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Accounting Leaders Reveal Industry Challenges of 2020

Last updated: 19 Nov, 2021 By | 6 Minutes Read

Every business faces multiple challenges that vary from industry to industry. If we talk about the accounting industry, it too has its unique set of challenges. With new refinements in tax regulations and the coming of the latest technology in the financial accounting market, CPA firms and accountants face the challenge of keeping compliance with the same.

In order to stay ahead in the competition and providing enhanced customer service, this compliance becomes highly imperative for achieving success. So, let us hear it from the industry professionals as to what challenges they face in the present times, along with the suggested possible solutions.

Top Accounting Challenges Reported

Challenge 1: Dealing with the Reporting of Non-Financial Measures

Amanda Matthews, CPA | Piaggio Fast Forward

A challenge to the accounting industry that became prevalent in 2019 is the reporting of non-financial measures, especially those related to environmental, social and governance matters (ESG). In Q3 2019, the Business Round Table made a pledge towards stakeholder capitalism. 

This leaves accountants to explore concepts about what “purpose-led” information is meaningful and measurable. A variety of ESG risk factors affect shareholder value that includes poor management of resources, lack of employee engagement, inadequate cybersecurity controls, and threats to brand loyalty, just to name a few.

The goal of providing information to investors is so they can maximize the value of their investments, which requires any information that could influence their decisions to invest. 

For example, high sustainability companies are more likely to have established processes for stakeholder engagement, to be more long-term oriented, and to exhibit higher measurement and disclosure of non-financial information.

Additionally, high sustainability companies significantly outperform their counterparts over the long term, both in terms of stock market and accounting performance.

As more executives and investors require ESG reporting, accountants must implement methods of measuring, analyzing and reporting that information to stakeholders.

Challenge 2: Poor Adaptation Ability and Zero Innovation

Katie L. Thomas, CPA | Owner of Diamond J Accounting

People are often cited as pointing to automation as the largest challenge facing accounting today. I think automation is probably one of the best things that could have happened to Accounting – it forces out the people who were just there to make a quick buck and asks everyone to level up and become a forward-thinking partner for their clients. 

Lack of Innovation

Personally, I think the biggest challenge facing our industry is the lack of innovation and the ability to adapt. That’s why people are so afraid of the automation revolution is because they can’t see how this could totally change how they do business for the better. They are so mired in the “bean counter” mentality that they can’t or aren’t willing to step beyond someone who inputs numbers in spreadsheets and programs. 

There are tons of people out there changing things up, but far too many want to be seen as “professionals” and are slow to adopt new technology, new trends, and just hope that sticking their nose to the grindstone and doing good work will be enough. It’s not, though, because clients can get the same “good work” from software now, so they’re looking for someone who can take that spreadsheet and translate it into meaningful information and actionable items. 

Challenge 3: Retaining Talent & Service Commoditization Avoidance

David | GBQ Consulting

Challenge: Two of the largest issues that the industry faces are:

(i) Attracting and retaining talent and

(ii) Avoiding the commoditization of services.

Overcoming these issues might help to ameliorate other challenges.

Challenge 4: Difficulty in Using the Automation Technology

Chane Steiner | CEO of Crediful

Automation. Technology is changing the way the world works, which is great – and dangerous for those in positions that are slowly being taken over by automation. It’s a balance between needing human thinking and creating more innovative, learning tech that is capable of mimicking that thinking. 

There’s pressure on jobs as we wonder whether or not robots will be able to replace us in the future. 

Challenge 5: Taking the D-I-Y Approach instead of Professional Help

RJ Bryan | Co-Founder of Credit Reps

The top accounting industry change in 2019 is two-fold and it will continue to be a top issue in 2020.

  • Tech know-how
  • DIY Economy/Lifestyle

Tech and the DIY craze that’s been happening the past few years has become a two-headed monster of the accounting industry. So, people often take shortcuts instead of listening to a pro’s advice.

D-I-Y Approach

And then, there are automated software (like Oracle and SAP) that accountants need to know how to use and stay updated within the long run. The downside to tech is that the accountant is often replaced by the software and that’s bad news.

Will this stop?

I think its ‘stop-and-go.’ Meaning people will take a swing at it but once they strike out a few times; they will hire the professionals.

