Innovation in accounting firms has been the subject of much interest in the past few years. With the advent of technologies such as big data and machine learning, innovation in accounting and finance followed suit, with firms developing infrastructures to adopt new technologies. For instance, some banks and accounting firms have been preparing for and implementing robotic process automation.
Peter Thiel, a venture capitalist, wrote in his book Zero to One that “a company’s most important strength is new thinking.” In a sense, innovation refers to the need to find new ways to reimagine your firm or company, as well as your products or services. In times of great disruption such as the pandemic we’re in now, innovation can spell the difference between a firm’s success and failure.
What is Innovation?
Is innovation just another buzzword among businesses and firms? If it is something more, why then do we need to develop innovative ideas for accountants? How do we foster innovation in accounting firms?
Before we discuss these points, a definition of terms is in order. Briefly, innovation refers to the process by which a novel, creative idea is implemented to develop a good or service that creates value for one’s customers or clients.
Why is this important? The accounting industry is not as it was 20 years ago: clients now expect more from their accountants. With the growing popularity of DIY accounting software such as QuickBooks, there are more opportunities for accountants to connect to their clients on a whole new level. More than bean counters, accounting professionals can, with the help of sophisticated accounting tools, act as consultants who can provide valuable business insights to their clients.
What Drives Innovation in Accounting Firms?
In the finance and accounting industry, innovation could mean moving away from traditional bookkeeping and compliance services and looking for more ways to add value to your client’s business. This means riding the wave of change and leveraging technology to meet your client’s needs – from moving to the cloud to embracing automation.
How to Promote Innovative Accounting Solutions
How then do you promote this in your firm? In a webinar by Jason Blumer, Founder and Chief Executive Officer (CEO) of Thriveal CPA Network, he noted that the key to becoming an innovative firm lies in building a system that allows for experimentation.
In this regard, the burden to create an environment that fosters innovative ideas for accountants lies in the C-suite. Specifically, the CEO should lead the innovation, generating new ideas and approaches to traditional problems.
Ultimately, It’s the responsibility of the firm’s management to encourage the adoption of innovative accounting solutions and processes not only for your finance and accounting team, but also for the rest of your organisation. According to Wired, these efforts include the following kinds of innovation:
1. Innovating Processes and New Technologies
Promote continuous improvement in your firm by offshoring particular tasks and leveraging fintech and accounting software that reduce inefficiencies.
2. Innovating Service Lines
Among the Big 4 Firms, Deloitte and PwC have demonstrated readiness to diversify their services—from acquisitions to developing new services.
3. Product Innovation
PwC Australia tapped a segment of Australian small businesses that usually don’t claim R&D tax refunds by launching the Nifty platform. As a result, they developed relationships with startups.
4. Business Model Innovation
Firms have to revisit many aspects of their practice to remain relevant and competitive, such as their billing, performance reviews, KPIs, ownership structures, and the like.
Barriers to Innovation
Nevertheless, there are many obstacles that can keep a CEO from fulfilling this role. In a recent survey by Robert Half, a global staffing firm, CEOs reported that too much bureaucracy (30%) is the top barrier to innovation. This is followed by being bogged down by daily tasks or putting out fires (27%), lacking new ideas (25%), and having ineffective leadership (16%).
To remain competitive, CEOs should develop efficient strategies to promote open collaboration and creative thinking in their firm, while remaining nimble enough to address the demands of ever changing market trends. Without a doubt, accounting firms and CEOs should keep abreast of the latest innovation in accounting and finance if they do not want to go the way of the buggy whip makers.
Read Next: Why Embrace Innovation in Accounting?
How D&V Philippines Can Help
At D&V Philippines, we help promote innovation in accounting firms by offering custom solutions that will free you up from mechanical and administrative accounting tasks. Learn more about our services by downloading our white paper, Solutions for Australian Accounting Firms. Get your copy today!
First published on 2017 December 14; Last updated on 2020 April 09