firms

Here are some examples of how automation is helping accountants this very second:

  • Machine learning and robotic process automation can help you to prepare the books in a fraction of the time that it 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 accounting evolves.

Here are a few tips for how you can leverage automation right now:

a) Standardize Processes First

Before you look to automate, you NEED to first have standardized processes. You can’t automate without a clear, step-by-step process in place.

So get clear on your processes first.

The easiest way to do this:

For each process that you’re looking to automate, get a strong team member in that process to document how they perform the task as it’s being performed.

For example, here’s how I might document a bank reconciliation process:

client accounting services bookkeeping process

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.

b) The Future of Accounting is Integrated Through Apps

When cloud accounting hit the market, things like automated bank feeds blew people away:

xero bank feed

Today, this is a basic expectation when it comes to accounting automation.

The future of accounting involves more complex automations that leverage the hundreds of third-party apps that can integrate into your accounting system.

For example, here’s what Xero’s App Marketplace looks like:

You would leverage this ecosystem to run more complex automations in accounting.

As an example, using an app like Jirav can help you automatically prepare forecasts, financial models, dashboards, and actual vs. budget comparisons.

Here’s their integrations screen:

jirav integrations

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

Being on the cloud today is table stakes. Remaining relevant in the future involves applying more complex integrations in cloud accounting to automate as much as possible.

c) Use Predictive Technology

With advances taking place in artificial intelligence, technology is now able to start making predicting accuracy in various areas of accounting.

For instance, Botkeeper, an outsourced bookkeeping service supported by technology, applies machine learning and AI to financial transactions to predict levels of confidence for how items should be coded:

botkeeper future of accounting

Anything above 98% gets automatically coded while items below 90% would require some kind of manual review.

And while this example provides levels of confidence on historical data, there are many other technological advancements happening that are predicting the future.

For instance, take Futrli Predict. It will look at historical information in Xero/QBO to create a predicted cash flow forecast, P&L and balance sheet.

As the video below shows, you can use the software’s predictions, or create your own:

My friends at App Advisory Plus even wrote up a small independent review on how it works and what some of the initial drawbacks are.

Xero and QuickBooks Online also released similar predictive cash flow features, though Futrli’s certainly looks more advanced at the time of writing.

d) 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 demand. But Blue J Legal helps to close this technical gap by providing software powered by AI which to predict the outcome of tax plans.

Start by picking a tax issue:

blue j legal accounting automation

Feed in the facts regarding said tax issue:

blue j legal

And by scanning available tax law and court cases, the software will predict the outcome of your tax plan to see how a court would assess the matter:

blue j legal tax

2) New Skills Required

Driven by technology, the trends are clear:

Technical accounting & tax knowledge are becoming less important than one or two decades ago.

I guess this helps to explain the recent 30% drop in accounting grads being hired by public accounting firms according to a recent AICPA report:

future of accounting jobs

Simply, many firms 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 accounting.

Here’s how you can look at hiring and training in accounting in 2021:

a) Onboard Technology Expertise

As more and more gets automated, you’ll need people on your team 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.

Everything from researching new ways to automate to implementing custom tools to training the team on technology and basically quarterbacking technology at the firm.

Do you need a full-time person on the team to handle this?

I think so.

Just look at part of this firm’s About Us page:

collective future of accounting

They have a CTO and three software engineers in addition to accountants and tax advisors.

They basically resemble many of the accounting tech startups popping up at the moment.

I very much believe the future of accounting teams will be a mish-mash of accountants and technologists. We’re already seeing this happen right now.

b) Soft Skills are Critical

Soft skills are non-technical skills that relate to how you work and how you interact with people. And with the advancements we’ve seen in technology, they are absolutely critical to the future of accounting.

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 someone who possesses a whole host of soft 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 in 2021:

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 when it comes to their work and working with people.

Problem-solving and innovation also go hand in hand.

2) Communication

This was one of the top things I tested for when I hired anyone on to the team for a few reasons:

a) Good communication is the cornerstone of good customer service.

On my end, I wanted every team member to be customer-facing and as such, they need to possess excellent communication and customer service skills. In fact, I value customer service experience on their CV (ex: McDonald’s) more highly than some of the technical experience they might have received when it comes to accounting. Technical experience is easy to train on. Customer service is far more difficult.

b) We 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) Technology will do (and already is doing) the heavy lifting. Someone needs to properly communicate to clients and team members what the technology has done in order to guide them through complex situations.

If you want more proof of skills that are trending and that are in decline, check out that table from a recent World Economic Forum’s Future of Jobs Survey:

future of accounting skills

c) Tap Into the Gig Economy

People have taken 9-to-5 jobs because that’s typically been the way to earn a living. The downside has always been to trade-in a certain level of freedom.

