Looking to the future in accounting
“It’s tough to make predictions,” Yogi Berra once said, “especially about the future.”
And yet there are accounting firms that are working to do just that, as one of our firm profile this week shows (see “A formula for forecasting the future”). For that matter, each month Accounting Today asks several hundred accountants to predict the direction of a number of levels of the U.S. economy in our Accountants Confidence index — and they’re happy to do so.
That points to an important lesson for the profession, though the lesson isn’t about the specific direction of the economy. In fact, the accountants who respond to our monthly survey have consistently predicted modest growth in the short- and midterm, while differing on the prospects beyond that. Since early 2018, a growing plurality of respondents expect to see a slowdown as early as the end of 2019 — but a smaller but still significant group expect continued expansion, and possibly strong growth. Even those who agree on the direction of the economy disagree over the factors supporting their expectations, with wildly different takes on the impact of the Tax Cuts and Jobs Act, the Trump administration’s trade policies, the current state of Congress, and much more.
The lesson, then, isn’t that the economy will grow or contract, and it’s certainly not that accountants can tell which it will be.
Instead, the lesson is that accountants can and should be thinking about the future — and sharing their thoughts about it with their clients in the form of concrete advice.
To be clear: This is not about fortune-telling. You don’t actually need to predict economic booms and busts. But you should engage clients in a directed conversation about where they expect the economy to go, and then arm them with strategies in advance.
For instance, if they think the economy in general is heading south (or even just their industry), they may want to arrange credit lines or sources of capital before it dries up, or postpone buying property or equipment in the expectation that prices will drop. Conversely, if they think a boom is coming on (again, even if it’s only in their industry), they may want to lock in lower costs from suppliers, or build up extra capacity in anticipation.
Many of your clients, particularly smaller businesses, won’t be prepared to think strategically about the future; you’ll need to teach them how, and then guide them in clarifying their thoughts about what’s coming. Even those who do think strategically about the future may not know all the different tactics available to them to prepare for it. Your insights into businesses of all kinds, as well as into their specific industries, put you in a great position to ask your clients the important questions, and then offer concrete options based on their answers.
Note that you don’t have to make predictions for them — you can guide them toward their own predictions, and then help them act appropriately and proactively based on their conclusions. It’s about decision support and strategic planning that puts your clients in a better place, not pretending that you know exactly how the future will turn out.
This is the sort of high-level advice that your clients want and need from you, and while making predictions is definitely tough, here’s one you can rely on: The firms that look to the future this way will build longer-lasting, more profitable relationships with their clients, truly fulfilling their mantle of the most trusted advisor.