20 trends to watch; Sharing a great article from Accounting Today for the Web CPA:
New areas of change that accountants should be on the lookout for.
1. LOOK, MA — NO WALLS!
Who it matters to: Primarily very small and start-up firms.
The details: With all the desks and equipment and filing cabinets and photos on the walls, it’s easy to confuse your office for your firm. After all, it’s where your staff go to work every day, and it’s where your clients send their checks. But an accounting firm isn’t an office — it’s a collection of people with a common purpose. And now it doesn’t have to be much more than that, with the cloud enabling “virtual firms” with no offices, no server room, no receptionist and no water cooler.
Midsized and large firms with significant legacy investments in leases and equipment will find it hard to move to a virtual environment, but small firms should have an easier time — and start-ups will find it easier and cheaper than ever to get up and running.
2. THE IMPERIAL MP
Who it matters to: Midsized and larger firms.
The details: This is most commonly referred to as the “executive MP” or the “corporate MP,” but we wanted to emphasize the importance of the shift in the role, responsibilities and authority of the managing partner. For a long while, many midsized and large firms have treated their MPs as only a little more than first among equals, a glorified administrator and figurehead who has to cajole, bribe and otherwise entice independent partners to act together for the good of the firm.
But with the growing realization that firms must be tightly integrated and focused on a small set of well-defined goals — to say nothing of the need to improve corporate-style functions like marketing and HR — firms are slowly giving their MPs more authority and power, so they look more and more like corporate chief executives.
3. SPYING ON YOUR CLIENTS
Who it matters to: Firms of all sizes.
The details: Everyone tells you that you have to get on social media, and you do — but not necessarily to promote yourself. One of the most important uses accounting firms are finding in social media is in “social listening” — following your clients’ tweets, blogs and Facebook posts to learn about what they’re thinking and doing. It’s a great way to get an unvarnished view of what’s keeping them up at night, what matters to them, and when their birthday is. And while you’re at it, why not find out what your competition is doing?
4. THE OUTSOURCED CFO
Who it matters to: Firms of all sizes interested in accounting work.
The details: Even today, not all firms do accounting work. For those that do, or are interested in expanding their service offerings, the idea of being the virtual back office or even CFO for a growing company is becoming quite attractive. New tools, particularly of the cloud variety, are enabling firms to do just that, and possibly more, through the collaborative nature of the products that allow them to work simultaneously on the same “version” of the same accounting product, all the while opening the doors to deeper advisory services.
5. OPPORTUNITY IN OBAMACARE
Who it matters to: Anyone with a business client, but particularly those serving small businesses.
The details: Whether they love the Affordable Care Act or hate it, all sides agree: It’s ridiculously complicated. And with much of that complication falling square on the heads of your small-business clients, they’ll be looking for someone to help — someone who is used to digesting and explaining complicated regulations, someone who is used to helping them with compliance issues, someone they trust. Who do you know like that?
This is a fairly short-term opportunity, though, so you’d better start boning up on the rules of health care exchanges and the details of the small-business credit soon.
6. BEYOND EXPERT
Who it matters to: Firms with differentiated practices or client groups.
The details: You already have to be an expert: Clients expect you to know all there is to know about taxes, accounting standards, and business and life in general. To stand out nowadays you need to be more than an expert — you need to be a demonstrated “thought leader.” That means showing that your expertise extends well beyond “mere” tax and accounting rules into the cutting-edge esoterica of whatever client areas you focus on. You’ve got to show that you know more about the future of, say, car dealerships, drilling for oil or running a bank than the car dealers, oil drillers and bankers who are your clients.
You show it through tweets, blog posts, articles, speaking engagements, firm roundtables and any other way you can think of to get in front of your clients with useful information that shows you’re more than just an expert.
7. SENDING SECURELY
Who it matters to: All firms.
