THE FUTURE

OF THE
ACCOUNTING
FIRM
By Rob Nixon

THE FUTURE OF THE ACCOUNTING FIRM

If you want a different result, then you must first make some different decisions and then put in place some
different actions.
The typical Accounting firm is a solid (but under-performing) business. The clients are loyal, the revenue is
mostly recurring and by and large the Government determines what work you have to do with your clients.
Although solid, this style of business encourages apathy.
I think the model of the Accounting firm needs to change. For the sake of the clients and the people who work
in it it needs to change. Clients are typically underserviced they want you to be proactive and offer them
more. The people who work in the business are generally not rewarded enough for how smart they are.
I have 12 predictions of the future of the Accounting firm. My predictions are based on working with many
hundreds of Accounting firms over a 19-year period and understanding the market implicitly.

PREDICTION # 1 - TECHNOLOGY (WEB BASED) WILL DRIVE BUSINESS EFFICIENCY

IN COMPLIANCE
There are already web-based Accounting systems for the business owner to use. There will be many more. As
the technology and Internet connection speed improves the functionality will improve as well. Part of that
functionality will be where the software will seamlessly integrate with the various Government taxation
departments.
As the integration happens it will be easier for businesses to get their compliance work done. This will mean
less need for the traditional Accounting firm who offers little value other than the preparation of financial
statements.

PREDICTION # 2 GOVERNMENTS WILL SIMPLIFY COMPLIANCE

We can debate all day long the effectiveness of any given Government at any time. My view is that the
Government exists to serve the people. In serving the people it collects taxes and then spends the collection on
facilities to make our lives better. That is the theory!
Governments want to be re-elected. Because of this driving force they want to please the people they serve.
When it comes to business owners it is my belief that they will continue to find new ways to simplify the red
tape and compliance that business owners have to go through. This will drive less need for the traditional
Accountant.

PREDICTION # 3 - COMPLIANCE WILL BECOME A COMMODITY

Because of predictions one and two general business compliance will become a commodity. There is a market
for businesses that provides commodity services. They are typically volume / price driven markets.
Compliance will not go away completely. It would be foolish to think so. How else is the Government going to
check that you are paying the correct taxes? As it becomes a commodity there will be less mystique around
what Accountants currently do for their money.

PREDICTION # 4 - THERE WILL BE LESS FIRMS BUT LARGER FIRMS

The Accounting profession is still a cottage industry made up of primarily small businesses. Even in Australia
where it is a (approximately) $14 billion industry with approximately 10,000 firms only (approximately) 400

firms have revenues over $3 million. There are also an estimated 45 per cent of all current Partners over 50
years of age.
There are too many firms and far too many small sole practitioner firms. According to industry statistics
approximately 65 per cent of all firms employ less than five people. There should be half as many firms yet they
should be larger in revenue. Many of the current Partners should not be Partners. If compliance is to become a
commodity then some Accounting firms may not be interested in continuing in their current format. To thrive
Accounting firms needs to offer a broad range of services (see prediction 12) and as such they need to be of a
larger size with a broader range of people offering those services.

PREDICTION # 5 - THE NEXT PARTNERS WILL WANT FASTER RESULTS AND BE

LESS PATIENT
There is a definite needs requirements difference between the so called generation Y,X and baby-boomers.
Around 90 per cent of all Partners are either Baby-boomers (current age 46 60) or Generation X (current age
30-45). As a generalisation, the baby-boomers are less resistant to change mainly because they have their
asset base sorted (or they should have). The next generation, X, are building assets for their future and are
keen to adopt new ideas.
The next group of Partners to come through, generation Y (current age 20-30), are a different breed. There
has been much written about their needs and style. Hasten to say it is a faster moving generation than the
previous two. They have grown-up on the Internet and other technology. When they become Partners over the
next few years they will want faster results and be far less patient. They are not going to wait for years and
years to get a return on their investment.

PREDICTION # 6 - UNMOTIVATED ACCOUNTANTS WILL FADE AWAY

Like any changing business model those that are not motivated to change will fade away. There are thousands
of Partners making a tedious yet comfortable living adding no value to clients. This is the crux of the current
issue. It is too comfortable in the industry. As a Partner you can make $200.000 - $400,000 without much
effort. As the industry changes the motivation needs to change as well.

PREDICTION # 7 - BUSINESS COACHES AND CONSULTANTS WILL AGGRESSIVELY

PURSUE SMES
Business coaches or consultants have primarily offered leadership, management, marketing, sales and human
resource services to the business community. They too are in business and are looking to expand. With the
correct tools they can expand into the Accountants space quite easily. There are many financial analysis
software tools available that are relatively inexpensive.
If a current coach or consultant wanted to skill and equip themselves they could quite easily offer budget, cash
flow, financial analysis, planning and monitoring services. When they do, it will erode away the revenue that the
Accounting firm should have.

