By David Osborne, Chief Executive Officer, Caseware International.
In today’s accounting landscape, accounting firms face myriad challenges. The regulatory environment is constantly evolving, the hybrid workplace model is becoming the norm and talent shortages remain. Additionally, time constraints and data security concerns add to the complexity of accounting processes, creating additional hurdles for firms to navigate.
Companies can overcome these hurdles by investing in the right resources and leveraging cutting-edge technology. We have identified five common accounting challenges and steps that can be taken to mitigate them.
1. Time constraints
One of the top issues shared by accountants is around time constraints. The lack of sufficient time to properly review financial reports and documents can lead to errors or missed deadlines. These stressors can have serious consequences, not only on the quality of work but also on a firm’s overall reputation and ability to retain and attract clients. When employees are rushed or forced to cut corners due to unrealistic deadlines, it increases the risk of security gaps, exposing the company to potential phishing scams, data theft and other breaches.
One solution is to invest in digital solutions designed to automate mundane and repetitive tasks, freeing up time for employees to focus on managing customer engagements. Today’s document management platforms maintain records in one centralized and easily accessible location, making it easy to carry data over from one year to the next, import and export information from other systems and accurately record changes – giving valuable time back to accountants.
2. Compliance
Staying up-to-date with the latest regulations is crucial in the accounting profession to ensure compliance with evolving requirements and to avoid costly penalties or legal issues. Compliance allows for more accurate financial statements and better decision-making, helping to prevent errors in financial reporting and enabling businesses to make informed decisions based on the latest accounting standards. When accountants demonstrate strong regulatory knowledge and competence, they maintain professional credibility.
Establishing a dedicated client advisory service (CAS) supported by compliance-facilitating technology is crucial to navigate today’s dynamic regulatory landscape and anticipate its impact on individual clients. This approach is widely endorsed by the industry, with three out of four respondents to Caseware’s 2024 State of Accounting Firms Trends Report indicating that they plan to grow their CAS offering. This can include anything from focused cash flow forecasting, budgeting and technology implementation to industry benchmarking, business valuations and tax planning. Intelligent accounting solutions also support compliance by automatically compiling data from current and historical engagements, enabling the extraction of insights at a more granular level.
3. Data security
Financial data often contains personal information making it susceptible to exploitation by malicious individuals for identity theft or fraud. Unauthorized access to this data can compromise the integrity of a company’s financial statements and expose clients to financial loss. It is a legal and ethical imperative for accountants to protect their client’s sensitive information, thereby building trust and sustaining strong client relationships.
To counter this challenge, select a secure and reliable cloud-based environment with advanced security features, such as encryption protocols and automated backups. Further enhance security by adhering to key practices such as enforcing complex passwords supported by a password manager, implementing multi-factor authentication, establishing comprehensive security policies, and restricting access to sensitive data on a need-to-know basis. Adhering to these key practices will significantly bolster your security posture.
4. Lack of resources
Attracting and retaining qualified accountants remains a significant concern for accounting firms, with 88% of respondents in Caseware’s 2024 State of Accounting Firms Trends Report reporting that hiring talent is challenging to some degree. The rapidly changing employment landscape has left firms understaffed at a time of increasing workloads. To address this, some companies are merging different segments of their accounting departments, such as accounts payable and receivable teams. While these measures may temporarily alleviate staffing issues, they can result in overwhelming workloads and stressful business environments.
Firms can optimize resources by offering tools that enhance team collaboration and provide clear visibility of project ownership. This allows leaders to redistribute workloads and responsibilities effectively to maintain project schedules. Additionally, it’s critical to demonstrate a commitment to innovation by investing in cutting-edge technology and staying ahead of emerging technology trends, such as AI, to help attract and retain talent.
5. Client communication
Effective communication with clients is vital during the engagement process. Clients expect efficiency, accuracy and compliance and accounting professionals must proactively manage their clients’ accounts with care and diligence amid an ever-changing landscape. For optimal performance, firms will want to ensure the timely delivery and receipt of accurate information. Traditional methods such as email and paper-based communication are becoming less effective in today’s fast-paced environment. Embracing modern communication techniques and technologies is essential for a new approach.
With 86% of employees citing poor communication as a leading cause of business failures, companies must prioritize the enhancement of their interactions with clients and internal teams. Cloud-based accounting software elevates client communication by simplifying access and enabling real-time updates. In addition, firms may consider implementing client portals to share progress, collect data and keep important client documentation in one secure place. Automated notifications and reminders, virtual meetings and interactive reporting also help keep lines of communication open.
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David Osborne is the Chief Executive Officer of Caseware International, the leading software-as-a-service (SaaS) provider to the auditing and accounting industry.
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Tags: Accounting, Small Business
