Whether it is the ever-evolving nature of government regulations and tax laws, or the struggle to remain cost-effective, accounting firms today don’t have it easy. According to the 2019 PCPS CPA Firm Top Issues Survey, finding qualified staff and keeping up with changes to tax law are among the CPA firms’ top concerns.
With the objective of delivering a high-value service to their clients, firms need to remain aware of emerging developments in technology that could have an impact on their practices and efficiencies. The looming risk of cyber threats is an additional challenge testing the accounting industry’s effectiveness today.
And while you might already be juggling a dozen such challenges at a time, the greatest challenge of all is to stay relevant and gain a competitive edge with an increasing number of CPA firms flooding the market.
In this article, we give you a run-down on the top 5 challenges that accounting firms are currently facing, and how you can overcome them.
Top 5 Challenges that Accounting Firms Face Today
Thriving in a Competitive Market
It is becoming increasingly difficult for accounting firms to thrive in a competitive market. Whether a small firm or mid-sized organization, you’re only as relevant in the market as your ability to differentiate yourself from your competitors.
Firms must stay updated with the latest technology and automation solutions to stay ahead of the competition. RPA technology, cloud storage, and providing higher-value services, etc. are all helpful in establishing key differentiators in your firm.
Staying Up-to-date on Current Technology
CPA firms face the need to periodically update their technology to offer better, more efficient service to their clients. While the right technology can do wonders for your business, investing in the latest software programs and network services can be an expensive feat.
What’s worse is that technology is constantly evolving, which requires firms to adapt to them quickly, in turn running up the processing expense rapidly.
A considerable amount of time is required to analyze what the needs of the firm are and to find the right technological fit for the company. In order to alleviate cost concerns and bring in efficiency, the best thing to do is to find a service partner such as CPA Innovations that can give you access to high-end accounting technology such as Robotic Process Automation (RPA), at a marginal cost.
A frontrunner in accounting technology is Robotic Process Automation (RPA). CPA Innovations uses RPA technology to set up workflows to automate repetitive tasks including bookkeeping, helping make large-scale accounting transactions time and cost-effective.
Additionally, separate workflows can also be created to approve accounts payable and process bulk payments. With the help of RPA technology, you can bring in process efficiency in your firm without having to worry about the technology itself.
As discussed earlier, firms that wish to be technologically advanced, struggle to remain cost-effective.
Other factors that lead to an increase in operational costs is high competition, which leads to firms investing in diverse methods to drive revenue, including recruiting more resources to get work done faster. Staff costs amount to a significant percentage of overall expenses on a firm’s income statement.
Conversely, if firms try to raise their pricing to compensate for the additional costs, they risk losing business to their competitors.
Being cost-effective requires firms to strike the right balance between the cost and the result. One way to do so is by setting a budget and sticking to it. The other more effective method, however, is to find reliable and knowledgeable accounting staff at a considerably low cost.
At CPA Innovations, we help you hire quality talent at half the cost in the US. This works well in your favor as outsourcing to a foreign country such as India helps with a faster turnaround as the time-difference works in your favor. This is a cost-effective strategic decision with appealing margins.
Maintaining Cybersecurity and Data Privacy
According to a survey conducted by Accounting Today, managing privacy and security risks emerged as a top issue this year. Firms of all sizes ranked privacy and security risks as one of their five most-pressing issues.
Firms need to understand that as our technology and infrastructure become more sophisticated, so do the nature of the security attacks.
While privacy and security are imperative in all aspects of business, it is especially crucial when it comes to accounting. A simple security breach has the potential to compromise sensitive information and thus fatally damaging the firm’s reputation.
One of the best ways firms can protect their information is by using an integrated IT security system, as opposed to layers of unintegrated software products.
Using a fixed asset software that integrates with your core accounting functions is key. Additionally, firms should use secure client portals, and constantly review the security systems to analyze how data may be able to leave the firm.
Ever-evolving Tax Laws
What is probably the most challenging thing for CPA firms is the ever-evolving tax laws and compliance requirements. Tax and accounting regulations get more and more complicated each year, firms struggle to complete work accurately and on time.
Failing to meet compliance and reporting guidelines can lead to rework, penalization and worse, it can still damage your firm’s reputation.
Using an automated solution to handle tax processing and reporting helps firms stay abreast of varying tax laws.
CPA Innovations is a complete, technology-enabled partner for all your accounting and finance needs.
We serve CPA firms and small businesses by delivering the highest quality accounting support with the help of Robotic Process Automation (RPA) technology, highly qualified staff and strong process orientation.