PREDICTION # 8 - CLIENTS WILL DEMAND ADDITIONAL SERVICES

Clients are getting smarter and more business savvy. They have fast and inexpensive access to information
through the Internet and various industry associations. If they know what an Accounting firm can offer they will
start asking for it. After surveying over 7,000 business people they have told us that they are looking for five
key service offerings over and above compliance.
1. Growth help with growth of revenue and wealth
2. Profit help with understanding and improvement
D
P
A
E
T

+61 7 3607 6600

F +61 7 3852 6642
PO BOX 1339, FORTITUDE VALLEY, QLD 4006
11/65 JAMES STREET, FORTITUDE VALLEY, QLD 4006
[email protected]
@ProactiveActNet

3. Cash flow help with understanding and managing

4. Asset protection help to protect all assets
5. Succession help with selling part or all of the business at some point
Progressive Accounting firms can and should be offering these services. If you do not, another firm will.

PREDICTION # 9 - MARKETING AND SALES FOCUS WILL BE NEEDED TO THRIVE

There is a sea of sameness with the Accounting profession. They pretty much all look the same and act the
same way. If you want to stand out then you must market your firm. If you want to grow it then you must
market for new business and have skills to sell the new business.
Firms are already hiring specific marketing people and dedicated sales people (often called rain makers) to
generate new business. These skills can be bought in or learned.

PREDICTION # 10 - CORPORATE CULTURE WILL PREVAIL

The best-run Accounting firms are ones that adopt a corporate culture with a dedicated CEO who is making
decisions and implementing the strategic plan. Typical firms use consensus management between Partners to
make decisions and as such few decisions are made or if they are they are made very slowly. Many firms are
adopting outside help such as independent chairperson and specialist business coaches to thrive. What growing
business would not? It just makes sense!
The corporate culture has dedicated marketing, sales and management people doing their job and their job
only. There are many successes worldwide of mergers, acquisitions and publicly listed companies within the
Accounting sector. This style of business will continue.

PREDICTION # 11 - UNLESS THE CULTURE CHANGES IT WILL BE A LESS

ATTRACTIVE OPTION FOR YOUNG PEOPLE
There is a general perception that the Accounting profession is a bit dull and it does not pay that well. Unless it
changes its perception (and perception is the reality in the eyes of the person perceiving) it be become a less
attractive option for young people. It will be seen as a dying profession. With outward focused marketing there
is a massive opportunity to turn that on its head and offer a more compelling proposition to young talent.

PREDICTION # 12 A HUB OF BUSINESS SUCCESS

When I enter the door of the new Accounting firm I want to be met by my Client Relationship Manager (CRM)
who manages my relationship with the firm. This person will assess my needs and determine which services I
need to fulfill my future direction. They will then ask various professionals within the business to do the work
necessary. I do not intend to visit division after division and be asked the same or similar questions.
The silo and division based model is an ineffective business model. This model does not encourage effective
cross selling or internal referrals. Rather it promotes turf wars, client hogging, and worst of all the clients are
not properly served with what they need. The client is a client of the firm not the individual.
The new Accounting firm will become a Business Success Centre and a hub of business a delivery platform of
likeminded providers.

BUSINESS SUCCESS CENTRE

Tax / Compliance (tax planning, quarterly / monthly accounts, audit)

Business Advisory (management Accounting, budgets, cash flow, monitoring)

Consulting / Coaching (special projects, recruitment, succession, on-going personal and business
coaching)
Finance Broking (vehicles, leasing, equipment, property)
Risk Management (insurance and risk advisory)
Wealth Creation (stock-broking, financial planning, funds management, investment advice)
Concierge (all clients represented as nodes referring each other and the act is the central point through
a web-based portal)
The future is exciting for those firms who want to embrace it.
It is my lifes work (and that of my business) to help Accounting firms revolutionise their financial performance.
We want to lead you into this exciting new world. Come with us on the journey.

We hope you enjoyed this article.

Let us know your thoughts, give us a call on +61 7 3607 6600.
Or if you have a question that is not answered, send an email
to [email protected] and we will answer it promptly.
Ask a better question, get a better answer!

D
P
A
E
T

+61 7 3607 6600

F +61 7 3852 6642
PO BOX 1339, FORTITUDE VALLEY, QLD 4006
11/65 JAMES STREET, FORTITUDE VALLEY, QLD 4006
[email protected]
@ProactiveActNet