- Accounting and tax firms are becoming more comfortable and reliant upon technologies such as the cloud as a driver of success even as they battle industry challenges including continued economic uncertainty and talent retention, according to a recent survey.
- Investments in new technologies closed out tax firms’ top five goals for the upcoming year, the 2022 Annual Accounting Survey by professional information firm Wolters Kluwer found, with 25% of firms overall pointing to such investments as a way to support remote work as a key goal for 2023.
- Expanding revenue and growing profit was the number one goal for tax and accounting firms for the next coming year, with 54% of firms of all sizes stating this was their top priority. Improving customer engagement, operational workflows, and employee effectiveness were also on the list of top five goals for companies moving into 2023.
Tax and accounting firms also pointed to continued economic uncertainty as one of their top worries, although the main challenge faced by such firms varied by size. Midsize firms, with between 20 to 49 total employees, were most concerned with economic uncertainty while large firms, with 50 or more total employees, were most worried about acquiring and retaining talent, according to the survey. Both large and midsize firms noted they were looking to learn to use their technology more effectively.
Economic uncertainty as well as keeping pace with shifting regulations and standards were the only two challenges cited as top concerns by firms of all sizes, according to the survey. The survey included data from quantitative interviews of 1,983 tax and accounting firms of all sizes across the U.S., with 1,445 completed responses, according to Wolters Kluwer.
New technologies are helping firms to better compete, with the majority of companies agreeing that their technology enabled them to either moderately or significantly improve client response times (73%), add new clients (73%) or retain existing clients (73%).
Most firms — 52% — also believe the pace of technological change is right on pace, with a growing number of companies positioning themselves as “tech-forward” entities. Forty percent of firms identified as either innovators or early technology adapters, according to the survey.
Companies using cloud solutions were also more profitable, with 81% of cloud-based companies reporting higher revenue growth and profitability compared to those firms who had not incorporated such technologies. Fifty-four percent of overall firms surveyed noted an increase in profitability, according to the survey.
“In a world that’s embracing digital transformation, firms that prioritize the adoption of integrated, cloud-based technology will continue to drive a competitive advantage,” Jason Marx, President and CEO of Wolters Kluwer Tax and Accounting North America said in a statement included in a Dec.2 press release of the study.
Yet despite the positive pace of change, less than 20% of survey respondents believe their firms are currently using their tech stacks to full advantage — indicating tax and accounting companies have more room to grow when it comes to implementing new technologies.
Fourteen percent of firms overall stated that they were using 100% of their tech stack’s capabilities, which also found 42% of firms believe they are using 75% of such capabilities — a 14 point increase year-over-year, according to the survey.
More firms are also using technology to improve employees’ skill sets or morale and engagement, a trend that comes as tax and accounting firms are confronting talent retention struggles. Seventy-four percent of firms report using technology to improve employees’ skill sets, while 64% report using it to improve engagement and morale.
With a large gap still remaining between labor demand and labor supply, upskilling employees’ digital talents —especially within the finance department — is becoming more attractive for CFOs who need to weigh the cost of labor against the need to find skilled employees, especially as they move to potentially increase their technology or digital transformation spending.
Though training programs may typically be cut back during an economic downturn, financial leaders are instead looking to gear such programs towards “the right skills and the right talent,” Tom Hood, executive vice president, business engagement & growth at American Institute of Certified Public Accountants (AICPA) said in a previous interview with CFO Dive.