Time for an accountancy price rise?

Time for an accountancy price rise? Share

There’s a been a lot of talk recently about the competitiveness of the market when it comes to professional services, especially when loss-leading models make the headlines. And if clients’ main concerns boil down to price, how can we change the conversation to quality of service?

At Reed Business School we know just how hard accountants work to attain their qualifications, and the level of expertise they then have to demonstrate to work as a finance professional. In a balanced market, such skills should command a premium price, but in some quarters that bargaining power seems to have diminished.

Business, partner, or both?

First and foremost, accountancy firms are businesses, with a goal to make money. And while common parlance might be to work collaboratively with clients as a partnership, sight should not be lost of why we all chose this career in the first place!

However, some argue that there are differences between how large and small firms operate in servicing clients, which may explain varying levels of profitability – and service quality.

Big corporates naturally come with brand recognition and buying power, but start-ups are increasingly offering more work flexibility and the freedom to explore several different avenues within the business itself. For the younger generations who are now moving into the world of employment, it might not be surprising to know that there is an increasing surge of young workers applying for start-ups, rather than big corporations – which then has a knock-on effect on salaries and therefore profitability.

Either way, maintaining the hunger for business acumen is key to profitability.

Cost vs quality

Of course, it doesn’t take a genius to work out that if costs are lowered, quality is likely to be compromised too, with efficiencies being made wherever possible. There has been plenty of such controversy in the media in recent years, particularly surrounding the likes of audit.

Many of you are probably aware that companies often want a cheap, competitive audit, but the expense of a firm tendering at a low price means that they need to find efficiencies or put undue stress on their team—they can’t fully deliver it for that price.

The tipping point is coming, as people start to realise that it is unsustainable to work for so little, and firms agree that in order to improve their quality, they too need to up their prices. The laws of economics will inevitably arrive at that point where it does level out, and the pendulum is starting to swing in that direction.

The technology effect

In many ways, it’s a really exciting time to be working in accountancy – there’s a lot of change and disruption going on—and the technology players are trying to disrupt it further.

In recent years, there has been an influx of technology and software companies coming into the accountancy market, providing prospective clients, firms, and practices with ways to implement and safeguard their data as the world moves online.

This development has been seen as a gamification of the process, creating a complete shift in what accounting is – so can we keep up? Going forward, there will inevitably be a bit of an education process for the end users, or clients, as to what exactly technology can and can’t do, and the value an accountant can still bring. And inherent within that discussion will be how much an accountant should get paid for their work, which can’t be done by software – not to mention the costs of the software which should be passed onto the client.

Even for those in the industry who are resistant to the implementation of technology in every aspect of their day-to-day lives, it is becoming increasingly difficult to compete in the market without conceding to change.

As more people start using technology, there will be the expectation that accountants can leverage it: workflows, reporting applications, OCR scanning, integration from one application to another. It’s no longer just about the finance system – suddenly the required skillset of the accountant has expanded, resulting in a price premium for those that can do it all effectively.

Data: the next big movement in accountancy?

In addition to adapting to new technology, data management is fast becoming an in-demand skillset. And many firms are lagging behind.

There’s evidence to suggest data will be a huge player in the coming years – not even going as far as the bounds of AI or blockchain, but simply doing data properly. Most accountants right now don’t have the skill set to do that.

Firms therefore need to be mindful that other big businesses come along – that aren’t necessarily in accountancy – that could take such business from them, and it becomes something that isn’t part of the accountancy service.

If you’re looking to develop your career as an accountant, getting your head around data management and how this fits into your current role might be a good place to start. But most importantly – know your worth!

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