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Business Lessons from the Pandemic: Protect Your Core, Commit to Innovation

Lee Frederiksen, PhDBy Lee Frederiksen, PhD

CPA firm leaders have been confronting a two-headed challenge as they navigate our COVID-19-restricted business landscape: do everything in their power to ensure ongoing viability – even as clients in certain industries cut back or fall away – and elevate a strategic mindset to identify and retool for new opportunities.

COVID-19 business disruptions make it clear that for service providers to thrive and grow, they must rapidly fine-tune internal operations and shave overhead, tasks for which accounting professionals are particularly well-equipped. At the same time, it’s never been more important for firms to offer clients more value, more insight, and more service model options tailored to specific business needs.

The Hinge Research Institute (HRI) recently partnered with CPA.com and Bill.com to survey more than 650 accountants and business buyers to identify benchmarks and emerging trends that capture the current and future state of the profession.

Continuous Improvement

Team holding a virtual meeting onlinePut “first things first” sounds cliché, but it bears repeating. You likely did this when the pandemic exploded, but continue to take every possible action to protect and run your business for today. When your focus is on continuing to effectively deliver at the highest level for clients, it becomes more difficult to keep sight of where you can make every-day improvements.

Even small enhancements can be worthwhile, and every member of your team needs to be on the hunt for where to make them. Whether it involves eliminating duplicate procedures or cutting down on cumbersome paperwork, look for ways to streamline operations that will reduce overhead costs.

This scrutiny may have met resistance – or even indifference – in the past because staff had to keep up with growing client demands, but in today’s market everyone should have a good reason to take a closer look at how to save money and improve delivery as clients pay closer attention to every dollar they spend.

Attention to the core business and efficiency of operations is critical, and making a significant commitment to automation can both improve a firm’s internal processes and set the course for adding value to client deliverables.

According to the survey, automation is an important step toward implementing value pricing, a concept that has significant appeal for both firms and clients. Applying a technology solution to highly manual processes – such as reviewing workflows, sending reminders and updates, and tracking progress on projects – allows both CPAs and the business professionals they serve to off-load lower-value, repetitive administrative tasks without sacrificing quality.

In addition to boosting internal efficiency, automation creates an opportunity for the firm to charge higher rates. Survey findings indicate that firms are over 3.5 times more likely to successfully increase prices when they can connect with clients and communicate the benefits of automation to them.

Advisory Services

As clients wrangle with their own need to adapt and pivot, it’s the perfect time for CPA firms to consider how additional advisory services can add value to their client relationships. Nearly 65% of business buyers in the survey indicated a need for help with strategies for revenue growth and business modeling. Other key areas of need include budgeting, risk management, and advanced performance indicator reporting – critical areas for those with an urgent need to adapt to new circumstances or reinvent themselves to survive.

Survey results suggest that firms may be able to increase monthly revenues by up to 50% by offering advisory services. On average, buyers who purchase advisory services spend $1,585 per month with their CPA firm; by contrast, buyers who don’t use advisory services have spend averages of $1,108 per month.

Buyer participants not currently purchasing advisory services indicated they would expect to pay 50% more for an accounting package that includes both strategic advisory and consulting services – most importantly, they are willing to pay more each month. If the need to offer advisory services was clear before lockdown, it has become urgent ever since. For many firms, advisory services provide the means to pivot their businesses into areas that keep them relevant, not only to their clients but also new prospects.

Now is the time to examine current business practices so you can stay competitive and operate as efficiently as possible. And there’s never been a better moment to embrace the innovation that can help you survive disruption and position your firm to meet changing client needs so all parties can thrive in the months and years ahead.

Lee Frederiksen, PhD, is managing partner of Hinge in Reston, Va. He can be reached at lfrederiksen@hingemarketing.com.

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