But now with technology and the rise of the marketplace economy (ex: Uber), workers are able to tap into platforms and perform the kind of work they want, when they want it.

And with younger generations are seeking freedom above all else, we now see the rise of the gig economy taking place in the world.

While some firms may feel threatened by this, there are actually some good opportunities for firms.

Progressive accounting countries, like Australia, have surveyed accountants recently and found that 28% of them intend to rely on the gig economy in the next 5 years to access in-demand skills.

This is a significant number.

There are platforms out there right now, like Paro and Taxfyle, who let you tap into the gig economy.

So next time you have some required skills on your team that don’t necessitate full-time work, consider reaching out to gig workers.

3) Emerging Business Models in Accounting

The accounting firm service delivery model that has existed since the beginning of time has not drastically changed until very recently.

The future of accounting will see a rise in the popularity of new emerging business models that are already forming. These will very likely erode market share of many traditional models down the road and make it more difficult for those traditional models to compete.

Here are three trending models that are in effect right now in professional services that you should be aware of:

i. Marketplace Platforms

Uber popularized the marketplace platform by providing software where suppliers and customers can connect effortlessly and have their needs fulfilled.

This is already happening in accounting with platforms like QuickBooks Live:

future of accounting quickbooks live

These platforms are often backed by huge players with massive marketing budgets where they are vying for the very clients that most firms target.

ii. Micro Service Offerings

There is a concept called “unbundling” which basically takes a model that has successfully existed for years and pulls it apart to create more focused, higher-quality service offerings.

For instance, take a look at the number of companies that “unbundled” Craigslist:

future of accounting unbundling

Essentially, the unbundling leads to intense levels of focus on that specific vertical, which typically leads to a much better customer experience.

The same logic can be applied to most professional service firms that offer dozens of services.

These models are ripe for unbundling through the deployment of focused micro service offerings by new competitors.

We are already seeing this happening in the legal profession.

Take a look at how Goodlawyer advertises some of its micro services online:

future of accounting micro services

The very same model can be applied to accounting.

And while this won’t appeal to all clients, it will certainly appeal to a segment of the market, thus eroding market share of traditional players.

iii. Online Education 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 and courses.

What this means is that your clients have yet another option:

Learn how to do things themselves rather than hire a firm.

For example, for those that want to handle their own bookkeeping, they can head to Udemy and pick from one of the 641 courses available:

Accounting firms today are also starting to leverage these online learning models to bring in new revenues.

Take Scale Spark lead by Susan Boles, a virtual CFO firm in the US. The firm has an online course that teaches entrepreneurs how to better understand their numbers for only $495:

And her firm is not the only one. I know plenty of firms moving into the online education space.

Some firms are moving downstream and developing membership models that provide a whole host of self-directed learning resources that help their clients do most of what they need on their own and then pair them with a CPA, accountant or bookkeeper only when needed.

All of the above suggests that competition will increase and market share will erode due to new emerging business models.

Here are a few tips to consider to help you prepare in this area:

a) Clearly Define Your Customer Profile

All of the above models have one thing in common:

They all target a very specific segment of the market.

Contrary to most accounting firms, they do not take a shotgun approach and try to target everyone.

Most accounting firms target “small businesses”. That’s the same thing as basically saying: “we help everyone.”

Because of this more targeted approach, firms and businesses leveraging emerging business models are able to cut through the noise and be found online by those that are perfect for their model.

As new business models emerge, it will be important for firms to take a more focused and specific approach to who they work with and make sure that comes across in their marketing.

b) Add Personal Touches

There’s a lot of talk about automation, but today, and certainly in 2021, 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:

scalefactor ceo message

It’s easy to get wrapped into just focusing on 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.

c) 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 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, payroll, etc., and as a service offering, it’s growing fast:

client accounting services fast growth

That’s probably because 77% of business owners polled in a recent survey stated that they’d pay someone to take this work over:

What this means for the future of accounting is that this is a service offering that firms should certainly be focused on developing in 2021.

Here are some ways to do so:

a) Power the Service with Cloud Apps

CAS services should be powered by cloud accounting apps to automate workflows to the fullest:

For more apps, check my Big List of 147 Cloud Accounting Apps.

b) Modify Your Discovery Call

Part of what your clients are paying for when they offload bookkeeping, payroll, bill pay, etc., is for 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 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 for each?

How do they receive payment for each?

What kinds of expenses do they have and how do they pay for them?

Etc.

Make sure you’re getting a clear understanding of a business’ processes before signing the client up.

c) 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.

