Workplace shifts and baby boomer retirement have led to many hand-wringing speculations that accounting is a dying profession. In reality, nothing could be further from the truth. Accounting Today recently released its 2023 review of the top 100 accounting firms, and the report describes the results as “astonishingly good.”
Here are just a few of the reasons for optimism, as well as some insight into the current strategies of today’s top firms.
Strong Industry Growth
The top 100 accounting firms have seen the strongest revenue growth in nearly 25 years. On average, the firms in the study improved their revenue by 18.55%, up from 4%–5% in the two previous years and the strongest growth since 1998.
More than a quarter (27%) of accounting firms reported growth exceeding 20%, showing strong growth even as corporate America continues to emerge from the pandemic.
These trends are visible across all 10 geographic regions, though the highest revenue comes from the mid-Atlantic region ($4.63 million), followed by the Great Lakes ($4.09 million) and West ($3.72 million).
What’s the reason for this growth? Mergers and acquisitions (M&A) dominated the landscape, with top firms entering into private equity deals that let them tap into a larger body of corporate funds. But top performers are also evolving their strategies on several levels.
In addition to traditional strategies such as geographic expansion and cross-selling, firms are focusing on new approaches that include the following:
Advisory Services (MAS)
A growing number of firms are venturing into “management advisory services” (MAS), which bring executive-level consulting services to B2B clients.
Dave Hinnenkamp, CEO of BerganKDV, says his organization plans “to work with clients to ensure their organization is as ‘healthy’ as possible, meaning that financials are sound and that current strategies are serving the client’s needs and future plans.”
Advisory services are often paired with specialty services, such as wealth management or ESG criteria. The latter have proved invaluable for helping companies adapt to evolving regulatory concerns and maintain a focus on sustainability. In all, 85 firms responded to the 2023 study, with top specialties including attest, CAS, and IT/data security.
But accounting firms are also evolving their services to focus on niche industries. For example, Florida-based Schellman is expanding privacy audit practices to include solutions specific to industries such as finance and healthcare. Others are providing tax solutions that adapt to the global marketplace.
Recruiting, Retention, and Development
Top firms are keenly aware of the unprecedented labor shortage facing the accounting industry. But they’re also adapting to these challenges by strategizing ways to attract and retain top talent.
Ernst & Young, for instance, has invested $2 billion in its people, including compensation, benefits, and employee incentive programs. This is part of a larger trend, with other firms focusing on their workers through:
- Increased compensation
- Frequent bonuses
- Better work-life balance
- Evolving benefits packages
Moreover, as firms pivot to niche specialties and advisory work, they’re continually investing in their workers to ensure that they have the professional skills and industry knowledge they need.
Industry shifts are also causing firms to rethink the way their workforce fundamentally operates.
Per Jacqueline Wiggins, principal and chief strategy officer at Baker Tilly, “A broad workforce strategy is gaining traction and includes outsourced, contingent, offshore and insourced resources to lift our talent, support our teams, and maximize client value.”
Innovation Through Technology
Technology continues to shape the industry in countless ways. Automation has been a particular focus, streamlining firms’ core processes to save time and money and reduce the workload on financial professionals.
But companies are also leveraging technology to deliver a better client experience. Technology can be used to assist the onboarding process, establish acceptance criteria, and maintain the client roster. The right tools can also help create a client pipeline.
Christopher Allegretti of Barth & King says, “Industry and service line professionals will work to move leads through our sales funnel and ultimately assist with bringing both new clients and additional services to existing clients.”
Meanwhile, customer relationship management (CRM) platforms make it easier for firms to coordinate with clients, who benefit from rapid communication and total transparency of their financial processes.
The Future of Accounting
The future of accounting belongs to those who innovate.
According to Heather Perry, managing member of Dauby O’Connor and Zeleski, artificial intelligence and automation represent the “biggest opportunity” for today’s firms. Allen Carroll, CEO of Wilkins Miller, says the future lies in the talents of “a young, entrepreneurial staff.”
Both sentiments seem to be at the heart of the current industry momentum. The present growth and development rely heavily on technology, but they likewise depend on human ingenuity and commitment.
The future of accounting may look very different from the past, but as of 2023, the future looks brighter than ever.
Neil Brown is Executive Director of the Controllers Council, author and a professional association manager. Neil is CEO of the Chief Executives Council, COO of the Operations Council, VP Partnerships for IT Executives Council, and Chief Marketing Officer of Modern Marketing Partners. Neil started his career as a Brand Manager, then promoted to CMO. Brown has provided marketing services to leading Fortune 500 and start-ups, along with board and volunteer roles with non-profits. Neil is a frequent speaker, author and contributor to Advertising Age, Marketing News, Adweek magazine and many others. He is author of two books including “Breakthrough Branding: Brand Naming Tips & Trade Secrets”, and “Tools of the Trade: Modern Marketing for Construction Brands”. Brown earned an MBA from Northern Illinois University, and a BS-Marketing Cum Laude from Southern Illinois University.