{"id":40426,"date":"2020-08-20T08:48:51","date_gmt":"2020-08-20T12:48:51","guid":{"rendered":"https:\/\/hingemarketing.com\/?p=40426"},"modified":"2023-01-03T14:42:45","modified_gmt":"2023-01-03T19:42:45","slug":"accounting-firms-should-change-their-business-models-now-six-reasons-why","status":"publish","type":"post","link":"https:\/\/hingemarketing.com\/blog\/story\/accounting-firms-should-change-their-business-models-now-six-reasons-why","title":{"rendered":"Accounting Firms Should Change Their Business Models Now \u2013 Six Reasons Why"},"content":{"rendered":"

This year will certainly be remembered in history as \u201cThe Year of Adaptation.\u201d There has never been so much purposeful change and adjustment. But that is not one of the reasons to seriously consider adjusting your accounting firm\u2019s business model.<\/p>\n

There are six very compelling reasons to make business model changes that come from a new, ground-breaking research study produced by CPA.com<\/a>, Bill.com<\/a>, and The Hinge Research Institute<\/a> entitled, \u201cWhere Opportunity Meets Value: Business Model Trends for Accounting Advisory Services.<\/p>\n

The study surveyed more than 650 accountants and business professionals who purchase accounting firm services (buyers)\u2014<\/em>with special attention paid to discrepancies in value perceptions between firms and buyers. It is in those discrepancies and perceptions where we believe accounting firms have opportunities to leap ahead of the competition if they act now<\/em>.<\/p>\n

Here are six reasons to adjust your business model now based on this new research.<\/h2>\n

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Reason #1. Buyers are open to making long-term commitments to non-hourly billing structures.<\/strong><\/h3>\n

In the survey, buyers displayed a high level of acceptance for non-hourly billing arrangements. Sixty-three percent of buyers reported that they pay for accounting services through fixed monthly fees or on a per-project basis. In comparison, only 28% of buyers said their accounting firm charges then by the hour\u2014with 32% of accounting firm participants reporting the same.<\/p>\n

If accounting firms want to change their billing structure with a client\u2014for example, from an hourly structure to a fixed-fee arrangement\u2014there is a window of time in which success appears to be far more likely. According to the data, if accounting firms switch their billing structure before the five-year mark, buyers are more than twice as likely to comply with the new arrangement than buyers who have been with an accounting firm for five years or more.<\/p>\n

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Download the \u201cWhere Opportunity Meets Value: Business Model Trends for Accounting Advisory Services\u201d research study<\/a><\/p>\n<\/div>\n\"\"\n

Reason #2. Buyers are willing to pay more to address their most significant accounting challenges.<\/strong><\/h3>\n

Accounting firms looking to expand their client bases may find ample opportunities when targeting small- and mid-sized businesses. When asked which additional services buyers wanted from accounting firms\u2014and how much they expected to pay for them, small business clients presented a 31% growth opportunity on average. Mid-sized business clients offered an 11% growth opportunity.<\/p>\n

How can accounting firms convert this willingness to pay for additional services into actual revenue? According to the study, the answer lies in addressing buyers\u2019 biggest accounting challenges and demonstrating they can solve them. When asked to identify what their biggest accounting challenges were, 19% of all buyer participants cited \u201cplanning for growth and expansion\u201d and \u201cgetting expert financial insights.\u201d Eighteen percent pointed to problems with cash flow and minimizing overhead costs. An additional 17% said staying in compliance and lacking time to focus on accounting and financial matters. See the full list of buyer accounting-related challenges below.<\/p>\n\"\"\n

Reason #3. Strategic advisory services present great revenue opportunities.<\/strong><\/h3>\n

Today, strategic advisory services present one of the most important growth opportunities\u2014survey results suggest that accounting firms may be able to increase monthly client revenues by up to 50%<\/em> by offering these services. According to the survey, buyers who did not currently purchase advisory services pay their accountants on average $1,108 a month. In contrast, buyers who do purchase advisory services spend $1,585 a month on average. That represents a 43% increase<\/em> for accountants who are providing strategic advisory services for their clients.<\/p>\n

How much more are clients willing to pay for strategic advisory services? The buyer participants not currently purchasing advisory services indicated that they would expect to pay 50% more for an accounting package that includes both strategic advisory and consulting services\u2014and they are willing to pay more each month for packaged services.<\/p>\n

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Reason 4. Buyers have clear priorities among services offerings.<\/strong><\/h3>\n

The services ranked as highly valued by buyers include: accounts payable\/bill pay (provided by roughly one-third of accounting firm participants), data analytics and technology services (14% for each), and forensic accounting (currently offered by only 8% of accounting firm participants). Focusing in on one or more of these services creates a valuable opportunity for your firm to grow.<\/p>\n

Each of these services can help businesses overcome what they identify as their primary challenges. For example, buyers with little time benefit from data analytics and technology services\u2014which automate manual processes while providing financial insight. Similarly, outsourcing accounts payable (AP) to accounting firms\u2014and automating that process\u2014drastically cuts the time required for these processes and helps manage cash flow.<\/p>\n

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Download the \u201cWhere Opportunity Meets Value: Business Model Trends for Accounting Advisory Services\u201d research study<\/a><\/p>\n<\/div>\n\"\"\n

Reason 5. Value pricing introduces benefits beyond the bottom line.<\/strong><\/h3>\n

Value pricing is not only a way to improve a firm\u2019s bottom line\u2014it can be a crucial tool in enhancing customer service and improving client satisfaction. It helps to understand where clients say their firms are coming up short. According to the survey, here are the top three things buyers would change about their firms:<\/p>\n