I’m a big fan of a three-tiered productized offering for a lot of reasons, but essentially you’re turning your offering into a subscription, as Pilot has done here:

tiered pricing pilot

Once you create your tiers, you can present them for acceptance in an app like Practice Ignition (affiliate link), which will look like this in the app:

5) The Future of Accounting Services Are Found on Google

Today, the first step in any consumer’s purchasing process is most likely through a Google search. This means that if your firm is not easily found on Google, you’re missing out.

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:

a) Optimize for Local SEO

Search Engine Optimization (SEO) is the process of optimizing your content/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 searchers 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:

how to get accounting clients local seo

b) Get Google Reviews

Getting Google reviews for your firm will serve two purposes.

First, it will help you rank you 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:

accounting firm google reviews

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 automations, but that’s a good way to start!

c) Get Blogging

This is my all time favorite strategy for getting people to find you on Google.

In fact, I’ve grown two businesses almost entirely from blogging.

But the strategy is a bit more involved and we won’t be able to go through full details here.

If you’re interested in reading about my proven formula for attracting clients through your blog, check my 15-Step Blogging Formula here.

6) The Future of Accounting Includes Changing Client Expectations

Millennials and Gen Z have different expectations of how they want to work with their accountants.

Today, they want the Uber experience. They want easy & frictionless with everything at the push of a button.

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:

millennials accounting

Unfortunately, it seems that accounting firms aren’t getting that message with the same study indicating that 50% of millennials polled are looking to replace their accountant.

Here are a few simple ways how to ensure you’re providing the experience your clients are seeking today:

a) Future of Accounting: Make Cloud De Facto

Younger generations have internet-first preferences, yet only 7% of millennial business owners are using cloud accounting software:

Here’s a simple fix for improving the customer experience:

Make sure all your clients are using cloud accounting software.

b) Ask for Feedback Often

The best way to know what to improve when it comes to the customer experience is to simply ask!

You should be constantly asking your 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 helps 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.

c) Map Out Your Customer Journey

Documenting the entire customer journey is a good way to identify points of inefficiency.

The customer journey most likely starts on your website and ends with the service being delivered and the client re-engaged.

Your client is probably interacting with your firm in ways that bring them no value. The idea is to eliminate those contact points to make the experience more seamless.

7) Decreased Stress in Accounting Life

Let’s face it.

Working in accounting has had a terrible wrap 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.

Couple this with the fact that almost 50% of millennials & Gen Z report being stressed out all or most of the time according to a recent Deloitte survey:

This means there’s no doubt that your team is looking for ways to reduce their stress levels.

On top of all of this, there’s been a big push to acknowledge mental health in the workplace.

As such, the future of accounting involves your firm taking steps to reduce stress levels for you and your team to not only attract and retain talent but to ensure that you, as the leader of your firm, stays happy and healthy.

Here are a few ways how to de-stress accounting life:

a) 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:

b) 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 🙂

c) 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:

accounting remote work

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, Work from Anywhere is the ultimate way to live a less stressful life in accounting.

8) Compliance Services Far From Dead

Everywhere you go, you hear that compliance services will be fully automated and that you need to pivot into advisory services to remain competitive.

But contrary to popular belief, compliance services aren’t going away any time soon.

In fact, it was recently found that compliance-focused firms have been growing faster than their counterparts.

Sure, the way compliance services are being delivered might be changing, and yes, more of it is being automated, but the demand is not going anywhere anytime soon.

That being said, when it comes to the future of accounting and compliance services, they are certainly becoming more automated 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:

a) 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.

b) Seek Education in Accounting Technology

Even though compliance services aren’t going anywhere, they are becoming more automated with businesses actively seeking to replace humans with machines.

In fact, the World Economic Forum’s Future of Jobs report in 2020 stated that companies expect machines 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.

Luckily there are online communities that have developed for modern, technology-forward accountants to help provide this education.

Consider Realize, lead by Jason Staats, or my very own online coaching program, Future Firm Accelerate, which helps accountants fast-track the growth of a modern, scalable, technology-enabled accounting firm.

Here’s a view of modern accountants all collaborating together inside of Future Firm Accelerate on technology (and other) firm matters:

c) 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.

d) Recommend Ways to Improve Your Client’s Processes

In addition to making yourself more efficient, firms that are growing faster than the average, pacesetters, are actively recommending ways to make their clients more efficient as well.

The more efficient your clients are, the easier the work becomes for you, which translates into better margins and happier clients with regards to compliance services.

For instance, this chart shows that pacesetting firms are more inclined to recommend banks to their client, likely because certain banks integrate better with the very cloud accounting software they’re using:

Improve your client’s processes and you’ll be rewarded.

The Future of Accounting – Over to You

I hope this guide on the future of accounting helped you better prepare for 2021 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!