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Survey Highlights Emerging Tools for Firms of All Sizes

How CPA firms are keeping up with software and hardware developments, including paperless systems, multiple monitors, time and billing software, client portals and social media, among others.

April 2011
by Alexandra DeFelice/Journal of Accountancy

How CPA firms are keeping up with software and hardware developments, including paperless systems, multiple monitors, time and billing software, client portals and social media, among others.

One of the clearest ways for firms to increase profitability is to become more efficient.

Because technology can enhance productivity, the 2010 PCPS/TSCPA National MAP Survey asked firms how they are keeping up with software and hardware developments, including paperless systems, multiple monitors, time and billing software, client portals and social media, among others. (For a breakdown of survey results, see Exhibit 1. For information about other sections of the survey, see “Hitting the Target: National Survey Looks at How CPA Firms of All Sizes Stack Up.”

Unlike other portions of the survey, the technology questions that are asked change each time it is conducted based on current trends, so information from previous years is not included in this article.

Time and billing software was the No. 1 most-used technology, reported by 76 percent of all firms. Although this is not surprising, according to Jim Metzler, AICPA Vice President–Small Firm Interests, he said what is surprising is that 24 percent of firms don’t use it.

“They could benefit in a huge way if they just used it as an estimating or cost system,” he suggested. (For examples, see the “Time Is Money” section of this article.)

Larger firms — those with at least $750,000 in revenue — reported even higher use (94% of firms in the $750,000 to $1.5 million revenue range and 100% of firms with $10 million and up, compared with 66% of those with $200,000 to $500,000 in revenue and 37% of those with less than $200,000).

Multiple monitors was the second-most popular technology, at 71 percent overall; and an “active/maintained” website came in third, at 66 percent overall, though the percentages again were much higher for the larger firms (see Exhibit 2).

The least common technologies were those used to enable the outsourcing of write-up work and tax returns at two percent each — though seven percent of the largest firms reported outsourcing tax return work. Only four percent overall reported having blogs (including 20% of the largest firms) and 14 percent using social media (see Exhibit 3). The use of social media by larger firms is significantly higher — 24 percent of firms with $5 million to $10 million in revenue use it compared with 44 percent at the largest firms with $10 million and above.

If blogs turn out to be a cost-effective way to promote firm expertise and reinforce client relationships, smaller firms may begin to use them in greater numbers, according to Metzler.

“It’s reasonable to expect that smaller firms will branch out into social media based on what they learn from larger firms’ efforts,” he said.

Coming in at the middle of the pack were allowing remote access to the firm’s network (62 percent overall use), having a paperless work environment (52%), accepting credit cards (45%), having client portals (28%) and using scheduling software (16%).

The JofA interviewed CPAs about how they are using some of these technologies to gain efficiencies and improve business. Following are some of the anecdotes and advice they provided to others who may be considering investing in these tools.

Focus on Paperless

The survey did not define paperless and most CPAs interviewed for this article said that the move to “paperless” took a few years. Only 35 percent of the smallest firms reported they have a paperless work environment, compared with 86 percent of the largest (see Exhibit 4).

The term “paperless environment” isn’t just about document management and retrieval but also about the ability to automatically identify bottlenecks and decrease cycle time, especially in the seasonal tax preparation business, Metzler said.

For example, using electronic workflow applications to track the status of tax returns can let a partner see what stage of the process each return is in and who in the firm is currently working on it instead of walking around the office searching for client folders and piles of paper. If the bulk of the returns are in review stage, for example, the partner can shift some of the preparers to that stage.

“The quicker you can move things through the system, the more profitable you’ll be,” he said.

Five years ago, when Jacquelyn H. Tracy and her partner started their Providence, R.I., accounting firm, Mandel & Tracy LLC, they knew the importance of standardizing the tax preparation process before moving to a digital environment. This would ensure that all seasonal employees could follow the same procedure — from the receipt of client workpapers to electronic storage of the returns in GoFileRoom, a Thomson Reuters product that integrates with their tax prep software, GoSystem Tax.

“You need to sit down and think about what you want to do and what makes sense for your practice and your client. [But] make sure you get the people involved who are going to be using it,” Tracy said. “Draft a plan and present it to them so they can ask questions, otherwise they won’t use it. Preparers are the ones who are going to live in it every day and will tell you the steps that don’t need to be there and you need to be willing to listen. People will support what they help make.”

During the first year of moving toward a paperless environment, one of the biggest challenges Tracy experienced was figuring out how to use the electronic system and grasping its capabilities.

This article has been excerpted from the Journal of Accountancy. View the full article here.