Industry pundits subject us to a nonstop barrage of predictions that CPA firms will cease to exist very shortly. You know how much I love our industry pundits, who have never worked a day in a CPA firm. I dislike the ones who have not worked in CPA firms in the last 20 years only slightly less. Their predictions are total and utter nonsense.
If you believe accounting industry pundits, artificial intelligence and blockchain will decimate accounting firms the way an asteroid killed off the dinosaurs. But paleontologists don’t think dinosaurs really went extinct. They survived as today’s birds. In the next 10 years, or sooner, accounting and tax firms will evolve from offices full of employees dutifully typing data into workstations to organizers of terabytes of accounting data for our clients.
The pundits are wrong about our extinction. Effective project management will prepare your firm to thrive in the 21st century. I’ll take you there in a bit of a roundabout way via the coming of blockchain to the IRS. READ MORE →
We’ve discussed planning for tax season in terms of how many full- and part-time preparers you need. Now, let’s discuss this in terms of capacity and turnaround time. Let’s ask why we should ever hire additional tax preparers at all, because hiring additional people only costs more money.
John Mellencamp’s hit song, “Rain on the Scarecrow” chronicle the decline of the small American farmer in the 1980s. Farmers faced economic devastation caused by new technology and emerging international competitors.
Expensive new machinery and international competition transformed farming from a sleepy vocation handed down between generations to international global commerce driven by technology and sophisticated business metrics. Farming became a real business.
Small farms disappeared as expensive machinery demanded economies of scale that could create a sufficient return on capital investment. International competition lowered prices to where new technology was required to compete with lower-cost international labor.
Farmers needed to raise the level of planning beyond pushing seeds into the ground and waiting for favorable weather. They began to pay attention to detailed yield metrics and weather patterns, planning irrigation to effectively use natural rain patterns. They used Monte Carlo simulations to plan which crops to plant and sell.
The ones who didn’t change went bankrupt or sold and retired. Musicians held a concert, Farm AID, to call attention to the farmer’s plight.
Driving to work this morning, I realized that changes in the CPA industry parallel the plight of the small farmer in the 1980s.
Better scheduling reduces WIP. A while back CPATrendlines.com published an article by a brilliant writer (me) called “The Annual Tax Season Meeting is Dead.” I based this article on years of scheduling mistakes in our firm that drove up WIP and killed turnaround. Here’s the gist of that article.
Beginning in the early 1990s, we began prescheduling personal tax meetings. We had the best intentions. Our practice was growing, and we could no longer afford to have clients call us when they got around to it. We needed to bring sanity to the scheduling of meetings. We couldn’t have all of our clients call to schedule in mid-March. Thus, we sent out postcards with prescheduled meeting times. READ MORE →