The year 2024, continues to be a year of mixed emotions for accounting firms. While the conversation around inflation is rife, there is also hope for better days, based on which, accounting firms are constantly increasing their investment in tech, hiring, etc. What happens, we will know for sure, as time goes by. But several key issues continue to stab the industry in its heart. These challenges are not just obstacles, but key factors that will determine the future path of the accounting profession.
In this article, Finsmart Accounting – trusted globally for offshore accounting services – will share the top challenges of accounting and how outsourcing can help improve them. Let’s start!
The Key Challenges and How Outsourcing Can Help Improve Them:
– Lack of Staff:
The problem:
Even in 2024, talent shortage is a lurking issue in the accounting industry. And it is becoming a bigger problem with every passing day. Increased educational qualification needs, the need to focus on the work-life balance, and a wave of professionals moving out of the profession are the top reasons for the problem. Even if accounting firms manage to get the top talent, the issue lies in retaining them. A report suggests that 8 in 10 account managers are struggling to retain their top talent. The high burnout rate, the lack of being able to maintain a personal life during peak seasons and longer work hours make things harder.
The Solution:
While firms need to choose their retention strategies carefully, it is not enough. No matter how tough the staff shortage situation is, there is always a solution; in this case, outsourcing. It provides a strategic solution to the persistent problem of the lack of skilled and qualified talent. By hiring an outsourcing partner, accounting firms can access a wide range of talent pool, irrespective of the geographic location. The team of accountants with outsourcing partners brings specialized expertise and experience, helping firms get rid of the need to hire and train talent constantly. In situations like tax season, where the need for resources is high, outsourcing acts as a strategic solution to address this fluctuating demand and capacity challenge issues.
– Cash Flow:
The Problem:
As economic hardships and factors like inflation begin soaring, accounting firms will be in need to ramp up liquidity by executing cost-effective measures, including putting a hold on the planned investments in people, tech, processes, etc. Post the pandemic, many firms have struggled to get back in the game and refocus on improving cash flow and this will continue to be a problem in 2024. As industries and the world, as a whole, continue to suffer from the lack of liquid cash, accounting firms will need to focus on the deteriorating accounts receivable and payable processes. In situations like this, it is important to stay away from the spending behavior patterns.
The Solution:
Amidst economic uncertainties, outsourcing offers strategic solutions to cash flow issues. By outsourcing functions like accounts receivables and payables, firms can streamline operations, optimize liquidity, and gain the most benefits from the services. Outsourcing partners also advise on measures to make processes efficient to enhance cash flow management, allowing firms to brave the weather of economic downturns. Outsourcing also provides flexible pricing, allowing accounting firms to gain maximum benefits without making a dent in the pocket, yet stabilizing the revenue cycles.
– Adaptation of Technology
The Problem:
Technology and artificial intelligence have given a brand-new shape to the accounting industry. Although we have come a long way in technology adaptation, many firms continue to struggle. AI is the need of the hour, but there are hindrances. While some firms continue to be rigid in their approach and choose the traditional means, on the other hand, there is a lack of upskilling, which makes it harder. While the world uses technology and artificial intelligence to its advantage, such an approach pulls the accounting industry behind. There is an urgent need for accounting firms to automate their work to be at par with their competitors and many fail to do so. If terms like cloud-based accounting software, budgeting, forecasting, and data analytics still seem like caveman’s language, you need to find a better solution to scale.
The Solution:
Outsourcing, for example. When outsourcing your accounting practice to a reliable partner with years of experience, you get to harness the benefits of artificial intelligence automation without the investment or training required for adaptation. Outsourcing partners with state-of-the-art technology and the team’s agility and ability to adapt to any technology make your job easier, and faster, making outsourcing a beneficial model for your business. Outsourced professionals are adept at leveraging cutting-edge technology and tools that drive innovation in accounting. Using outsourcing as a business model, allows accounting firms to stay ahead of the curve and leverage tech as a competitive advantage in the digital age.
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– Upskilling:
The Problem:
As technology and automation become an integral part of the accountants’ everyday life, upskilling becomes imperative. However, small accounting firms have a dearth of time, resources, and training to become aware of the latest trends and happenings. As a result, accounting firms fail to reap the benefits of technology and trends. Today, accountants must upgrade themselves to reap the optimum benefits. Ensuring that their teams are upskilled also becomes critical to boosting employee morale and retention. Firms that have invested in employee morale have noticed more than half (53%) lower attrition rates. This continues to be a problem for the small accounting firms.
The Solution:
When you outsource your accounting tasks, you do not have to worry about spending time, money, or resources to help your employees upskill. The experts at an outsourcing firm are constantly upgrading themselves, fostering a culture of continuous learning and growth. Outsourcing firms have training programs to ensure the team is updated with the latest tech advancements, industry trends, etc. Additionally, outsourcing frees up in-house accountants to take development initiatives that can directly benefit and impact the ROI. Embracing outsourcing can prepare accounting firms to cultivate a skilled workforce poised for success in the current business environment.
– Keeping up with Latest Trends and Technology
The Problem:
Besides the constantly changing tax laws and compliance, keeping up with the other evolving trends and technology can be a huge burden for accounting firms. A recent report by Gartner, suggests that about 45% of IT expenditure will be focused on cloud-based technologies, which means the accountants in small accounting firms need to keep up. There is constant innovation – robotic process automation, real-time analytics, new software, etc. Many accounting firms, due to their lack of capital, or the time and knowledge of tech continue to use outdated accounting systems which impact their growth and business.
The Solution:
At the heart of the outsourcing business lies the need to stay up-to-date with the industry. When accounting firms associate with outsourcing firms they can gain their knowledge and insights without hefty investments. Today, outsourcing professionals also provide advisory services that give accounting firms a holistic solution. Firm owners can then use the insights from the experts to pave their path to the future – through forecasts, planning, and strategy and capitalize on the readily available opportunities. Outsourcing is a strategic imperative that has become key in determining the success of firms.
Outsourcing as a Strategic Means to Overcome Recent Accounting Issues: Summary
The issues in the accounting industry are not going anywhere anytime soon. However, accounting firm leaders must remember that change is the only constant. There are still firms that are unsure of the capabilities of outsourcing. It is essential to explore, talk to someone who has reaped the benefits of the strategic solution, and set yourself up for success. The accounting industry is highly volatile, and the market is full of economic uncertainties. To stay afloat and continue scaling, talk to an outsourcing expert today. Write to us at connect@finsmartaccounting.com to know more.
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Director Growth Strategy & Alliance
Maanoj Shah is a finance and outsourcing expert with strong Business Strategy and Scaling-up experience. Over the last 20 years, he has incubated multiple businesses and helped build global enterprises in verticals as diversified as hospitality, technology, and healthcare.
