Top 5 Challenges Accounting Firms Face in 2024 – Blog Series Round Up

In the exclusive blog series by Ace Cloud – “Top Challenges Accounting Firms Face in 2024”- we are uncovering the challenges accounting firms face today and the actionable solutions to overcome them. Understanding these challenges is crucial for any firm looking to thrive in today’s competitive market.

In this round-up post, we will dive into these pressing issues and see how they can help brighten the future of accounting.

Accounting Industry – A Changing Landscape

The accounting industry in the United States is very profitable and essential. It involves analyzing numbers to understand the language of business and uncover the keys to financial growth. The revenue of the accounting services industry in the US has grown exponentially since 2013 and reached $147.5 billion in 2023.

Despite the overwhelming statistics, a slowing global economy will challenge the accounting industry in upcoming years. If firms fail to adapt to changing market conditions, they may face a downfall in the market.

• A decelerating worldwide economy and a divergent economic landscape will challenge the finance and accounting industry in 2024. Banks’ ability to generate income and manage costs will be tested in new ways. (Statista)
• The exponential pace of new technologies and the confluence of multiple trends are influencing how finance operates and serves customer needs. The effect of generative AI, industry convergence, open data, embedded finance, decarbonization, digital identity, digitization of money, and fraud will grow in 2024. (Deloitte)

Challenge 1: Burnout – Loss of Productive Hours

Feeling burnout goes beyond physical exhaustion and stress. It’s a sign of emotional and mental tiredness from prolonged stress and heavy workloads. But with the right support or plan, we can overcome it.

Moreover, burnout can make you feel detached and demotivated to do work, resulting in decreased employee productivity and satisfaction.

“Our team has been at capacity, and there are no longer ‘slow’ periods,” said SVA CPAs’ Weyenberg.

According to the University of Georgia and FloQast’s recent study, almost all accountants suffer from burnout. The study surveyed 1,000+ U.S. adults working in finance and accounting, revealing that 99% of respondents sometimes experience fatigue, inefficiency, and detachment from their jobs. The main factors leading to burnout are –

• Work overload caused by accountant shortage
• Lack of control over work
• A toxic work environment

Image Source: vintti.com

Moreover, the study emphasizes that less experienced and younger accountants are more susceptible to burnout.

To gain in-depth knowledge of burnout-related challenges that accounting firms face and their potential solutions, we have covered it in depth in our first article of the blog series – “Why Burnout Impacts Accounting Firms.”

Challenge 2: Technology Adoption

83% of accountants believe that keeping up with the pace of technology adoption is necessary to gain a competitive edge in the market. (Sage’s survey)

Over the past few years, new technology and trends have profoundly transformed accounting work. From tax workflow automation and strategic tax planning to advanced data analytics, accountants who embrace these technological advancements are more likely to thrive in the long term.

“Staying up to date on technology changes and disruptors impacting our industry is a challenge,” said Mary Elliott, CEO of Alabama-based Warren Averett.

To explore the challenges accountants face while adopting new technology trends and how to overcome them, check out the second blog of the blog series – “How Accountants Can Keep up With Tech and Trends.“

Challenge 3: The Growing Cybersecurity Challenge

A survey found that 78% of accounting professionals lack a comprehensive cybersecurity plan, revealing a significant gap in the industry’s preparedness against cyber threats. This highlights the urgent need for improved awareness and more robust cybersecurity measures to protect sensitive financial data.

IT security is one of the most crucial issues in today’s digital world, especially in accounting. According to CrowdStrike (a leading cyber security company based in the US), accounting firms are most prone to challenges like cyberattacks as they hold large amounts of sensitive financial and personal information about clients.

“A big challenge will be staying aware of and defending against the threat of cyber incidents,” warned Avani Desai, CEO of Florida’s Schellman.

To gain crucial insights into the cybersecurity challenges accounting firms encounter and explore detailed strategies for mitigating these threats, read the third article of the blog series – “How Safe is IT?“.

Challenge 4: Moving to Advisory Roles

Thomson Reuters Institute survey found that 95% of tax professionals believe their clients want business advisory services.

Advisory services are increasingly becoming a necessary component of accounting firms’ offerings. However, this conversion brings a new set of challenges.

Dealing with advisory in accounting requires diverse skills, including business acumen, strategic thinking, and the ability to offer insightful, forward-looking advice. A study found that firms that successfully integrate advisory services significantly increase client satisfaction and retention. Yet, many firms are not fully prepared to make this shift, lacking the necessary training and resources.

“The public accounting profession has traditionally been a compliance-oriented business, one that is now facing the ongoing threat of continuing commoditization by technology,” explained Seth Siegel, CEO of Grant Thornton.

To gain crucial insights into the challenges of transitioning to advisory services and explore detailed strategies for overcoming these obstacles, read the fourth article in the blog series – “Moving to Advisory – What, Why, and How?“.

Challenge 5: Pressure Building

There are around 1000 mid-sized CPA firms in the US with revenue of over $10 million to $100 million. Firms like this are under pressure to increase revenue, and this is because:

• Clients are beginning to give more work.
• Accountants are under great pressure to expand their services beyond tax and audit work, offering bookkeeping and technology consulting.
• Firms have outgrown the outsourcing phase.

Moreover, several factors contribute to this pressure. Clients now expect wider and more immediate actions, leading to pushing firms to deliver higher-quality work in shorter timeframes. Accountants are often pressured to meet tight deadlines, produce accurate reports, and provide high-quality advice to clients. This pressure can accumulate feelings of unfair treatment, stress, and anxiety.

“One of the most critical issues facing firms of our size is pricing pressure,” said Schellman’s Desai.

To gain crucial insights into the mounting pressure on accounting firms and explore detailed strategies for alleviating this stress, read the last article of the blog series – “Pressure Building – How Accounting Firms Can Solve This Challenge.“

Addressing all these issues is crucial for accounting firms to thrive in a competitive market. By investing in solutions and adapting to change, firms can navigate these obstacles and secure a successful future.

What are your thoughts on this? What other challenges do you see that will impact accounting firms in 2024 and beyond? Please share in the comments.