How can small accounting firms do more with less?
That’s the question itching leaders at most accounting firms today who have less than 25 employees. There is an unfortunate inability to take on more clients because the team has no additional bandwidth to work. Hiring is a headache because large firms, with their luxurious capacity to pay extra, have skewed the salary expectations in the job market, making it hard to find an accountant who will work for anything less. And it is hard to increase the salary because there are not many clients.
A most vicious cycle, indeed.
But is there a remedy? Thankfully yes!
The unreasonable job market
The starting salary at PwC is approximately $56,000 for audit associates. EY’s starting salary for the same position is $64,000. Deloitte’s starting salary for a Tax Associate is $61,000. (Courtesy of big4accountingfirms.com)
Smaller firms may not be able to imagine so big, with their gross revenue low enough and the margins tight. But graduating accountants don’t empathise, making it hard to hire great talent.
Is it at least possible to bill the clients at a higher rate? No, especially when the service remains the same, and the fear of driving clients away looms large.
On top of this, accountants are actively quitting their jobs and the count of new accountants entering the industry is coming down. Did accounting lose its glamour?
More with less
When the demand for fabric production, especially cotton, increased in the UK between the eighteenth and nineteenth centuries, fewer people were available to work in factories. This necessity led to the invention of the sewing machine, and a great increase in productivity. Now fewer workers could produce more amount of clothing.
The advice being whispered in the ears of leaders of small firms by their distant counterparts is automation.
Accounting automation, powered by machine learning, mass crunches numbers and produces deliverables in a fraction of the time. And it has been shown to cut 50% of operational costs and 100% of hiring costs.
As if wanting to be more helpful that this, automation allows employees to focus less on repetitive manual tasks and more on delivering advisory services that clients value. This would enable small firms to bill their clients more, what with so much value addition to show for.
However, accounting automation must not be seen as a quick fix to escape the current predicament. It is the rite of passage for accounting firms looking to grow.
Interested to safely experiment with automation? Contact us at email@example.com for giving a boost to your accounting firm!