As a result of COVID-19, American businesses have been blindsided and only had time to pick up the pieces. Thankfully, the government reacted quickly, offering bailouts, loans, and stimulus – what could end up being a lifeboat from a sinking ship for many businesses and their employees.
But what does this have to do with CPAs? Aside from the fact that many CPAs are also small business owners, this pandemic has been a total interruption in their usual, yearly workflow.
When the pandemic and its economic effects began to take hold, CPAs were in their busiest, and most profitable, time of year.
“In terms of hours, CPAs do over 1/3 of their yearly work in the three months of ‘busy season’” said Joe Abesamis, Tax Manager at BaCo Group in Dallas, TX. “Those months are February, March and April.”
In terms of tax clients served, between February 15 and April 15, essentially 100% of the tax preparation clients he works on will either be filed, or an estimate will be made for an extension.
Most CPAs run their practice on an hourly engagement with their clients. When a client signs on for their service, they get billed AFTER all the work is done. COVID-19 and the recession it caused presented several problems for CPAs.
- Many of their clients would need to reduce hours on tax and accounting work. When clients cut hours, CPAs must cut costs.
- The pandemic meant everyone moved to working from home. Gathering data for clients became more difficult than ever.
- The Tax Deadline moved to July 15, meaning that many clients who had not sent in their data will simply wait. CPAs will begin to get more books in May and June, and still have just as busy of a busy season, only in the summer instead of the spring.
Of course, these problems were presented to every profession and every industry across America in slightly different ways. What is unique for CPAs, though, is that the pandemic has exposed some long-standing problems within the profession.
Many businesses are learning lessons that could forever alter how they do their job – for the better. For years, studies have shown that working from home routinely leads to more productivity and efficiency. There are pains to this as well, but many owners are beginning to adopt work from home as a permanent option – giving employees the choice to do so.
Business are also learning where to invest their time and resources more effectively. As a tech firm working with CPAs closely, we have had a unique opportunity to discover some of the things that CPA firms should be learning:
1. CPAs should switch to Value Pricing vs. Hourly Billing
Value pricing focuses on the service provided rather than the time it takes to provide it. When a firm focuses on the hour, the more hours they work the more money the make. It flies in the face of being efficient because if a job took less hours, then you lose money.
Switching to Value Pricing allows a firm to send one bill, at the beginning of their year that can be paid out at 12 consistent payments. Here is a link to a more in-depth study from Ron Baker on Value Pricing, how it works, and its overall benefits.
2. CPAs Need to Automate
Technology has allowed many industries to become more automated, but it seems like these things have passed the CPA industry by. The reality is this is not the case. There are many platforms out there that help CPAs become more efficient.
Moving clients to an online platform, such as QuickBooks online, allows CPAs to more quickly access or gather their data. BQE’s Core Accounting Platform is a fantastic product, NetSuite and Xero are also strong and widely used options. If you are an accounting firm looking to automate your practice, the task can seem daunting. The first step? Ensure your clients’ data is online. Need help? Companies like ours offer services that can help your clients switch so you do not have to. Many of these cloud accounting solutions have advisors to help simplify the process as well.
If you have clients online, then it is time to automate your workflow. Automating a practice not only helps CPA firms be more efficient, but it helps their clients, too. Recently, two interesting articles in CalCPA and Sage Accounting were posted about what CPA firms would look like in 2030. In short, it is highly automated firms that provide high value services to their clients. Covid-19 revealed the need to do that now, and many do not realize that solutions like cloud accounting, and technologies like Baco Tech, help them accomplish that.
3. It’s Time to Change
CPAs and their firms are known to be change resistant. It makes sense – their entire workflow is based on “what did we do last year.” Change requires that one looks forward. Working from old data based on last year's work does not lead to the most valuable service CPAs can provide. It leads to repetitive form filling, over long hours disproportionately spread throughout the year, and CPAs’ personal lives getting caught in the crossfire.
It is ok to be broken, what is not ok is to stay broken. Broken things require fixing, and Covid-19 has revealed that it is time to fix this.
Author Bio: Will Baker is the Marketing and Chief Experience Director of Ford Squared Technologies, LLC, based in Dallas, and the creators of Baco Tech.