Accounting Industry Trends for 2020 and Beyond
The role of the accountant and CPA firm has changed dramatically in recent years. Today, business clients in particular expect far more from their accountants than in years past as they have assumed more of an overall financial advisory role. This is expected to continue in the future as technology enables CPAs to operate more efficiently and provide more comprehensive services to their clients.
If you are an accountant (or an aspiring accountant) and you want to be competitive in the years to come, it is important to understand where the industry is going. Here are six accounting industry trends to look out for in 2020:
Cloud-based Accounting is Now Mainstream: Cloud-based computing began to come on the scene about a decade or so ago, and now it is just about everywhere. QuickBooks and other top accounting software brands operate largely in the cloud, and nearly 70% of accountants prefer cloud accounting. Keeping financial data in the cloud is good for CPA firms and their clients alike as it allows for more collaboration and it also allows clients to obtain easy access to their data in real time. The trend toward cloud-based computing in business is expected to continue, and according to Accounting Age, nearly 80% of small businesses will rely solely on cloud technology by the end of 2020.
AI Enables Bookkeeping to become Increasingly Automated: Artificial intelligence (AI) is an emerging technology that is greatly impacting virtually every industry and area of our lives in one way or another. In the accounting industry, AI allows firms to fully automate what were once labor-intensive tasks, which helps save time, streamline operations, and enhance productivity. Purdue University reports that 66% of accountants would like to invest in AI technology, and 55% plan to do so within the next three years.
Financial Insights are Increasingly Important: As the technology that is used for bookkeeping and other financial data becomes more robust and interactive, it is much easier to identify financial trends that impact business clients in both the present and the future. With so much data now at your fingertips and broken down in ways that can be more easily understood, clients now expect accountants to provide greater financial insights and analysis to help advise them regarding the current health of their business and help prepare for the future.
CPAs Need to Adopt the Mindset of Millennials: The population of millennials is about the same as baby boomers and will soon eclipse them, and the millennial generation now has a much greater influence over business trends than ever before. To remain competitive, accountants will need to cater to the younger generation by going beyond traditional business approaches and systems. This means, among other things, new marketing methods that can reach millennial business owners where they are, as well as more personalized service. And this brings us to our next point…
Sales and Customer Service Skills are Now Just as Important as Accounting Skills: In the past, accountants used to be the “numbers guys” who spent most of their time doing the books and recording and analyzing the data. CPAs still need to be good in math and have a strong understanding of finance and accounting laws and regulations, but today, their role has greatly expanded. In addition to knowing the numbers, accountants are also expected to have good communication skills and to be strong in both sales and customer service. With automation taking care of most of the repetitive and menial tasks, accountants have taken on more of a consulting role with their clients.
Baby Boomer Accounting Firm Owners are Passing the Torch to Millennials: We are in the middle of perhaps the largest demographic shift in our history. With 10,000 baby boomers turning 65 every day, a growing number of Boomer CPAs are looking to retire. Some have put off their impending retirement, but eventually, they will be passing their firms along to the younger generations.
According to CPA Practice Advisor, “the biggest unwritten story in business is the massive wave of business ownership transfers in the US.” They go on to say that, “more millennials are stepping up, leaving the employee world, becoming their own boss and allowing baby boomer entrepreneurs to retire.” Expect this trend to continue well into the 2020s across all industries, and especially with accounting firms.
Whether you are on the buying or selling end of a CPA practice, the market is very strong and balanced. There are an ample number of practices for sale, and there are a good number of buyers as well. The key to a successful sale or purchase is to work with a reputable business broker, and preferably one that specializes in CPA and accounting practice sales. An experienced business intermediary can help ensure that your practice is marketed to the widest possible audience of prospective buyers, and that the transaction goes smoothly and seamlessly.