Accounting in 2024: The year of change management

In 2023, accounting firms in the United States navigated an unpredictable environment, marked by the explosion of generative AI tools, an increasing talent shortage and pressure to control costs amid stubborn inflation and rising interest rates. 

As 2024 approaches, accountants and tax professionals will face what we’re calling the year of change management: more change and adoption of technology that aids firms to drive more revenue and profitability.

In a recent survey of accounting professionals, Ignition found the top three challenges for firms today are, staff shortages (51%), inefficient and manual processes (43%) and too much client work (35%). To tackle these challenges, firm owners will need to face them head on by looking at more efficient ways to operate their firm and leverage technology so they can remain competitive and profitable.

Yet, the industry is still seeing a discrepancy between interest versus action. A recent study found 82% of accountants said they are intrigued or excited about AI, yet only 25% are actively investing in AI training for their teams. 

So what are the underlying themes behind this trend and how can accountants, bookkeepers and tax professionals set themselves up to tackle each portion efficiently and effectively? 

A culture of overworking and undervaluing time is entrenched in many accounting firms. Out-of-scope work costs US accounting and bookkeeping firms over $76,000 per year on average, according to Ignition’s State of Client Engagement report. 

Additionally, 90% of accounting professionals have experienced clients not being billed for out-of-scope work. With inflation and interest rates to remain high well into 2024, accounting firms can no longer afford to work for free.

Mounting cost pressures and work will mean accounting firms will need to reign in over-servicing clients and find a way to monetize scope creep. There is an opportunity to turn scope creep requests into revenue opportunities if clients' expectations are managed. 

When you flip scope creep on its head, it's generally a positive signal coming from the client. They're asking more from you because they like your work and trust your judgment. Now it's your job to cash in. 

Many accounting firms today struggle to accurately price their services without undercutting their value, as they use bespoke pricing or packages, which don't match the hours dedicated or client expectations. A more volatile economic climate means accountants need to keep their profit margins healthy and keep client expectations realistic.

According to the American Institute of Certified Public Accountants, the overall number of U.S. accounting graduates dropped 7.4% from 2021 to 2022. Fewer people are selecting accounting as their career for a multitude of reasons, including things like work-life balance. According to a 2023 Thomson Reuters survey, new accounting practitioners work an average of 46.1 hours per week, which can nearly double during busy season. 

As a result, firms will need to rethink the “churn and burn” mentality of the client work they take on and implement new guardrails for how they operate to create a more balanced workplace and attract new talent. 

Additionally, there has been a rising debate about whether increasing salaries is the answer to fixing the accountant shortage. While it may be a part of the solution, firms can also consider looking overseas to countries with lower labor costs to find qualified staff. Outsourcing and the use of contractors could accelerate in the next 12 months, as it’s a viable option for firms to save on salaries while ensuring the work is getting done.

For the past few years, accounting and tax professionals have slowly started to move from once-a-year tax advice to providing year-round advisory services. To continue to do this well amidst a staff shortage, accounting and tax professionals need to approach their roles differently. With the arrival of AI, accounting expertise is now table stakes; evolving into “technologists” will be essential. 

Within a recent Share File study, it was noted that “96% of respondents consider automation “important” to the accounting industry.” Devising and deploying a tech and AI strategy across the firm serves two functions: 

1. It enables you to see how well your firm is performing quickly and accurately, giving you insight into where your firm is growing and where you need to invest.
2. It automatically imports data across your ledger and apps, providing you with the accurate insights needed to develop a high-value advisory strategy for clients. 

Technology doesn’t impede or jeopardize an accountant’s role, it supercharges it and enables accountants and tax professionals to work faster, smarter and at a higher value than ever before. What’s more, work-life balance is restored and profits are improved. Win-win. 

In 2024, firms need to start investing in training to take advantage of these tools – and stay ahead of the curve – as well as redefining the roles they need to hire: no longer will firms only seek to hire accountants, but will seek to find IT/tech specialists to manage the firm's technology and teach others how to use it. 

If you're interested in how to make your firm more efficient and profitable in 2024, consider investing in technology to start automating repetitive processes. Platforms such as Ignition can automate several tasks in your client engagement process, while helping you price and package services confidently, and bill and get paid for out of scope work. Want to find out more? Watch an instant demo.