Challenge 6: Keeping Compliance with the Tax Cuts and Jobs Act Amendments

Andrew Conrad | Capterra

The continued implementation of Tax Cuts and Job Act is a challenge for 2019. The Tax Cuts and Jobs Act is shaping up to be the granddaddy of tax reforms, affecting everything from meals and entertainment expenses to depreciation. Unless you’re really, really into this kind of stuff, I wouldn’t recommend attempting to read the entire, arcane, 186-page document (though it is publicly accessible).

Here are some of the biggest takeaways of the Tax Cuts and Jobs Act for businesses:

  • Entertainment expenses (e.g., sporting events, concerts) are no longer deductible, though business-related meals are.
  • Bonus depreciation allows businesses to deduct 100% of the depreciation on business assets such as vehicles, computers, and other equipment right away for the next three years (through 2022).
  • Many more small businesses (those with $25 million or less in annual gross receipts instead of the previous threshold of $5 million or less) are eligible to use the cash method of accounting, which is often simpler and cheaper than accrual accounting.

The Solution: Make sure you’re keeping your accounting software up to date every month so it can do the heavy lifting for you when it comes to new TCJA rates and deductions.

Also – while it’s not directly related to the TCJA – don’t forget to factor virtual currencies into your tax preparation planning if your business or clients use them. As the IRS writes, “Virtual currency transactions are taxable by law just like transactions in any other property.”

Recommended: Top 11 Bookkeeping Software Suggested By Professional Bookkeepers

Challenge 7: Becoming Tech-Savvy & Retaining Talent

Eileen Maki | Tax and Accounting Analyst, FitSmallBusiness

Technology: Incoming crops of entrepreneurs have grown up tech-savvy. They expect paperless solutions, mobile accessibility, and cloud solutions. Accountants need to equip themselves to offer modern solutions. Otherwise, antiquated systems and solutions could cause a small business owner to pass over an accountant in favor of a more advanced option.

Tech-Savvy

Compliance: Accountants will find it demanding to be on top of every development in the industry. Accountants will need to be up to speed on the inundation of recent compliance changes to provide effective advice to their clients.

Updated business processes and skills will become important as we advance into 2020, where we expect more changes in the tax and accounting industries.

Talent: As the Baby Boomer generation retires from the workforce, more and more accounting organizations and small businesses will be staffed by Millennials and Gen Zers

Therefore, accountants and small business owners will need to consider ways to retain the right talent, such as flexible work schedules, casual dress policies, and unique benefit offerings.

Challenge 8: Shortage of Qualified Accountants

Olga Bashkatova, CPA | NextStage Advisory LLC

I believe that the most challenging factor is the lack of properly educated and trained accountants. The accounting world is becoming less about manual work and more about reviewing data that is processing automatically through various software. 

The smaller accounting shops and individual companies have invested in changing their working methods to incorporate technology, whereas most companies (both accounting services and companies that employ accountants in-house) have not modernized. 

Thus the experienced staff out there don’t know how to work with all of the integrated technology, don’t know how to look for and implement efficiencies and other technologies, and don’t know how to troubleshoot when something is not syncing or not reconciling in the data that is streaming in. 

The more experienced they are, the harder it is for them to adapt. Universities are not addressing this issue; I believe most still believe that teaching Excel skills is all that’s needed for accounting majors.

The new age accountants have to be good at parsing through a lot of data, looking for anomalies, troubleshooting, be quick to identify changes in patterns or missing information and be able to analyze variances between actual and expected. This is unprecedented; most accountants believe their job is to push receipts around and add them up on a calculator. They work slowly and manually. 

Finding staff that can thrive in the new digital environment is extremely difficult.

Challenge 9: Inability to maintain Good Relationship with the Clients

Lilia Stoyanov | CEO of Transformify

Ever since the collapse of Enron and Arthur Andersen, accountants have faced challenges over their relationship with key clients.

Relationship with clients

Recently, Financial Times published an article providing insights into the alleged “creative accounting” practices of the German fintech giant Wirecard. Stating inflated revenues and transaction volume, FT poses questions about the trustworthiness of audited financial statements.

