How Small Accounting Firms Can Increase Productivity by Leveraging Technology

How small firms can increase their productivity by leveraging technology

Whether you’re a small or mid-sized accounting firm, your competition is determined by how efficient you are, how well you differentiate your firm from your competitors and how effectively you recruit and retain talent. Leverage today is no longer dependent on staffing. With today’s technology, small to mid-size firms can increase productivity without losing money. Accountants of a small to medium sized firms can move up in the compensation scale without moving up in firm size. This article will focus on how accounting firms can leverage technology to increase productivity and profits.

Cloud Computing Levels the Playing Field

The accounting profession is undergoing its biggest technological sea change since the personal computer three decades ago.

Journal of Accountancy, Technology and CPAs: Visions of the Future

Today’s tax returns can be quite literally, hundreds of pages long. Preparing them correctly can be very difficult and costly. Historically, larger accounting firms had the manpower to handle this inordinate task even if the work was managed traditionally. Today however, smaller firms do not need that huge manpower to compete with larger firms.

Accountants are under pressure more than ever before. Client expectations are very high. Many are intolerant and only willing to pay what they initially perceive as value. This puts a lot of pressure on firms to be as efficient as possible. Digital clients expect digital firms to be highly responsive and take advantage of the best technology. Cloud technologies lead to more efficient tax preparation, compliance and workflow processes. Let’s see how.

Digital accounting firms utilize digital workflows: how cloud technologies are changing

As mentioned in this video, many accounting firms are still using Quickbooks because that is what they’ve heard of, but cloud technologies are changing the entire digital workflow. The entire process of preparing the tax return from the engagement letter, the tax organizer, organization of source documents, the preparation of tax returns, the review and delivery of it as well as e-filling and the finished 1040 can conveniently be processed by a “one stop shop” cloud technology.

With cloud technologies, data entry and information are aggregated in one place. On the cloud computing dashboard for example, there is the client access, a common interface where clients can collaborate with the firm. A portal allows clients and accountants to upload and download files as well as to communicate with each other. The mobile part of cloud technology supports many form factors and operating systems which grant access to a client’s data remotely from any mobile device and perform any given task at any time. This accessibility and efficiency build trust which in turn, creates added value for the client.

Other Benefits

  1. With cloud technology, the starting costs are lower than traditional software.
  2. Accountants can access a client’s data anytime and anywhere. Efficiency is an added perceived value that clients are willing to pay.
  3. This technology is maintained by the vendor with a disaster recovery built-in freeing up accountants to focus on their expertise.

Technology devices are tools, much like the prehistoric calculator. CPAs will be able to provide greater value to client when are able to leverage the various devices.

Journal of Accountancy, Technology and CPAs: Visions of the Future

Considerations for Moving to Cloud Technology

According to Mark Ryburn, CPA of Wolters Kluwer Tax and Accounting, firms need to develop a strategy for moving to cloud technology. There should be an agreement with stakeholders and reasonable expectations should be set. A detailed plan to achieve this strategy should include the following:

  • An intake of the current technology: What is our bandwidth? Can our current Internet connection and provider support this new technology without any outages?
  • A re-examination of current workflows: What new workflows will be adjusted to support this new technology?
  • An implementation team spearheaded by a leader to test the technology. What works? What doesn’t? What’s next? The key is to remain flexible while implementing the plan.

Differentiating Your Firm through Technology

Social media is today’s foursome on the golf course. If you are not on the inside, you are on the outside. CPAs looking to grow their firms have “no choice” but to embrace social media.

Journal of Accountancy, Technology and CPAs: Visions of the Future

There’s also the “backdoor” to increasing profits which comes from differentiating one’s firm through social media and online content. Larger firms historically have always had an advertising budget and longstanding reputations to bring in clients and produce “brand loyalty.” According to the American Institute of CPAs, (AICPA) 95% of larger firms actively maintain their websites and constantly update content with relevant and targeted information. On the other hand, 68% of small firms and 85% of middle firms use social media and online content to connect with their clients. How many prospects are you losing by not having a strong social media and online presence?

No longer do small firms need to compete with larger advertising budgets of larger firms. Differentiation is the key to a firm’s message and what distinguishes it from the competition.

A content strategy plan for a small firm can look like this:

  • Providing targeted relevant website content updated on a regular basis to clearly distinguish a small firm from its competitors
  • Actively using social media to attract and retain clients
  • Actively using social media to attract staff

All types of firms can definitely use social media more effectively by posting more frequently but the key lies in building an authentic relationship with the prospect.

Use social media to build a know-like-trust factor

While cloud technologies help with building efficiency, allocating and collaborating on various social media tasks, can increase that know-like-trust factor which in turn, can result in profits. Case in point: When a firm or company starts leveraging social media to build trust, a prospect may feel more connected, secure and comfortable reaching out to a small firm. Nurturing this trust also becomes much more integral to the branding.

When there is no social media presence, a client might feel compelled to research a firm multiple times before making a single inquiry if at all. When a small firm has a strong online presence, that same prospect may have already gotten the impression from targeted social media posts that that targeted firm has her best interests at heart. She might research the firm a bit online and begin making initial inquiries right away.

To Recap

Client expectations are at an all-time high. Do your clients perceive your firm as up-to-date? Are you leveraging technology to use your most valued resource more effectively? By differentiating yourself among the competition using tax-based cloud software, social media, and online content, you’ll have a better chance to increase productivity and profits and become equal players in the playing field along with other larger-sized firms.

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