The economy has offered a boon to the accounting industry in recent years, but a time of reckoning has come and firms are faced with new realities. They must discover new ways to do more with less while increasing profitability.
Some might believe that the answer is to work harder and raise rates. Those options are, at best, short-term solutions to a longer-term problem. Doesn't it make more sense to recommit to technology and increase leverage and margins?
Most firms utilize technology only to sustain the
Resistance at the leadership level in many accounting firms is stunting growth and limiting profitability.
Let me cite just a few examples:
* Filing paper tax returns;
* Using paper for the billing process (billing drafts and paper invoices);
* Research via paper versus the Internet;
* Preparing financial statements using word processing versus automating the process and eliminating redundant data entry; and,
* Auditing around the computer, rather than through the system.
If some of these examples strike a chord, keep reading and consider what a simple change in attitude might do for your firm.
Firms using technology to accelerate profitability during difficult times view it as a strategic asset, while firms merely sustaining outdated processes and procedures view technology as overhead. Resistance to change is not unusual, but awareness can help you start thinking differently.
Creative strategies are imperative in light of the ever-evolving economy. According to statistics from The Boomer Circles, firms invest an average of less than $10,000 per person per year on technology. Remember that average is where the worst of the best meet the best of the worst. Most firms don't want to settle for average.
Traditional thinking suggests that a firm should simply cut personnel and budgets, rather than consider how technology might allow personnel to become more productive. Many partners say that they believe in the potential of technology, but few truly understand its strategic value.
Moreover, many partners do not understand how to take full advantage of the high-powered tools already at their fingertips. They offer a variety of justifications for this ignorance, but the bottom line is accountability. Partner compensation must take into account ongoing self-development. IT skills and adherence to standards, policies and procedures are as important (if not more so) than charge hours.
Increasing profitability during difficult economic times is possible. Here's how:
1. Start (or expand) the firm's training and learning initiative (including IT, technical and soft skills).
2. Improve integration of production and management applications (reduction of databases).
3. Ensure secure, fast and easy remote access.
4. Re-engineer your firm's written standards, policies and procedures.
5. Implement portals for all clients.
Leadership, discipline and accountability will ensure follow-through and success. If your firm is serious about doing more in the face of today's economy, don't wait to tackle the items on the list above. Many of the best firms are already well on their way. Firms that invest in infrastructure and training of personnel grow faster and sustain a higher level of profitability.
Don't get caught trying to sustain profitability by "milking" your current technology into obsolescence.
Gary Boomer, CPA, is the president of Boomer Consulting, in Manhattan, Kan.
(c) 2009 Accounting Today and SourceMedia, Inc. All Rights Reserved.
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