Research continues to show that compliance work is no longer valued as highly putting pressure on fees and practice profitability. Practices are looking to provide new services, such as advisory, to achieve new growth. At the same time, practices still must cope with new regulatory, accounting and reporting requirements, such as Making Tax Digital (MTD), driving the need to make the process more efficient with digitalisation.
Gartner defines digitalisation as using digital technologies to ‘change your business models and provide revenue growth opportunity.’ The move to digital goes beyond just using digital data and software. It is a chance to change your processes and an opportunity to create new services.
A reduction in growth from compliance work
According to survey research conducted by Wolters Kluwer in conjunction with Kelley Market Research, cloud technology is the key to reaching a firm’s full potential. Firms that reported growth of over 10% in revenue year on year have already adopted cloud-based solutions enabling them to move into new service areas. With compliance work contributing between 0 and 3% of revenue growth, advisory services are predicted to produce between 30 and 40% of revenue growth in the next few years.
This combination of events has left practices across Europe thinking about how they can protect their existing compliance revenues and grow their other service revenues to secure their future.
The evolution of the advisor
Self-proclaimed ‘Digital Darwinist and Evangelist’ founder of strategy consulting Neuland, Karl-Heinz Land says the theory of evolution hinges on the choice between ‘adapting or failing’. Put simply, it is a period of the survival of the fittest. Digitalisation has thrown accountants into that period of evolution.
This is not a new concept as the accounting profession have had to constantly react to changing legislation and client requirements, however there is a greater sense of urgency. The difference today is that more governments across Europe are driving new digital data policies which are speeding up this change but also creating opportunity for market disruption. In the UK, MTD has been a catalyst for this sense of urgency.
Remaining competitive in a disruptive market
New disruptive firms with younger accountants are entering the market, using automated tools to complete more work in less time, thereby reducing costs with the capacity to undercut traditional practices and remain profitable. Technology enabled firms have more time to build strategic relationships with clients based on up-to-date information while software automates the repetitive tasks.
Furthermore, clients’ needs are changing. They are looking for greater collaboration and more proactive services that they place higher value on rather than compliance tasks. Many younger, tech-enabled clients can already complete themselves using the software now available. Businesses across the board are trying to manage complex growth and regulation challenges and need advice to help them navigate these challenges.
Future-proofing your business with advisory services
With that in mind, why are so many practices across Europe turning to advisory services to future-proof their practices? Who better to advise a client on how to improve their profitability, forecast growth and build a strategic narrative than their most trusted advisor, their accountant. Advisors have the intuition, experience and resources to make a tangible difference to a client’s bottom line, and ultimately, to increase the value of their businesses.
Advisory services will play a critical part in the evolution of practices as they face the growth challenge head on. Practices who have already begun thinking about an advisory model have seen first-hand the financial and professional rewards for their practices and their clients, as well as improved client and employee retention.
How Wolters Kluwer can help you?
If your practice hasn’t yet successfully harnessed the power of digital technology, it is missing out on its ability to grow revenue by adding new services, its profitability and how successfully your practice can adapt to compliance changes. Digital technology has revolutionised the accounting profession and will continue to do so.
To keep up with the demand, integrating your accounting software into a single suite of best of breed products will drive the efficiency your growth is looking for. Automating daily operations and time-consuming tasks like data collection and workflow management enables your current staff to work more efficiently and unlock time for advisory services.
Download our whitepaper, Reinventing the tax and accounting profession, for more information on how your practice can make the transition to advisory services. You can also keep an eye on our blog and newsletters as we continue to bring you more resources and information about this evolution of the profession.