Accounting firms find problem solving, flexibility essential in adapting to new client needs
The accounting business isn’t what Kevin Kruggel remembers when his career began as a certified public accountant almost four decades ago.
Kruggel, president at Kruggel Lawton CPAs in South Bend, chuckles when he recalls the first computer he typed on. It was the size of a minifridge.
Floppy disks were all the rage, and email addresses wouldn't exist for years. Kruggel, once the guy in the corner preparing tax documents by hand, had no idea he'd one day respond to clients' emails from a device, small enough to fit in his front pants pocket. Nor did he know that this same technology would entirely change his profession as he knew it.
“The advent of the microchip has accelerated the way we do things tremendously,” he said. And that is just the beginning of the changes.
These days, “people need answers instantly,” and they suddenly needed a lot more of them. As technology continues to get more complex and business compliance requirements increase, the need for additional services provided to clients by CPAs is continuing to grow at a rapid pace.
A global survey of 1,000 accountants, released by Sage in 2018, found that 83% said that clients already are asking their CPAs for more services. Additionally, 42% of clients expect their accountant to provide business advisory services, over and above accounting, compliance and tax services.
CPA Greg Ward, principal at Swartz Retson & Co. in Merrillville, is seeing this trend at his firm firsthand.
“I think business owners understand that CPAs have broad skill sets and experiences beyond the traditional tax, accounting and audit areas,” Ward said. He pointed to estate and trust consulting, business valuation and human resource consulting as his clients' most requested services outside of traditional tax needs.
But these changes didn't happen overnight.
“Change (in the profession) has been slow, but it's changing a lot more quickly now,” said Terry McMahon, president of McMahon & Associates in Munster. “With technology in the forefront, it's forcing us to work beyond 8-to-5-hour rules, to expand our thinking and to be aware of a business as a whole.”
McMahon, who has worked as a CPA for almost 50 years, said the door is closing on the old way of thinking where an accountant is sitting in a corner crunching numbers. A new door, however, is opening that allows CPAs to expand their expertise and help clients in ways the past and previous technology didn't allow.
Kruggel also sees these changes developing and at a pace the industry needs to be ready for.
“These days the world is more complex, and we're at a point in time where what we do is really going to change greatly,” he said. Technological advances, such as artificial intelligence, blockchain and data analytics, are each driving down the need for CPA services.
These systems, according to McMahon, have caused the profession to lose business in the market of producing numbers alone, but have opened the market to a vast number of additional services clients need to succeed. It's up to CPAs like Ward and McMahon to make sure their clients understand those needs.
“For a small business, being successful can be a challenge. Our role in the past was to give numbers as historians. Our role going forward is to be part of a client's team,” McMahon said. “There's a certain element of a small business that is accustomed to the service their accountant provides them, like a tax return at the end of the year.”
McMahon said accounting firms must work with their clients to help them understand and appreciate the changing world.
“There's an educational process on our part to make them understand that we can still do (traditional services) for them, but in the bigger picture, we can also service them in a more profitable way,” he said.
Areas such as tax reform and tax rules, which have become increasingly complicated, are at the top of the list of client needs at CliftonLarsonAllen in Schererville where Principal CPA Chuck Taylor is trying to stay ahead of the times.
A far cry from an audit, Taylor's team also provides “penetration investing” where an IT group is hired to try and infiltrate a business's computer software system. Taylor will then produce a report on any found risks, which will help the clients prevent potential breaches.
“Clients aren't always knowledgeable about what services are out there,” Taylor said. “It's a value to a client to have a firm that stays relevant,” which is what many firms are racing to do these days.
For Ward, that means taking a team approach and focusing on specialization.
“I think operating a business continues to get more complex,” Ward said. “We often approach client service using a team approach.”
Ward said each person in his firm brings different expertise and experiences to the team, so the client gets the best service.
“It seems that specialization has become very important in recent years,” he said.
Part of the team
Kruggel said, instead of considering himself a client's CPA, he thinks of himself as part of the business's ad hoc board of directors — someone who is going to look out for their best interest and be a real team player. He is someone giving not just tax advice but business advice that will help his clients succeed for generations down the line.
“As a profession, it's about listening to your clients’ needs and staying up with what you need to do to service them, but if you've been doing it right all along, you've always been a business adviser to your client too,” he said. “We're the quarterback for our clients.”
Eventually, he sees himself having to hire a marketing specialist, IT specialist, a data analytic specialist and the list goes on.
“Because of technology, people are wanting more,” he said.
At his firm, Kruggel is always looking to be one step of head of his competition and one step ahead of anything his clients could possibly need.
To do this, Kruggel has put together the Frontier Team, which consists of employees at every level in the firm. Tasked solely with forward-thinking initiatives, the group tries to stay ahead of the curve and make sure the longtime business stays afloat and clients keep coming back.
“I don't think you're going to survive if you're not evolving,” Kruggel said. “One thing that's constant is change, and it's coming at a faster and faster pace.”
Kruggel said it’s important for CPA firms to look down the line.
“If I bury my head in the sand, I'm not doing my best for my clients,” he said.
Outside of numbers, CPAs today are also selling trust and communication as major selling points to their clients. Firms looking to hire today are seeing beyond grade-point averages and looking for communication and personal connection that will bode well with businesses instead.
Kruggel said the emphasis of the profession is no longer solely about numbers but about finding solutions, and that happens with clear and concise communication. He and his team act as a “hub” between clients and solutions.
If Kruggel can't provide his clients with a service, he'll find someone who can. If he can't solve your problem, he'll make sure he knows someone who will, he said.
“We need to be effective in the way we communicate and the way we solve problems,” Kruggel said. “We need to find solutions for our clients, even if we're not the solution.”
Taylor said, as client’s needs evolve, so does the forward thinking of the CPA profession.
“We sell trust, really,” Taylor said. “We want them to know that we're going to look out for the client's best interest.”
Taylor said clients might not recognize how much the accounting firm they’ve been working with through the years knows about their business and operations.
“The benefit of being a larger firm is you have all sorts of resources at your disposal to bring your client, but you have to care enough to go beyond the surface and dig around,” he said.
McMahon agrees, noting that he would advise individuals considering entering the profession to diversify their skill sets.
“I would want to tell today's student that they should focus on communication and the bigger picture and thought process while learning their craft in school,” McMahon said. “You can't take away the fact that there are certain procedures accountants need to know and use but join social situations, expand your thinking.
“You're not a producer of numbers; you're also a full businessperson.”
The experts agree that, while the door is closing on the number crunching, corner sitting stereotype, the ground is being laid for the future of CPAs.
They must be analytical thinkers with communication skills, who are willing to think outside the box and bring firms into the next generation as technology and clients’ needs coast into the future.
“That is the evolution of the firm,” Kruggel said.