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The past ten years have been an electric time to be in bookkeeping.
The cloud app universe has continued to rapidly expand, dozens of “AI bookkeeping” firms have come and gone, and Intuit started competing with its bookkeeping partners (because of course they did). Even with all these changes, a lot of our current reality feels like the logical outcome of trends that were already visible ten years ago.
The team at Scrutinize is always trying to figure out what's around the next bend, and we thought it might be helpful to share some of our thoughts on how firms can take advantage of these trends.
Here are our tops three predictions for what the next ten years hold for the the bookkeeping industry:
An increasing majority of the industry has now adopted some form of fixed-fee pricing, which is great for aligning incentives between customers and firms. Customers get consistency in their monthly bill and bookkeepers can increase the margin on their engagements by offloading previously manual tasks onto various apps.
Most firms who offer this type of pricing have broken up their offerings into different packages with varying levels of service in each. This presents opportunities for bookkeeping firms, but also introduces two kinds of risk.
The first risk is that firms won’t be able to profitably deliver the service for the price they charge. If the fixed-fee price is wrong, there are only two options - either take the hit to margin or go back to the client and tell them the initial price was too low. Neither of those scenarios are sustainable long term. The good news is this risk can be reduced by improving the scoping process for client engagements and building the assembly line processes required to consistently provide each of the services.
The second risk is that increasingly standardized offerings across firms will make it harder for clients to compare firms on anything but price. This could turn bookkeeping services into a commodity and drive prices down in a race to the bottom. To avoid this, bookkeeping firms will need to find ways of clearly communicating the benefits of working with their firm beyond price. Some opportunities for differentiation are displaying quality control measures, industry certifications, or delivering an exceptional client experience.
As highly repetitive tasks are replaced by software, the role of bookkeepers will continue to transform. Instead of being buried under a mountain of transactions, bookkeepers will spend more time architecting the right combination of software and processes to fulfill clients' needs.
This change creates a few interesting dynamics. The first is that the number of transactions each bookkeeper oversees will grow exponentially. Instead of manually coding each transaction, bookkeepers will only have to touch the ones the software didn't understand how to handle or coded incorrectly. Firms that choose the right technology for their clients will be able to handle more work per bookkeeper, and will capture more value from their engagements.
Secondly, one of the hardest parts about scaling a firm is maintaining a delightful customer experience. Gaining efficiency on transactional work means there's more time to invest in developing a great experience for clients who need to interact with the team. This is partly done through technology, but also requires documenting and communicating the standards to the client-facing team members at the firm.
Most clients will never really understand the difference in the titles of the accounting service providers they work with, and that probably doesn’t actually matter. The most important part is educating them about the actual services they need, and whether your firm can fill all of those holes for them.
The distinction between the titles of the people delivering those services behind the scenes at the firm are of little importance to the value created for the customer. For example, most of them don’t know that non-CPAs can still do tax work, or that a fractional-CFO doesn’t usually also handle the bookkeeping.
Firms that succeed long-term will focus on building a team with the right combination of skillsets around the customer so they feel like they have a central place they can come to get their questions answered.
All in all, we believe the next decade will be even more exciting than the last. Great technology will continue to be a major driving force, and selecting the right combination of technology will be critical to how firms navigate the changing tides. At the end of the day, the future is what we all collectively decide to make it, so let’s make it one we all want to live in.
If you’re interested in discussing how to use technology to improve scoping and quality control at your firm, or just want to discuss your thoughts on the future of the industry, schedule a free consultation today.