It would almost be a cliche to start this article by saying this has not been an ordinary year. Nonetheless, the cliche here is unavoidable. The pandemic had a deep and wide reach into all aspects of our lives, personally and professionally.
Accountants and bookkeepers are no different and have experienced a tumultuous year packed with changes both internally, within their own practices, and in their engagement with clients.
It's safe to say that 2020 was a year where pre-existing trends were accelerated to a maximum: the adoption of advanced technological solutions, the move to remote and cloud accounting, and more - were all there at the start of 2020, but Covid-19 took these processes to level. Simply because for many accounting and bookkeeping firms, it was a "do or die'' situation. Let's go over the trends that reigned over 2020.
Goodbye (forever?) brick and mortar
Firms were already exploring flexible and remote work models when the pandemic broke, but the immediate shutdown forced them to go remote and adapt to the new circumstances. This change into a work-from-home model in a service-based industry is no less than revolutionary. It requires a rethinking in almost all work aspects: Finding technological solutions, boundary-setting with clients, maintaining a connection with employees, reframing the work environment, and more.
On the other hand, along with the challenges, came opportunities. The savings in overheads such as office rental cannot be denied, and the move to remote work allows more flexibility when hiring employees and recruiting clients.
A recent survey from December, published in Accounting Today, found that 61% of firms said their shift to remote work was "seamless".
While most firms manage to adapt fairly quickly, there's still a challenge in interacting with other entities such as government offices and large banks, whose transition into remote services isn't so smooth.
As one bookkeeper shared with us, he had to open a bank account for his clients, but the bank required them to be there in person: "All the local banks required them to come in and be present to sign paperwork, and I was actually surprised by that. I located an online-only banking solution for them, where they specialize in folks not having to come in, and everything is handled online."
The Accounting Today survey also found that 81% of firms expect remote work to increase post-pandemic. It looks like the transition is still in process, but the direction is clear, and more and more firms will say goodbye to the brick and mortar model.
Accounting in the technological age
Another stable trend accelerated in the passing year is the utilization of more technological solutions.
While some accountants were more ahead of the curve than others, Covid forced technological advancements on accountants who were still dragging behind in terms of tech adaptability.
As a bookkeeper shared with us: "Personally I have embraced technology wholeheartedly in the sense that with a few pieces of software I run everything in the cloud, but I have highly skilled CPA friends who still won't e-file a return, as an example. And so, when Covid comes and they need to clear out their office, they're stuck. And they're not unique in that."
The Accounting Today survey mentioned before found that 40% of firms are still not fully paperless.
A stable, seamless tech stack is the foundation of almost any accounting firm's practice: Cloud accounting makes data more accessible and manageable than ever. AI accounting solutions minimize the need for repetitive manual tasks such as data entry and classification and ensure the numbers are always up-to-date. And online bill management software increases efficiency and accuracy and reduces bill pay lag time to a minimum.
Since technology is now the backbone of many (if not most) accounting firms, CPAs and bookkeepers apply extreme scrutiny when choosing the software they use.
They are also selective as to the clients with whom they choose to work. CPAs and bookkeepers will turn down a client who is unwilling or unable to integrate technology into their mutual workflow.
Some will even let go of a prospective client who's choice of software is incompatible with the software they use. As a bookkeeper, we interviewed notes: "That's one of the only areas I've drawn a hard line with prospective clients and said: if you're not on one of the Quickbooks Online products, I'm not the right guy for you".
The rise and rise of the trusted advisor
2020 proved to be the year when business clients needed the help and close support of their CPAs and bookkeepers the most. On one end of the spectrum, struggling clients in industries adversely affected by COVID needed guidance and advice on cash flow mitigation, credit applications, and business decisions.
On the other hand - businesses in certain industries, such as health care and e-commerce, got a significant boost and needed their CPAs to navigate their business strategies and plan their expedited financial growth.
The adoption of technological solutions made more time available for accountants to offer services that are more advisory in nature.
It looks like the trend of offering a more diverse set of services, along with a high-touch standard, is here to stay. Business owners have learned to expect more from their accountants than just "number crunching", and rely more and more on their advice.
*This blog post is intended for informational purposes only and is not intended as financial advice.
**Melio does not provide legal, tax or accounting advice, and you should consult with a professional advisor before making any financial decisions.