Challenge 10: Not Having an Advanced Payment Processes

Karla Friede | CEO of Nvoiceplay

The first wave of new entrants in B2B payments has already hit the market, and many of their value propositions sound the same—cloud, simple, automated. But, not all of them are really in the cloud, simple, or automating the whole process.

B2B payments have long been plagued by partial automation, and that’s a big reason why so many businesses are still stuck on checks. Cards and ACH make the transfer of funds electronic, but they also introduce new manual processes for file preparation, reconciliation, and vendor enablement.

New, truly automated solutions can handle every part of the process. The person in accounts payable should only have to select the bills they want to pay and click the “pay” button. Buyers need to look past the marketing language and check under the hood.

Challenge 11: Difficulty in Convincing Clients to Use Technology for Engagement

George Birrell, CPA | Founder of Taxportunity

The biggest challenge accounting and tax professionals find is getting clients to engage in the technology we provide them that allows us to streamline the customer flow and data exchange process. Generally, clients have been slow to realize that in doing this brings efficiencies that are then passed on to them via lower billings.

Forward-thinking clients who do interact with service professionals in a virtual manner are quick to learn that the personal touch is not lost by not meeting face to face and that it is actually a much more convenient and time-saving experience.

Taxhub has created a platform that only requires customer once signed up to share documents and communicate with tax preparers via email and sms (text message). 

Creating an environment where customers don’t have to log in to a closed platform each time they interact with us has increased customer response rate and time drastically, which in turn has allowed us to undercut traditional Brick-and-Mortar CPA’s. 

Challenge 12: Trouble Staying Updated with the Technology

Ryan Shirzadi | Partner at Tekrevol

I personally believe that the biggest challenge of this era for any accountant is being able to stay up to date with emerging technologies. Each day a new piece of technology intervenes in our world, resulting in a more challenging phase for an accountant on how to integrate their approaches with that technology. Whoever is more adaptable to these advancements, is for sure living a much easier life. And quite frankly, being unable to keep up can be a cause of becoming stagnant in the market. 

Updated with Technology

Another big issue that an accountant faces is Cyber Security. He/she is responsible for the safety of all Accounting information (e.g., credit card information, bank account numbers, passwords) as it is an especially hot target for hackers because of higher-value. 

Challenge 13: Dealing with the Shortage of Accounting Talent

LJ Suzuki, Fractional CFO | Founder of CFOShare

Honestly, the biggest challenge for the accounting industry in 2020 (and business customers of the accounting industry) is the shortage of CPAs and general accounting talent. There simply aren’t enough accountants available for small business customers, which results in poor service, missed deadlines, and a lack of thorough consultation on important matters. I’ve seen this extensively in 2019 as our clients complain about their CPA partners, but also when we try to recruit high-quality accounting professionals.

Compounding the issue is millennial-age accountants who want a work-life balance and refuse to work 80 hour weeks during tax season. In a hyper-competitive labor market, they will leave an employer that doesn’t cater to their lifestyle, sometimes without even having a new job to go to! The result is high turnover, project delays, and poor customer service.

Small business customers are left with the challenging choice of receiving poor service or upgrading to a more expensive but higher-quality CPA.

Overall these trends aren’t changing. Accounting, once viewed as a reliable and high-paying profession, is not popular with college students seeking more meaning in their careers. At the same time, macro-economic changes like 2017 tax reform, the shifting sales-tax landscape, globalization, and the recent explosion of small businesses (empowered by cloud-based business software like Shopify, Salesforce, and Quickbooks Online) are creating a big demand for CPAs.

CPAs need to ask themselves, “why will accountants want to work here?” In a service business like accounting, this answer will determine their competitive advantage for the business overall.

 Conclusion

This brings us to the conclusion that more or less every accounting professional is facing the common issues of incorporating the use of the latest technology, providing enhanced customer service, retaining and finding new qualified and skilled talent, etc. The solutions provided above will surely help the accountants in dealing with their unique set of challenges. 

Are you unable to deal with the accounting back-office workload owing to less time, skilled professionals, or technical expertise? Look no further than Cogneesol! Get in touch with us today!

Read also:

Proven Strategies for CPA Firms to Keep Their Clients Satisfied!

When is the Right Time to Hire an Accountant?

Expert Reviews for Using Accounting and Tax Software!

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