Small practice challenges drive innovation
Small and medium-sized practices are under pressure to lower fees, differentiate from the competition and keep up with regulations and standards, according to findings from a new global report.
Unquestionably, technology has forced small and medium-sized firms to evolve. But as the IFAC’s global survey illustrates, digitalisation has also resulted in others innovating to overcome the perennial global accounting challenges.
For example, the biggest challenge that confronts 48% of the small and medium practice respondents is the pressure to lower fees. Last year, AccountingWEB members even confirmed how competition and technology have squeezed their fees.
But the small and medium-sized survey respondents have retaliated by setting prices for certain services based on estimated value for the client and using technology to lower costs.
Likewise, the challenge of differentiating from the competition, which 46% flagged, has seen firms move towards specialising in a specific niche and using technology to communicate with these clients. The need to differentiate has also triggered more firms to invest in staff training and education in technical and soft skills.
The survey also reported that 46% of respondents find attracting new clients and retaining existing clients a challenge, but through the assistance of technology, many have developed a social media strategy to engage clients.
The global landscape mirrors the issues antagonising small and medium firms here in the UK. With Making Tax Digital being a prime example, many practitioners have taken to AccountingWEB to vent about the stresses of keeping up with regulatory change.
The survey demonstrates how the same pressures are seen across the globe. According to the report, 45% struggle to keep up with regulations and standards. Again, technology has helped firms, with online learning being used alongside informal group staff discussions and accountancy bodies’ resources.
As such, 78% of respondents anticipated accountants’ roles in supporting small businesses would change to focus more on navigating new technologies in the next five years.
To accommodate the increasingly tech-dominated accountant’s role, the IFAC report found that 28% of respondents plan to allocate more than 10% of their total revenue over the next 12 months to technology investment.
This technology investment is spread over the next 12 months by the respondents into areas such as developing in-house skills, the adoption of cloud and the recruitment of non-accountants.
Obviously, practices worldwide realise that only with the right staff can they develop their tech offerings. But the direction of their tech investment – combined with the 54% who have difficulty attracting new recruits – chimes with similar horror stories reported on AccountingWEB from firms struggling to bridge the recruitment and technology gap.
Voiced by 66% of respondents, the biggest difficulty was the lack of candidates with the right mix of skills, closely followed by competition from larger practices.
Small and medium practices, though, have introduced a number of initiatives to make their firm as an equally attractive proposition for new recruits. The most popular initiative at 47% is flexible working hours, which has proved a popular response in AccountingWEB’s weekly Practice Talk series. Other initiatives include technical training and direct incentives and reward programmes.
These results echoed the recent research carried out by Thomson Reuters, which documented how technology will transform the role of an accountant over the next decade