Creativity from chaos: How accounting practices excelled in spite of COVID-19
The light at the end of the 2019 tax season tunnel? That wasn’t daylight; it was a train.
It’s hard to say how long we’ll feel the after-effects of government shutdowns around the world in response to COVID-19, but one thing is clear: we’ve all lived and worked in a constantly evolving reactionary state of upheaval over the last two years.
And while accountants didn’t make headlines in the same way that doctors, nurses, and teachers did, bookkeepers and financial coaches alike were working around the clock, desperately trying to support an entire portfolio of clients in crisis.
It may have been exhausting, but something else emerged amidst the chaos: creativity and collaboration in the accounting space like never before.
In times of hardship, we’re forced to innovate. After all, we have no choice but to ‘figure it out’. But sometimes, when our backs are to the wall, we come up with our best ideas.
Karbon’s 2022 Practice Excellence Report provides a unique glimpse into how accounting firms worldwide endured a global crisis. Perhaps the most exciting insight to emerge from the data is that despite the immense setbacks, many accounting firms managed to thrive.
The survey, which over 1,100 firms have opted to complete since 2017, has allowed us to gather real-world data in real-time, painting a pandemic picture not with anecdotal stories but actual numbers.
Accountants not only maintained but also improved their practices despite such tumultuous times. Let’s dive in.
Measuring practice excellence in firms
Every accounting firm is different—different markets, different teams, different maturity. But many challenges accountants face are universal.
The Practice Excellence Scorecard is a tool used to measure the business aptitude of firms by providing insight into a firm’s performance in four areas: strategy, efficiency, management, and growth.
The opt-in self-evaluation is a tool for firm leaders to identify strengths and areas for growth in comparison to their industry peers.
The assessment is a 20-minute survey consisting of 35 questions designed to measure performance in each of the 12 accounting firm competencies: innovation, marketing, sales, client management, organizational management, talent management, change management, operations management, business processes, technology, strategy adoption, and business strategy.
It’s important to note that technical skill is not part of the evaluation process.
Since 2020, 426 firms have completed the Practice Excellence Assessment.
Because the assessment is designed for rolling participation, the Product Excellence Report provides a unique glimpse into a data-backed understanding of how accounting firms have evolved during, and emerging from, a global crisis.
Rising to the challenge in times of turmoil
Going into 2020, many firms were gravitating towards improving their practices and making big bets on the future of technology in the industry. Firm owners, by and large, were either looking to adopt cloud technology or had begun the initial stages of the cloud accounting journey.
Practice management and process improvement weren’t top of mind, with only about 50% of firms entertaining methods for increased efficiency.
Talent management remained an area of focus (as it has been for some time) as firm leaders looked to navigate ongoing talent shortfalls.
At the time, most firms ran in an office setting, with team members sitting side-by-side. As we know, that was about to change.
The worldwide pivot
The instantaneous requirement for firms to work in 100% remote environments presented immense challenges, particularly for firms who had not yet leveraged cloud accounting technology.
The shock to the system of upending life as we knew it directly impacted all areas of performance and functionality. COVID-19 demanded fundamental shifts in tech, leadership, talent management, and servicing clients.
Not only were firm leaders forced to solve for the immediate challenges of remote work, but their practices were also attempting to support client needs during a time of sheer economic uncertainty. Businesses were going belly-up overnight and the only way for many to survive was with government funding. Many governments relied on accountants to distribute funds and often businesses also needed the help of bookkeepers to qualify for stimulus money.
For this to occur at any time would throw even the savviest of accounting firms off kilter, but for this to occur during the US tax season added to the already-historic pressures faced by the entire industry.
The massive volume of high-priority work, which needed to be completed in a very short amount of time meant that firm leaders were forced to innovate, exploring fundamental questions such as:
How do we rethink our pricing and service offerings?
How do we service customers who aren’t able to afford our services upfront?
How do we deploy our services in this fast-paced environment?
How do we operate efficiently and effectively, but remotely?
What technology must we adopt to maintain our functionality as a firm?
How do we manage our work days?
How do we manage our team?
During the early throws of a pandemic, accounting firms still managed to rise in all four practice excellence pillars: strategy, efficiency, management, and growth.
Practice Excellence across years
The aftermath
As firms resume in-person meetings, stimulus fund dissemination eases, and the workforce stabilizes, many firms have permanently adopted some of their temporary solutions to improve practices.
Efficiency remains a priority and many firms are looking to the process side of the business to iterate on their best learnings from COVID-19.
Firms are turning their tech adoption focus from cloud accounting software to workflow management and practice management solutions—an indication that efficiency remains an area of focus for firm leadership.
So, what happened? Accounting leaders are more strategic and efficient than ever before.
When firm leaders realized that the pandemic wasn’t going to end overnight, they were forced to grapple with redefining firm operations. The focus shifted from enduring a short-term hurdle to adapting to a new reality.
This realization forced firm owners to deeply invest in strategy, exploring innovative solutions to both new and pre-existing challenges. As a result, many firms invested in themselves like never before, and through that investment, leaders learned new ways of operating that have led to short- and long-term improvements.
As the pandemic waned, numbers in some areas of the Practice Excellence Scorecard dipped, but didn’t return to the 2019 baseline, meaning that the improvements implemented over the course of the pandemic have staying power. This appears particularly true in tech, innovation, and talent management.
Efficiency scores continue to steadily increase, which is likely due to the fact that the way of work has fundamentally changed. As a result, we predict that processes, operations management, technology, and change management will continue to be areas of growth and focus for top-performing firms around the world.
The emphasis on management will likely become an increasingly important differentiator for success, particularly as the talent shortfall remains a concern in the industry.
Taking it all in
The 2022 Practice Excellence Report isn’t just an opportunity to glean insight, it’s an opportunity to pause and celebrate the accomplishments of an entire industry.
Since the onset of COVID-19, accountants have, behind-the-scenes, stabilized the global economy. Accountants didn’t just distribute stimulus funds, but were instrumental in developing the implementation and strategy needed to successfully stop the financial bleeding.
That alone is a huge accomplishment worth celebrating.
Not only did accounting leaders achieve this massive feat, but they did so while also facing their own challenges as small business owners and entrepreneurs. The tenacity and endurance of those in our profession is, frankly, remarkable.
What happens when the accounting profession faces uncertainty and chaos? We rise to the challenge. We create. We collaborate. We innovate.
Yes, we’re exhausted, but look how far we’ve come.
