The Future of Accounting: Will Your Firm Adapt?
What do buggy whip manufacturers have to do with the future of accounting? More than you might think.
At the turn of the 20th century, Westfield, Massachusetts, was known as Whip City. As automobiles replaced horses, the demand for buggy whips disappeared. Some manufacturers found ways to use their skills and equipment to make other products. Others didn’t survive.
Today, artificial intelligence is creating a similar challenge for CPAs, bookkeepers, and accounting firms.
In this episode of the Financially Fit Business podcast, I share the story of the buggy whip industry and explain why the future of accounting may depend less on the services you provide today and more on the value you can deliver to clients tomorrow.
The question isn’t simply whether AI will change accounting. It’s whether you’re willing to change with it.
What Buggy Whip Manufacturers Can Teach Accounting Firms
When automobiles began replacing horses, the buggy whip industry faced a serious problem. Its customers no longer needed the same products.
Some manufacturers adapted. Westfield Whip Manufacturing Company diversified into products such as paper tubes, dog collars, and funeral casket hardware. The H.M. Van Dusen Whip Company converted its factory to make lawn swings.
They recognized that their capabilities could be useful for something other than making buggy whips.
That’s the lesson I want CPAs and bookkeepers to think about.
If you define your business entirely around preparing tax returns and financial statements, what happens when technology can perform more of that work?
AI Is Changing the Work Accountants Do
AI and automation are getting better at many of the repetitive tasks that accounting professionals have performed for years.
Does that mean accountants are going away? No. Professional judgment, verification, and oversight are still necessary.
But it does mean we need to think about what our firms will look like five, ten, or fifteen years from now.
Technology may make it possible to complete work much faster. Clients may begin questioning why they’re paying the same fees for tasks that require significantly less time.
That’s a challenge if your entire business model depends on performing those tasks.
What Business Are You Really In?
Here’s a question I’d like you to consider.
Are you in the business of preparing financial statements and tax returns? Or are you in the business of helping business owners understand their numbers and make better financial decisions?
Those are two very different ways to define your business.
When you prepare a financial statement and send it to a client who puts it in a drawer, what have you really accomplished for that client?
Now think about what happens when you help that same business owner understand why profitability is declining, why cash flow is getting tighter, or what their financial trends are telling them.
You’re providing information they can use to make decisions.
Financial Advisory Services Create Opportunities
Financial advisory services give CPAs and bookkeepers opportunities to use their knowledge in ways that go beyond preparing reports.
That might include helping clients understand:
- Whether their businesses are becoming more or less profitable
- What their financial statement trends are telling them
- Why cash flow is improving or deteriorating
- How actual financial performance compares with their budgets
- What their cash flow forecasts suggest about upcoming decisions
These are conversations that can help business owners make better financial decisions.
And they’re conversations that can make your services more valuable to your clients.
One Simple Way to Start Providing More Value
You don’t have to completely reinvent your accounting practice tomorrow.
Start with something simple.
The next time you review a client’s financial statements, look for a trend worth discussing. Then contact your client and say:
“I’m seeing some things on your financial statements that I’d like to talk to you about.”
Do you think that client will call you back? Probably pretty quickly!
Now you have an opportunity to discuss what’s happening in their business rather than simply deliver another report.
The Choice Is Yours
The accounting profession isn’t going to change overnight. Neither did the transportation industry when automobiles first appeared.
But the changes are happening.
You can continue doing things the way you’ve always done them, or you can start looking at how your expertise can serve clients in new ways.
There’s no single right answer for every firm. You have to decide what makes sense for you.
My suggestion? Choose one thing from this episode and put it into practice.
Build Your Financial Advisory Skills
If you’re interested in helping clients better understand their financial statements, my Understanding Financial Analysis Trends manual is a practical place to start.
It focuses on recognizing financial trends, understanding what they may mean, and asking questions that help uncover potential problems before they become major crises.
Explore Financially Fit Business and the Understanding Financial Analysis Trends resources.
Ready to Move Beyond Preparing Financial Statements?
Your clients need more than financial reports. They need someone who can help them understand what the numbers mean and what they should be paying attention to.
That’s where financial advisory services can make a difference.
My Understanding Financial Analysis Trends manual helps CPAs, bookkeepers, and financial professionals recognize important financial trends, identify potential warning signs, and ask better questions during client conversations.
You already have the financial knowledge. Now put it to work in ways that help your clients make better business decisions.
Explore the Understanding Financial Analysis Trends Manual »
Questions Accounting Professionals Are Asking
Will AI replace CPAs and bookkeepers?
AI is likely to automate more routine accounting and tax preparation tasks, but professional judgment, verification, and client relationships will still matter. The bigger question is how accounting professionals will adapt the services they provide as technology improves.
How can accounting firms prepare for AI?
Start by identifying which tasks technology can handle and which services depend on your experience and expertise. Look for opportunities to help clients interpret financial information, understand trends, and make better business decisions.
What are financial advisory services?
Financial advisory services help business owners understand and use their financial information. They can include financial statement trend analysis, profitability reviews, cash flow forecasting, budgeting, and comparisons of actual results against budgets.
Do I have to stop offering tax preparation and bookkeeping?
No. The goal isn’t necessarily to abandon traditional services. It’s to consider how those services may change and whether you can expand your relationships by providing additional financial guidance.
How can a CPA or bookkeeper start offering advisory services?
Begin with the financial statements you’re already preparing. Identify an important trend, ask your client what’s happening, and help them understand the financial implications. You can build from there as you develop your advisory skills.