The accounting industry in North America has long been recognized for its vital role in ensuring financial compliance, transparency, and accurate reporting. However, in recent years, the sector has experienced a capacity crunch, primarily driven by increasing demand, complex regulatory requirements, and a shortage of skilled professionals.
This blog will delve into the challenges posed by the capacity crunch and explore viable solutions to the Google search phrase: “How to create capacity in my accounting firm”. Here’s how firms can bridge the gap and maintain the industry’s growth and efficiency.
Understanding the Capacity Crunch
What Accounting Firms Can Do to Create Capacity
The capacity crunch in the accounting industry is a multifaceted issue, influenced by several key factors:
Rising demand requiring more services
As Jennifer Wilson (Convergence Coaching) notes in the 2023 Rosenberg Survey, “Client demand for services has never been greater and firms have many opportunities to sell new services to both new and existing clients.” Jennifer further states that “The high client demand has contributed to overselling in most firms, creating a feeling of overwhelm – even burnout for all staff levels including partners.”
Regulatory complexity putting pressure on already overextended staff
Government bodies continuously revise and add new financial regulations, making compliance a challenging task for accounting firms. This increases the workload and creates a strain on existing resources.
A skills shortage that isn’t budging
According to Matt Rampe (The Rosenberg Associates), “Staffing was a red-hot challenge” over the past year. What’s worse Matt says, is that the fallout of this shortage leads to:
Slowed revenue growth as firms slow or halt the acquisition of new clients.
The retirement of baby boomers and a lack of qualified successors posing difficulties in transitioning clients and buying out partners while maintaining firm sustainability.
Escalating staff costs, coupled with recruiter fees, exerting pressure on profitability.
Learn more about Global Staffing Services here.
As the AICPA’s 2023 Trends report points out, accounting graduate numbers are in sharp decline, making the talent pipeline ever more problematic and further reinforcing the skills shortage.
Accounting firms can create capacity through various strategies, both with their current teams and by looking elsewhere for skills. Here are some approaches for each:
Maximize current resources
Process Automation: Invest in software for task automation, freeing up staff for higher-value work.
Workflow Optimization: Identify and eliminate inefficiencies in internal communications, processes and workloads.
Training and Skill Development: Upskill employees to take on more complex tasks.
Talent management: Encompassing training and development to allocate resources effectively, this also includes succession planning and engagement strategies to maintain a competitive edge and minimize talent gaps.
Client Segmentation: Prioritize profitable clients and reallocate resources.
Extend capacity beyond current capabilities
Hiring Specialized Talent: Recruit experts in growth areas – on or offshore as skills availability allows.
Strategic Alliances: Collaborate with other firms, freelancers, or consultants for specific projects.
Technology Adoption: Invest in advanced tools and analytics.
Mergers and Acquisitions: Consider merging with or acquiring complementary firms.
Offshoring: Access specialized skills to free up your in-house team for more advisory and strategic work.
As Matt Rampe (The Rosenberg Associates) notes, firms who navigate this crisis well, found success in “leveraging more technology, outsourcing, and hiring non-accountants to help boost capacity.”
Client Advisory Services (CAS) accounting: As the U.S. faces a CPA shortage this is leading firms to adopt CAS practices that don’t exclusively require CPAs, making them accessible. CAS offers comprehensive service suites that boost revenue, ease hiring, and enhance client relationships.
