As COVID vaccinations spread across the country and the beginning of the end of the pandemic comes into sight, accounting firms can’t let up on their efforts to build stronger organizations, according to BDO USA CEO Wayne Berson.
“When a brighter future comes into view, it’s often tempting to let up on the work of building resilience into your organization,” he told the more than 6,000 attendees at the BDO Alliance’s virtual Rethink Conference earlier this week. “Don’t!”
If anything, he continued, firms should redouble their efforts. “Now is the time to lean in — even if normalcy feels within reach, I challenge you to think of this moment differently. We have a significant opportunity to create even stronger, more responsive businesses,” he said. “We can build on what has been working, reinvent what has not, and hold ourselves accountable for the hard lessons we were compelled to learn over the past year. This is an opportunity to rethink our approach to business and to leadership.”
Michael Horwitz, the executive director of the BDO Alliance USA, also warned against surrendering to optimism, however warranted.
“The glimmer of light at the end of the COVID tunnel is glowing brighter and brighter every day,” he said, before sharing four observations that firms need to bear in mind as they plan their way into the future:
1. The move to advisory services. Noting that the percentage of revenue coming from BDO USA’s assurance and audit services has gone from 60 percent in 2010 to 40 percent currently, Horwitz said, “We’re seeing the strategic and intentional transformation of the larger firms from primarily accounting, audit and tax firms to true advisory firms. It’s been subtle, but at this point it’s simply undeniable. … This transformation into advisory is not slowing — it’s accelerating, with most CPA firms’ growth coming from non-assurance services.”
2. The remote workforce is the future. “Investing in technology to enable a remote workforce is no longer optional — it is absolutely imperative,” he said. “And complaining about not having enough people to do the work? That’s growing old. … One of the major positive impacts of COVID is the realization that we can provide exemplary services and we can efficiently onboard new team members entirely remotely — from our homes and remotely working out of state.”
3. Global is here now. “Yes, the world is getting flatter. The move to offshoring is booming,” Horwitz explained, noting that the Big Four all have tens of thousands of workers in India serving U.S. clients. “In Bangalore, BDO has over 300 people serving clients. We expect we’ll have 270,000 hours of work done there this year — and we’re new to this game. In 2019, we had 60 people there, so you can get a sense of the growth that we are experiencing.”
4. Disintermediation has reached accounting. More and more players are barging into accountants’ traditional service areas, Horwitz said, citing $1.2 billion startup Pilot as an example, since it is offering payroll, bookkeeping, tax and other back-office services to small businesses. “Sound familiar?” he asked. “And it’s not just the basic stuff — they’re offering R&D tax credit services to small-business owners as well.”
Overall, he confirmed Berson’s point that accounting firms can’t afford to be complacent.
“You’re still going to need to be proficient in offering accounting, audit and tax services, but ultimately this will not be enough to sustain you,” he told attendees. “Over time, the haves will separate from the have-nots, and more and more, we’re going to see firms that have not properly invested in the future of their firms simply fall away. It’ll be manifested through slow growth or inability to attract future leaders, through mergers or acquisitions, or dissolutions of firms. … We need to rethink our game plans, because there are going to be some incredible opportunities for all of us to thrive.”
A thriving alliance
As part of his presentation, Horwitz offered a snapshot of the BDO Alliance’s state after a year of COVID-19.
“As many of our firms have, we’ve weathered the pandemic and emerged stronger than ever,” he said.
Among other measurements, he highlighted the fact that the alliance has added 19 member firms since the start of the pandemic, bringing it to 222 members in the U.S. That’s despite the strong market for firm M&A — over the past six years, Horwitz explained, 35 alliance firms have been involved in mergers, with 11 of those between member firms and seven between member firms and BDO USA; the remaining 17 were with outside firms.
Horwitz announced the 2021 BDO Alliance Awards, which were modified to celebrate how alliance members responded to the pandemic. The awards were given in four categories to both CPA firm members and members of the alliance’s Business Resource Network:
- Rethink Innovation & Technology Award: OUM & Co. and Vic.ai;
- Rethink Client Experience Award: Grimbleby Coleman and Optisave;
- Rethink Growth Potential Award: BMSS and Reliable Group; and,
- Rethink COVID-19 Resiliency Award: Rea & Associates and Concannon Miller, and ConvergenceCoaching.
Horwitz also took a moment to remember a number of individuals from alliance member firms who had died of COVID-19:
- Mayer Rispler, managing partner at Mayer Rispler CPAs;
- Tom Donovan, a partner at Marvin & Co.;
- Lamar Reeves, a partner at Smith Dukes & Buckalew; and,
- Joe Smith, retired founding partner at Smith & Howard.
