Digital transformation to accelerate as firms lift technology investment.
The longer-term outlook is now brighter for Australian accounting firms following a sharp deterioration in business conditions as the coronavirus pandemic gripped the world.
According to CommBank’s latest Accounting Market Pulse report, firms’ confidence is expected to improve over the next 12 months from its current historic lows of net -18 per cent and then exceed pre-pandemic forecasts of net 53 per cent to reach net 61 per cent over a two-year horizon.
As the coronavirus situation developed in Australia, many firms were prepared for disruption, particularly the larger organisations. Firms overall were most likely to be best prepared to manage client relationships (net 73 per cent) and remote working (net 59 per cent). Crucially though, just net 36 per cent of firms had a business continuity plan in place.
The overwhelming response among firms once coronavirus took hold was to increase communication with clients, with 79 per cent of firms acting on this front. That was followed by reducing overheads (61 per cent) and reducing equity partner draws and freezing pay increases and bonuses (both 58 per cent).
Preserving jobs and the wellbeing of staff was high on the agenda, with 52 per cent accessing JobKeeper payments and 58 per cent of firms introducing wellbeing initiatives. Only 18 per cent of firms reduced their headcount.
Commonwealth Bank National Manager of Professional Services, Business Banking, Marc Totaro, said: “Business confidence collapsed with the onset of coronavirus, but many firms expect the market to bounce back strongly, albeit gradually.
“While accounting firms are taking a neutral view on short-term business conditions, many made tough decisions early to maintain their operations and workforce and to position themselves for the longer-term recovery. This meant staying close to clients, many of whom needed support, including navigating the government assistance packages.”
Firms are now making strategic changes to the way they work as a direct result of their coronavirus experience. They are sharpening their focus on digital initiatives, with a net 82 per cent of firms stepping up their focus on digital service delivery and flexible and remote working, and net 69 per cent increasing investment in technology and cybersecurity. Meanwhile, a net 45 per cent of firms are expecting to reduce office space and net 73 per cent will travel less for client meetings.
Prior to coronavirus, firms had been investing heavily in technology to drive efficiencies and productivity, and to meet client expectations. In the three years to January 2020, firms had increased their investment in, and use of, document automation, data and analytics, and collaboration tools. Most have implemented cloud-based solutions.
“Years of investment in the cloud, cybersecurity and even CRM software meant firms were equipped with the tools to service clients digitally and manage a decentralised workforce. And 88 per cent of firms already offered flexible working. That investment is now expected to accelerate as firms embrace the digital economy and seek new ways to balance efficiencies with engaging digital experiences for clients and staff,” Mr Totaro said.