The details: Whether you are a sole practitioner or a Top 100 Firm, communication between colleagues and clients is often more compromised than many are aware. As such, keeping whatever is exchanged — text or e-mail — secure has become a top priority and spurred the rise of tools to handle such security measures. This can range from deploying portal technology across a large firm’s entire client base, to sole practitioners employing inexpensive e-mail encryption technology.
8. BEYOND BORDERS
Who it matters to: Everyone, everywhere.
The details: It’s become much, much easier to do business internationally, thanks to the Internet, larger and more sophisticated transportation networks, and a willingness to wrap supply chains around the entire planet. What that means is that even the smallest company tucked deep in the heart of the country can have international customers — and that means that even the smallest CPA firm can have clients with international ties.
You can find pockets of international activity almost anywhere, and tap into wide-ranging expertise through networks of professional firms that span the globe. But even if you’re a determined isolationist, try not to be surprised when some local mom-and-pop asks you a fiendishly difficult question about Mongolian VAT.
9. THE COOPERATIVE INTERNSHIP
Who it matters to: Growing small firms in areas with lots of similar firms.
The details: There’s a reason large firms offer internships — they’re a great way to find and lock in talent early. Unfortunately, they’re also complex to run and not all that cheap, which means that they’ve often been seen as out of reach for smaller firms. And so they were, until some small firms realized that there’s strength in numbers, and started banding together to offer group internships. These cooperative efforts, like the Accounting Intern Scholarship Program started by five Chicago firms in 2012, pool the firms’ resources to offer larger scholarships and broader opportunities to the interns than any individual firm could offer on its own.
10. TABLET MADNESS
Who it matters to: All firms.
The details: Once thought of as cool toys or merely consumption devices, practitioners are finding that tablets of all kinds can be used as a valuable presentation device, and can even run various aspects of firm and client business. And with mobile business applications being designed all the time for this very platform, the tablet will likely have some staying power for ease of use in the boardroom, at the airport, or wherever work is being conducted. That may be why Top Six Firm McGladrey bought a tablet for every single one of its more than 6,000 employees.
11. THE NEW FLAVORS OF M&A
Who it matters to: Everyone — in their own way.
The details: There’s been an almost-uninterrupted bull run in accounting firm mergers and acquisitions over the past 15 years — and every time we think it must have peaked, it gets even more manic. But the relentless drumbeat of M&A press releases obscures some essential changes in the market. First off, where there used to be just a few models, now there are a dozen or more. If you’re looking to acquire, is it a traditional acquisition, about boosting a book of business, or does the acquirer just want to pick up a ready-made cadre of qualified staff? Is it a regional play, a move into new service areas, an attempt to block or counter an expanding competitor, a merger of equals or just plain old empire-building? If you’re looking to be acquired, are you young and growing, or looking to retire — and have you done everything you can to make yourself attractive in what’s turning into a buyer’s market?
As the main driver of this boom — the ongoing retirement of the Baby Boom — picks up steam, look for the M&A markets to get even more fractured and more complicated.
12. THE NEW CAREER PATH(S)
Who it matters to: Anyone whose career isn’t over.
The details: Time was, there were only one or two career paths in accounting, and the main one was working for a public firm until you made partner or didn’t; if you did, you stayed until you died (sorry — retired), and if you didn’t, you went into industry. Now, staff and partners and even whole practice groups are jumping from firm to firm, and back and forth between public practice and industry, as they pursue money, autonomy, more exciting work or whatever other professional goal suits them. So don’t be surprised if your next new manager started their career in industry, or came to you from a series of two-year stints at different-sized public firms all across the country.
13. CLOUD CLOSETS
Who it matters to: All firms.
The details: As firms look at the challenges and costs of maintaining their own file storage, they are increasingly turning to the cloud not only to permanently house client information, but have redundant support of all of their programs that they can access at any time. But be warned: You need to vet your storage provider carefully in terms of uptime and service-level agreements, and use common sense — a cloud storage provider whose server farms are right next to your office doesn’t offer much security.
14. RISE OF THE EMERITI
Who it matters to: Midsized and larger firms.
