Accountants are facing multiple headwinds, including technology, commoditisation and increased competition from tax advisers, but it is not too late to demonstrate their value and relevance to clients.
“I could show you all sorts of graphs to prove to you that the accounting model is on the decline,” Institute of Public Accountants (IPA) technical policy general manager Tony Greco told the IPA Victoria Congress in Torquay this month.
“So what firms are doing is diversifying their revenue streams.”
Many accountants were in small practices and often gave away advice for free, Greco pointed out.
“That’s the problem, you’ve always done that, but at some point you need to rethink your billing method and consider how you can increase your revenue growth,” he said.
“You don’t offer [advice] at a premium, yet it’s very valuable in today’s day and age.
“Most other professions charge for their time, but most accountants unfortunately don’t value the advice that you provide to your client base.”
Accountants therefore had to rediscover their significance for today’s clients, he said.
“What I see as the biggest challenge for you is to remain relevant in a digital world because as you know technology is taking over, so where is your place in this fast-moving world going forward?” he said.
“Really gravitate to value and re-establish what you’re offering.
“At the end of the day, what is your value proposition that you offer your clients?
“If it’s just compliance, all the surveys say that clients want more than just compliance, though it used to be the hook in the past, so just be conscious of these trends in the market.
“Your business is worth only what your recurring revenue is going forward, so if your compliance [work] is dwindling because of all sorts of competition and the race to the bottom [in terms of pricing], then it’s going to impact your valuation when you do exit your business.”
Furthermore, there was new competition in the tax accounting world, he said.
“We’ve got 16,000 tax financial advisers who are your new competitors and can pretty much do everything but lodge returns, however, within their networks they can offer that service so don’t expect that other firms won’t attack your client base,” he said.
“Everyone’s looking to grow businesses and I think the mid-tier firms are starting to offer cheap alternatives for compliance as the hook to get hold of your good clients.
“So just be wary of this as a trend in the marketplace.”
He highlighted that while every practice was different, accountants had a huge advantage as being the point of contact for clients and services around compliance still presented opportunities.
“They come to you as trusted advisers,” he said.
“That’s why some of those diverse service offerings are important to make sure your clients are sticky and retain your services because if you just offer a commodity service, they’re going to be offered that at a much cheaper price and at some point you may lose your good clients and that’s not what you want.
“What’s important is to make money out of compliance work.
“The big accounting firms knew this a long time ago.”
He used Deloitte Australia as an example of a firm that bought multiple software businesses and created and offered tailored solutions, which all clients had to use.
“And they’ve just concentrated on data analytics – their clients love it and are prepared to pay for it via various pricing models,” he said.
“So compliance is not dead. You’ve just got to work out an efficient way [to do it].
“If you’re not doing this and you’re stuck in the old ways, and if clients haven’t computerised, then it’s going to be difficult for you to make money out of compliance.”
He stressed those trends were part of the new reality for accountants and it was worth revisiting their approach to compliance work, client expectations and billing methods.