In 2023, accounting firms in the United States navigated an unpredictable environment, marked by the explosion of generative AI tools, an increasing talent shortage and pressure to control costs amid stubborn inflation and rising interest rates. As 2024 approaches, accountants and tax professionals will face what we're calling the year of change management: more change and adoption of technology that aids firms to drive more revenue and profitability.
In a recent survey of accounting professionals, Ignition found the top three challenges for firms today are staff shortages (51%), inefficient and manual processes (43%) and too much client work (35%). To tackle these challenges, firm owners will need to face them head on by looking at more efficient ways to operate their firm and leverage technology so they can remain competitive and profitable.
Yet, the industry is still seeing a discrepancy between interest vs. action. A recent study found 82% of accountants said they are intrigued or excited about AI, yet
So what are the underlying themes behind this trend and how can accountants, bookkeepers and tax professionals set themselves up to tackle each portion efficiently and effectively?
Trend #1: Accounting firms will not only need to manage scope creep, but monetize it
A culture of overworking and undervaluing time is entrenched in many accounting firms. Out-of-scope work costs U.S. accounting and bookkeeping firms over $76,000 per year on average according to
Mounting cost pressures and work will mean accounting firms will need to rein in over-servicing clients and find a way to monetize scope creep. There is an opportunity to turn scope creep requests into revenue opportunities if clients' expectations are managed. When you flip scope creep on its head, it's generally a positive signal coming from the client. They're asking more from you because they like your work and trust your judgment. Now it's your job to cash in.
Many accounting firms today struggle to accurately price their services without undercutting their value, as they use bespoke pricing or packages, which don't match the hours dedicated or client expectations. A more volatile economic climate means accountants need to keep their profit margins healthy and keep client expectations realistic.
Trend #2: Accounting firms will need to find and retain talent in non-traditional ways
According to the American Institute of CPAs, the overall number of U.S. accounting graduates
As a result, firms will need to rethink the "churn and burn" mentality of the client work they take on and implement new guardrails for how they operate to create a more balanced workplace and attract new talent.
Additionally, there has been a rising debate about whether increasing salaries is the answer to fixing the accountant shortage. While it may be a part of the solution, firms should also consider looking overseas to countries with lower labor costs to find qualified staff. Outsourcing and the use of contractors could accelerate in the next 12 months, as it's a viable option for firms to save on salaries while ensuring the work is getting done.
Trend #3: The explosion of AI has been a wake-up call to the industry
For the last few years, accounting and tax professionals have slowly started to move from once-a-year tax advice to providing year-round advisory services. To continue to do this well, accounting and tax professionals need to approach their roles differently. With the arrival of AI, accounting expertise is now table stakes; evolving into "technologists" will be essential.
A recent
In 2024, firms need to start investing in training to take advantage of these tools — and stay ahead of the curve — as well as redefine the roles they need to hire. No longer will firms only seek to hire accountants, but they'll seek to find IT and tech specialists to manage the firm's technology and teach others how to use it.