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What services will CPAs offer in the next 5 years?

November 2nd, 2008

I was recently asked to comment on what services are most likely to be offered by CPAs over the next 5 years which is an interesting question to contemplate.  Here are my thoughts, what are yours?

I suspect all the services that are now offered by CPAs will continue to be sold during the next 5 years but their relative importance will change.  For example, we’ll likely see an increase in the importance of bankruptcy & insolvency, litigation support, business valuation and M&A, forensics/fraud.  On the other hand tax compliance and consulting will not likely to be as important as it has been in the past 10 years.

I think one of the very best opportunities for CPA firms of all sizes will be in the area of outsourced CFO services built on recession management consulting.  The boom times we have experienced for most of the last 10 years have disguised the brutal reality of under-performance that you can’t hide from in a recession.  A recession is a time when businesses of all shapes and sizes get sorted out and it’s a time when savvy business managers understand the need to seek (and follow) competent advice.  For this reason the next 5 years is a time when CPAs will be able to create and capture significant value as SME advisors, coaches and mentors.

Although every business needs the services of a CFO, SME’s don’t need that function 5 days a week and in good times many of them get by without it, but not so in bad times.  This is when an external CPA should step up as an outsourced CFO. Clients need advice and assistance with assessing the vulnerability of their business and help to stabilize it.  From that position it’s able to capitalize on its strengths to capture market share and profit.  These three stages form the framework for a recession consulting engagement.

Such a service will involve identifying the businesses’ underlying strengths and weaknesses, product/service line profitability analysis, customer profitability analysis, pricing strategies and revenue management, refining and articulating the business value proposition, developing a robust customer service strategy as the major source of differentiation,  cost management, cash flow forecasting and disciplined working capital management.  The quality and timeliness of the financial and non-financial KPIs is also a matter of great importance in tough times especially if the business is operating near to break-even–this is not a time when near enough is good enough.

One of the most valuable services external CPAs will provide in the next 5 years will be to give their clients emotional support when managing a business under stress e.g. giving them confidence that margin is more important than market share in tough times especially when everyone else seems to be hell bent on discounting; this logically leads to the need to improve the degree of financial literacy amongst their business clients and hence an educational role for the CPA.  This is a time when all businesses (including CPA firms themselves) need to get back to basics by focusing on (and only on) what they can do really well, pricing to reflect value and acting decisively and confidently in accordance with a very clearly defined and understood business strategy.

SME’s did not cause the global economic crisis but they’re the key to turning the world economy around.  They are major source of employment, they are a major source of innovation and they can act quickly in response to market messages.  However, the people who run them are not always sound financial managers.  Their “accounting department” is usually a bookkeeper or low-level controller which is why they need the assistance of their CPA for higher level CFO-type advice.

In my view, CPA firms that build a strong service offering around “managing your business in tough times” will not only provide an invaluable service to their clients, their community and the country.  They’ll also discover they can capture a fair, but significant proportion, of the value created and will have secured clients for life.  The next 5 years will indeed provide great opportunities for CPAs who see and seize them.

I’d love to hear your thoughts.

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