In a short amount of time, the COVID-19 outbreak has caused changes on a global scale that few thought would ever be possible. As with other industries, public accounting firms have had to adapt their business models and processes in response to these new and unforeseen challenges.
As firms move forward and begin to establish a new normal for how business is conducted, it is important to understand what we have learned to this point and how these lessons can best be served in the future.
Utilize change to empower innovation
Public accounting as an industry has a reputation for long hours, rigid structure and a general aversion to change. For those who have been practicing over a long career, they have become accustomed to at least one busy season each year, a set way of executing an engagement and have a penchant for an endless stream of meetings.
There are some wide ranging characteristics that seem to historically follow the industry. Paper is still the preferred medium of many, despite policies that may dictate otherwise.
Employees must work a certain number of hours throughout the year. The billable hour has traditionally been the firm’s most important metric. We have seen recently that it is not necessarily the number of hours worked but how efficiently time is used and the value that it brings that should be most important.
Same as last year. Based on last year. Look at last year. Prior year workpapers are an essential resource, but they should not prevent us from asking fundamental questions each engagement. An important lesson for all in public accounting to learn: just because something was done that way in the prior year does not mean it has to be done that way for this year.
The one constant in life is change. This is not to say that these issues are prevalent for all firms in public accounting, or that any firm faces all of these issues. What we all must keep in mind is that change can be a great tool to empower innovation. Those who embrace change seem to benefit the most from it, whether it be from a global pandemic, new technology, or evolving expectations from a younger workforce.
Technology is your friend.
Technology has changed how accounting firms handle in-house communication, client relations and other day-to-day activities. This has only accelerated since the onset of the COVID-19 outbreak.
It is no secret that changing a process within a firm can be quite the undertaking. With that in mind, it is imperative for a firm’s leadership to constantly look both inward and outward to identify how and when processes can be improved. New processes can lead to new efficiencies, which in turn can lead to enhanced profitability. Having buy-in from the top will also show the rest of the firm the commitment to continual improvement. This can have a positive impact on morale and make the execution of new initiatives easier from top to bottom.
One of the principal themes to keep in mind when looking at products and processes: technology is an investment! New technology implementations can be capital and time intensive. The lesson here is that with the right plan, team and execution, new technology can be implemented in such a way that the firm stands to benefit in both the short and long term.
We have seen that there are some particular technologies readily available in the market that can immediately effect the productivity of accounting firms, including secure electronic document signature software, calendar assistants, bots and mobile technology, Robotic Process Automation (RPA) and project management software.
Electronic document signature software is a secure way to send and execute documents such as proposals and engagement letters. It is a great way to enforce firm standardization and push forward a paperless initiative.
There are various forms of calendar assistants, from bots to add-ons that integrate with the most commonly used email services. They can mitigate the need to manually negotiate meeting times and can make for an effective tool for current and prospective clients to put time on your calendar.
Firms should not be afraid to look closely at bots and mobile technology. Bots can assist in engagements such as bookkeeping and audits, improving the efficiency and lowering the firm’s internal costs for such services. Chatbots are also a great way to allow for client interaction without necessarily having a human monitoring at all times.
Many firms have already started to explore mobile apps to manage engagements and client relationships. There are significant benefits to utilizing a mobile app, almost too many to list. It should be noted, however, that maintaining a mobile app requires continual management from a technology team and should not be taken lightly.
RPA utilizes bots to perform repetitive tasks, parse large populations of data and execute error-free testing at a speed and scale not possible by a human. This technology can run 24/7 and allows for the humans involved to focus on more substantive and nuanced parts of an engagement.
Project management software is an absolute necessity to efficiently administer a firm’s portfolio of services and engagements, as well as its staff. Everything from tax returns to financial statement audits to bookkeeping and beyond are projects which need to be organized and executed in a timely, structured manner. Excel schedules and matrices may have worked to an extent in the past, but there is a better, more efficient way. One important note: try to find user-friendly, visually appealing software that has a dashboard for user tasks. People tend to be visually responsive and having a “one-stop” destination for tasks and their statuses can make a for a material difference in performance.
