Accounting firms shift more operational work into practice management systems

As accounting firms expand their technology stacks, they're also consolidating more everyday operational tasks within their practice management systems. Rather than relying on separate applications for each function, firms are increasingly using these systems to manage work across their organizations while continuing to rely on specialized tools where needed.

The research highlights how firms are shifting operational work into practice management systems, with progressive firms leading the trend:

• Accounting firms are using practice management systems for more operational tasks. Nearly two-thirds (63.2%) of firms with practice management software now use it for five or more functions, up from 23.3% the previous year.

• More operational work is moving into practice management systems than out of them. Among firms surveyed in both years, researchers identified 195 instances of functions moving from standalone applications into practice management systems, compared with 50 moving in the opposite direction.

• Progressive firms run bigger, more organized tech stacks. Early adopters use 16.5 tools on average and run 7.2 operational functions through their practice management systems. Late adopters use 10.3 tools and use practice management systems for 3.1 functions.

“The number of functions a firm manages through its practice management system is a good indicator of that firm’s mindset toward new technology: progressive firms centralize more tasks than cautious ones,” said Mary Delaney, CEO of Karbon. “As some firms rethink how they organize their work, they’ll reduce complexity and give their teams more time to focus on their clients.”

AI agents emerge as a new source of capacity for accounting firms

Accounting firms have traditionally expanded their capacity by hiring employees or outsourcing work. AI agents are emerging as another option, giving firms new ways to manage growing workloads and expand their capabilities alongside existing teams.

The research found that firms are increasingly combining AI agents with traditional staffing approaches, with progressive firms leading adoption:

• Firms using AI agents generate more revenue per employee. The typical U.S. firm using AI agents generates 17.7% more revenue per employee than the typical firm adding capacity without them.

• AI agents are becoming another way for firms to expand capacity. Two in five firms (40%) adding capacity now use AI agents, alongside traditional approaches such as hiring employees and contracting work.

• Firms using AI agents maintain similar payroll spending relative to revenue. Payroll accounts for 44.5% of revenue among firms using AI agents, compared with 45.3% among firms that don’t use them.

“Our research shows firms are adding capacity in three ways: traditional hiring practices, contract work, and the use of AI agents,” said Delaney. “That said, AI agents aren’t replacing traditional hiring outright. They’re creating opportunities for accountants to spend more time on the complex decisions, strategic advice, and client relationships that drive the most value.”

For more information on the report and other updates from Karbon, visit karbonhq.com.

About Karbon

Karbon, a global leader in AI-powered practice management software for accounting firms, provides an award-winning, collaborative cloud platform focused on accelerating firms’ top and bottom line growth. Karbon drives unprecedented value for its customers evidenced by its #1 ranking on G2 and customer-reported savings of 19.9 hours per week per employee. Founded in 2014, Karbon has customers in 40 countries with employees across US, Australia, New Zealand, Canada and the United Kingdom. Karbon is well-funded and backed by Tidemark and Five Elms.

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Jack McHugh, Propllr PR
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