What lies ahead for Professional Service Firms in 2020? By Mark Holton on Aug 7, 2020
This month I thought we would do something a bit different and examine an article from a fellow thought leader and long-term supplier to the profession both in Australia and New Zealand.
I totally agree with the market demanding more advisory services coming out of COVID-19. Something I have been speaking about in previous newsletters for some time now. Maybe we need to plan now for advisory recovery services that assist clients to get back to where they were before COVID-19. Clients in my mind, need an action plan complete with a realistic budget and cash flow and actions, timelines, and strong accountability measures. This could be the best opportunity ever to launch or enhance your firm’s advisory service delivery.
What lies ahead for Professional Service Firms in 2020?
Seven months ago, 2020 looked pretty good for professional service firms.
Then COVID-19 arrived, and firms had to react – fast. In the fog of lockdown, you made quick decisions, often with imperfect data. Business continuity plans were dusted off (or hastily written), alternate budgets were prepared, and emergency board meetings held to plot the course ahead. Now, the mist is clearing. In most cases those hastily prepared “worst case scenario” budgets are being cautiously discarded – but what lies ahead?
Based on our experience with 1,400 professional service firm clients across Australasia, I have ventured to speculate and predict four trends to watch out for in 2020/21 and beyond:
Horizons: Smart businesses are developing their strategies now for a 2 – 4-year horizon. However, shortage of working capital forces most businesses to plan around shorter periods – typically 3 months to 12 months. Cost cutting is easy; change and investment for the longer term is much harder.
Prediction: Most firms will survive the short term by cutting costs. Fewer firms (those blessed with capital and a sound plan) will go on to thrive and over-perform in the medium term. The 24-month economic bounce back that is predicted will not be evenly spread around.
Growth: The market will be demanding more business advisory work. Some firms have existing systems and experience to provide this, others will be pivoting to start doing so. Since the drivers of success in an advisory business are different to a compliance focused business, it is self-evident not all entrants will be successful.
Prediction: The COVID-19 recovery will be the tipping point for more firms to enter the business advisory space. Not all will succeed and that will spawn more mergers and acquisitions amongst professional service firms to grow advisory services.
People: The cost of talent, increased need for work flexibility, the scarcity of A Players and the cost offshoring/outsourcing options will exacerbate any existing tensions between employers and their talent.
Prediction: Coupled with ongoing digital disruption there will be more restructuring (lay-offs) to reduce costs. The skills and aptitudes needed for accurate and timely compliance work are similar to those required for doing insightful data advisory work. However, the soft sales skills needed to win more advisory work (in an increasingly competitive market) will be in short supply. Rainmakers will be in short supply.
Digital: COVID-19 has increased the speed with which digital disruption will impact the professional service sector. Two years ago we thought it would take another 5 years for our accounts receivable Chat Bots to be deployed by professional service firms. Instead it was in March 2020, during COVID lockdown, we launched our first Bot to provide copy invoices, answer statement queries and provide payment pathways.
Prediction: Clients will demand seamless, frictionless and simple solutions. Digital AI solutions will rapidly replace manual and repetitive human jobs. Data collection, onboarding, payments, accounts receivable, reporting are all areas that digital solutions will be deployed.
What are your top four predictions for the year ahead? Where will your growth come from and how is demand from clients expected to change?
smartAR Group seamlessly integrates alternate payment options, best practice debtor & accounts receivable management and expert managed ledger services to ensure accounting firms and their clients get paid quicker. This is done by combining cloud technology, great strategy, and exceptionally talented people.
If you’d like to explore how digital assistants can lower your and your client’s collection costs and increase cash flow why not book a complimentary strategy session. Just email me at [email protected] and I will write a personal referral for you to Dave Birch and one of the smartAR specialists.