No more meetings!
No more meetings may be an exaggerated goal, but it is not as far-fetched as one may think. Instead, perhaps the more realistic goal may be to minimize meetings and to make them as efficient as possible while still getting to the same end goals.
Daily standups are a great way to encourage engagement, efficiency and organization. The daily standup should be set up for the same time each day and allow the team to participate in-person or remotely. Each individual gets a set amount of time to discuss their tasks for the day, any challenges that they are facing, and other relevant issues. Fundamental to the daily standup is that individuals get only a moment to speak and that they need to use their time wisely.
Firms can institute a cap of 30 minutes for meetings as a way to enforce the best use of time. Firms may be quite surprised with how quickly things get done when there is a hard cap on the time allocated for a meeting.
Sometimes it helps to ask a fundamental question: does this need to be a meeting? If the answer is not a resounding yes, then it probably does not need to be a meeting. Utilizing some of the technology discussed previously and delegating tasks to managers and others where appropriate can help to lower the number of meetings needed to complete regular tasks. Ruthless prioritization is crucial.
Firms need to acknowledge a resource that they have in front of them: their staff. Staff in some firms are treated on a scale ranging from disposable to invisible. One must work a certain number of years before they become eligible for a promotion, regardless of capability, and there is a set hierarchy in the firm that is strictly adhered to. If someone, regardless of where they are in the firm’s hierarchy, has an idea or a better way… LISTEN!
Different perspectives can bring new efficiencies, even potential new service lines or client offerings that may not otherwise have been imagined. There are additional benefits to the firm as continual innovation and efficiencies encourages the whole firm to be engaged in what they are doing and can give them a sense of ownership. That sense of ownership can have a positive net impact on morale and firm culture.
Understanding the new competitive landscape
The future pool of talent from which public accounting and other industries will draw must answer an existential question: why become a CPA to work long hours and deal with an industry averse to change, when you could work for a company or startup that has embraced more new ideas?
In the battle to attract talent, accounting firms aren’t just competing with each other but other industries as well. Over the last few years, companies across many industries have rolled out policies and benefits that may not be considered “traditional” by public accounting standards but have become an expectation to many in the greater work force. This includes regularly working from home (before the COVID-19 outbreak), unlimited PTO, flexible or core hours, fitness memberships and other benefits. As difficult as it may be to explore these and other benefits, it is in a firm’s best interest to have an open mind.
We have seen since the COVID-19 outbreak how working from home can be effective. All employees may not excel in a work from home situation, but that is where communication is key and managers get to prove how well they can manage both engagements and people. With policies such as work from home, those who would abuse or misuse the policy typically becomes a self-selecting population. There is a pretty good chance that their productivity would not have been significantly better in the office without a level of micro-management involved.
There are certainly discussions to be had around policies such as unlimited PTO. One of the key things to remember about unlimited PTO is that it does not mean that employees can take time off at will for an indeterminate amount of time. There should still be an approval process for PTO, as would be the case for any PTO policy. Employees should not be able to take time off without having the appropriate sign-offs. Again, this is a self-selecting population when it comes to those who would abuse it.
The traditional 9am-5pm workday is being phased out in many industries in favor of flexible or core hours. This type of modern schedule typically goes hand-in-hand with enhanced communication and an ever-expanding suite of technology products.
It is important to know that as a firm, you shouldn’t try to do everything at once. Be strategic in how you approach a new processes and technology, and try to tackle the low hanging fruit first. Getting quick and easy victories in the beginning will help if and when things get more challenging.
These are just some of the lessons that we have learned to date. There will continue to be new lessons learned as the impact of the COVID-19 outbreak continues to unfold, but for public accounting firms and the industry at large. This is an opportunity to revisit what is and is not working, and to make improvements to ensure the long term success and continued evolution of your firm, and the industry as a whole.