The details: Many accountants are coming to see retirement as optional — some because they just love to work, and many more because they’re afraid they can’t afford to stop. Still others don’t want to continue at the same pace or with the same workload, but still want to keep their hand in. The question is, what to do with all those extra gray-haired partners clogging up the top ranks and preventing younger staff from moving up? Smart firms will find transitional roles for them, as mentors, business development experts or consultants within the firm, thus keeping their expertise on tap but clearing space on the career ladder for younger up-and-comers.
15. YOU OWE YOUR CLIENTS A SUCCESSION PLAN
Who it matters to: Everyone, but particularly smaller firms and sole practitioners, and extra-particularly small and solo firms with financial planning clients.
The details: When it comes to succession planning, no argument seems persuasive enough to get accountants to actually do it — not that it’s necessary for the longevity of their firm, or to make them an attractive M&A candidate, or even that they need it to ensure their own retirement. Here’s the latest argument: You owe it to your clients as a kind of fiduciary duty. The accountant — and particularly the CPA financial planner — who thinks that it’s fine to just “turn out the lights” when they’re done, or even to die with no clear plan for what will happen to their practice, is seriously shirking their responsibilities to their clients.
16. THE AUTOMATED IRS
Who it matters to: Anyone with tax clients.
The details: It’s no secret that the Internal Revenue Service hasn’t always been great with technology. A long history of tech projects that ran over budget and out of control has left it with a reputation as technologically backward. That’s why this particular trend may take many taxpayers and tax preparers by surprise: The IRS is automating more and more of its investigation and notice procedures. That’ll mean more notices and more audits initiated and conducted by mail. The tax man likes it because these automated processes bring in more revenue more efficiently; you might like it because it terrifies clients, who’ll need your help dealing with the flood of notices.
Less exciting, but further in the future, is the IRS’s interest in using technology to automatically populate tax returns. If their technology does that, then you can’t charge clients to have your technology do it … .
17. MANDATES ROLL DOWNHILL
Who it matters to: Anyone the government can identify.
The details: Congress comes up with a law, but doesn’t want to create a whole new bureaucracy to enforce the provisions, so it drops them on, say, the IRS. The IRS doesn’t much like it, but it does learn the lesson that you can pass unwanted work on to those under your authority — and suddenly tax preparers are required to police clients on things like the Earned Income Tax Credit. As compliance professionals, accountants will be square in the sights of every government agency, from state tax authorities to market regulators, that decides that this model of delegating responsibility without authority (or pay) sounds attractive.
Who it matters to: Primarily growing or more mobile firms.
The details: As firms grow and have their staff work more in the field, concern is growing over every device they work on that leaves the office. This, coupled with staff’s personal preference to work on their own devices, has caused IT departments and directors some consternation, and they are increasingly considering policies and practices around controlling sensitive data, regardless of the device, so staff can safely work on whatever device they want.
19. OUTSIDE COLLABORATION
Who it matters to: All but the paranoid.
The details: Accounting has always been a collegial profession, but this trend has taken collegiality to a new level, with firms and individual accountants working together in unprecedented ways. It goes beyond just sharing best practices and brainstorming with fellow professionals in other firms — though there’s still plenty of that — to actually setting up joint ventures, offering services to one another, and, on a personal level, banding together in networks and leadership groups.
Of course, the flip side of this is that even as accountants deepen their collegiality in these ways, they’re also more and more willing to compete openly and directly for clients and staff.
20. EYE ON AUDITORS
Who it matters to: Auditors, naturally.
The details: There’s been a great deal of talk about mandatory auditor rotation, and some fairly heated public meetings hosted by the Public Company Accounting Oversight Board, and in Europe they’ve even had some votes on the subject. Don’t worry, though — it’s not going to happen in any serious way. What seems more likely is something less than rotation, but more than what we have now — mandatory tendering, for instance, or some sort of codification of some of the ideas proposed by opponents of rotation in those public meetings. And to go with it, tougher enforcement and inspections.