Back home in Lancashire, we used to laugh at the old timers who would trot out their ‘when I were a lad’ stories. ‘All we’d get for Christmas was an orange in a stocking.’ ‘We used to be down’t pit 18 hours a day and got paid two and sixpence.’ ‘You young uns don’t know you’re born.’ I am sure similar tales perpetuate in communities around the world.
On the radio the other day I heard some interesting statistics about the average weekly wage in Queensland. Turns out the average weekly wage in 1972 was $72. In 1982 that had quadrupled to just short of $300 per week. 20 years ago, in 1992 (doesn’t that make you feel old!) it had risen to just over $600 per week. And in the past 20 years it has more than doubled again to $1350 per week.
Other than explaining why my wife swears blind her parents sent her off to the Ekka with 50c when she was a kid and it lasted her all day, I got to wondering whether accountants’ fees are keeping up with the constant increase is wages. I suspect not. I see fees increasing moderately but what is not taken into consideration is the millions and millions of dollars collectively invested by accounting firms in technology, resulting in efficiencies for the accountant. These efficiencies allow accountants NOT to increase prices (and, in fact, if the accountant prices and bills in arrears, because time on clock is less, they may well REDUCE their prices.) And as such, margins remain steady.
The major change in the accounting landscape right now is Cloud accounting. Compliance will become even more commoditised than it is today. Clients will have more and more information about what is involved in preparing their year end work. In fact, just this morning an accountant told me he is getting calls from clients every week asking him if he knows about Cloud accounting solutions. The famed mate at the pub has all the answers and downward price pressure will be placed on compliance prices.
Combine that with the ever increasing cost of labour and many accounting firms are going to be squeezed out of existence.
Time to reinvent yourself. Leverage off Cloud accounting solutions to offer more value to your clients. For example, providing feedback and input on monthly data very shortly after month end. Offering charts and diagrams to explain the numbers in a format that the client understand. Creating a low labour intensity virtual CFO service to help clients make better decisions and stay on top of their numbers. Explaining to clients how cash accounting is all well and good but they may be making bad decisions if they don’t take accruals into account, especially around cash flow management (this is an area where you can add real value.)
And then, charge appropriately. Accountants create tremendous value for their clients day in day out. You should be properly rewarded. It’s up to you to ensure that you are.