Like many businesses across industries, accounting firms are facing significant obstacles in their pursuits to recruit skilled workers — but, unlike in other industries, the issue is unlikely to be fixed through benefits, perks and boosted compensation. While other sectors are struggling to convince skilled candidates to join their ranks, accounting firms are struggling to find qualified candidates in the first place.
The U.S. has, for some time now, been facing a major shortage of CPAs, with the AICPA reporting a 4% drop in the number of students majoring in accounting as well as a steep decline in the number of graduates taking the CPA exam (from 50,000 in 2010 to 32,000 in 2021). Furthermore, accountants are leaving the field at unprecedented rates, led by baby boomers hitting retirement age. This mass exodus is only further widening the gap between the number of roles sitting unfilled and the candidates available to fill them.
A new way forward
Despite the higher premiums they can charge when operating at capacity, the lack of qualified candidates is spelling trouble for firms who are running on skeleton crews. It’s unsustainable, and it’s not something that can be remedied overnight. The fact is that engaging in a campaign to encourage students to join the field is a long-term solution. Even if it’s successful, accounting firms won’t be able to reap the reward for years.
As a result, these firms may have to re-evaluate their business models to protect their bottom lines — and many have started building out robust client advisory services programs to reinvigorate their operations. With in-house accounting departments facing a similar set of obstacles as independent firms, organizations that once handled their own accounting needs are now looking to third parties to supplement various business processes.
Independent firms can capitalize on this growing need by building out more comprehensive service suites, which can boost revenue, ease hiring burdens, and strengthen bonds with clients to foster long-term success. Of particular benefit to accounting firms in today’s market, CAS practices do not need to be staffed by CPAs exclusively.
CAS practices also allow firms to become integral to their clients’ daily operations, shifting their status from “vendor” to “strategic partner.” The most mature CAS practices even feature “third-party CFO” arrangements, wherein the firm offers high-level guidance, modeling and analyses to executives to help drive business decisions.
Building CAS for success
Getting a CAS practice off the ground takes time and significant resources; it’s not something that can be built overnight. However, the commitment it takes to grow this business area is well worth it. To get a new CAS practice up and running, firms must consider:
- Where they will begin: It seems obvious, but all programs must start at the beginning. In this case, that means picking one or two services that make sense with your current model to build credibility and grow your client list. Opting to start with a couple of more basic business process outsourcing services may be a natural place for many firms. Though these tasks are often lower margin compared to high-level consulting, automated HR tech tools can take care of many of them with little ongoing work for team members. That means firms can get started without going all-in on new hires.
- Who they need to hire: As noted above, shifting to a CAS model can alleviate hiring struggles for firms that are already at capacity. However, that doesn’t mean firms will be able to start hiring — and they’ll likely be looking for a different type of candidate than ever before. Success in this regard will mean opening new channels and identifying labor pools the firm may not have used before. Managers will need to research compensation and benefits standards from these industries to ensure their offers align with those offered in the organizations these workers are used to.
- Who they want to work with. Picking the right clients is just as important as picking the right set of starting services. Paying attention to the needs they reveal in their communications with the firm can help highlight which existing clients could benefit from outsourcing some of the processes the team identifies as feasible to a third party. Picking a niche for services can also be beneficial, as different industries have different regulations, intricacies and needs.
- How they will grow: The final step is to develop a roadmap for what management would like the full program to look like and how long they think it will take to get there. When doing this, be realistic about the firm’s staffing, capacity for growth and ability to establish its services in the market.
The tools of the trade
Once the firm has established all of the above, it’s critical to identify the technology and tools they need to support the new practice and services. Today’s B2B and HR tech landscape is filled with automated options that can help simplify the task of managing services. These tools will allow teams to streamline operations, offloading the most repetitive management tasks — like payroll administration, for example — to scalable platforms that ensure accuracy and provide advanced analytics, insights and benchmarking data. This frees up employees to focus more of their energy on analysis and strategy, upping the overall value of their services to clients and cementing their team as a critical driver of financial success.
Of course, some firms will have existing HR management tools at their disposal as most organizations already engage with at least one of these tools, and others may need to start from the ground up. Either way, choosing an option that can scale with all the services the team plans to offer as the business grows — and do it whether the team has one client of one hundred — will be critical to sustainable operations in such a competitive market.