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The Future of Client Accounting Services is in the Cloud

The Future of Client Accounting Services is in the Cloud

The Future of Client Accounting Services is in the Cloud Source: Accounting Services Harness the Power of the Cloud – AICPA

In the second decade of the 21st century, there are three fundamental trends that are changing the future of client accounting services in the U.S., each of which can be traced to the profound impact that computing and networking is having on human culture globally.

Trend #1: Digitalization

The first of our trends is the migration of text documents from paper to digital formats. This has been long in coming and will continue to transition for a long time to come. That said, we have reached an inflection point at which, for the first time, the default format for the majority of documents is now digital, and the expectation of the community, and particularly of the younger members of the community, is that there will be no need to print it. To be sure, there are still plenty of exceptions to this rule, and that makes for a hybrid workflow that imposes greater overhead on accounting than either method alone would in isolation.

This has profound implications for client accounting services (or CAS as we will call it from here on out ). On the one hand, the accounting profession can see a future that is far more friction-free than current practice, and the early adopters in the community are embracing that future today. On the other hand, the majority of the profession is still shackled to a legacy of paper that is not easily shed and that traps clients and service providers alike in high-cost, low-value procedures. This is a no-win situation, and every firm needs a strategy for how it will address this challenge.

Trend #2: Virtualization

The second mega-trend we are living through is a migration from business affairs being conducted in person and at a specific location to being conducted online from whatever location is most convenient. This is a more nuanced transition than the one from paper to digital, for the ultimate goal is not to displace physical presence entirely. Instead, it is to reserve being physically present for situations that warrant such effort, that in some way are core to our well-being, and to have the option to be virtually present or digitally represented in situations that are not. For example, if one were dealing with a crisis in cash flow, or worse, a problem with fraud, then physical presence might be critical to help sort through not only the facts but the emotions of the situation. By contrast, routine work or run-of-the-mill trouble-shooting are better done digitally for less cost, greater convenience, and faster time to closure.

Again, this has profound implications for the profession. For our more forward-thinking clientele, not providing a digital option is increasingly being perceived as imposing an unwarranted inconvenience upon them. So we must invest to support these new workflows. For late-adopting clients, on the other hand, it is just the opposite: having to provide documentation or interact digitally is what is perceived as an inconvenience. So we have to continue to invest here as well. Having to support a hybrid practice across both modes creates duplicated costs that undermine the viability of any client accounting services practice, so once again every firm needs a strategy for how it will address this challenge.

Trend #3: Transformation

Finally, a third mega-trend that follows from the ongoing digitization of human culture is a transition in business organization from large integrated corporations that staff up internally to meet all their requirements to a hybrid global model in which core functions are still done internally but context functions are outsourced to specialist providers. This has lowered the barriers to entry for specialized small business entrepreneurs and led to an explosion of small to medium sized businesses in almost every sector of the economy. That in turn has increased both the number of clients available for CAS practices to serve—clients, incidentally, who by the very nature of their own businesses are predisposed to embrace outsourced solutions—and, for a similar set of reasons, the number of CAS firms that can effectively compete for that business.

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