“The global accounting & auditing consultancy market is projected to expand at 5.7% CAGR and be valued at US$ 379.05 billion by 2032”. – Global Newswire
This growth can be attributed to factors such as market volatility, rapidly changing tax laws, the global expansion of companies, and so on.
As a result, an accounting and auditing consultancy firm requires diverse resources with specialized skills and expertise to complete projects successfully.
However, these firms’ projects are often seasonal and witness a noticeable surge in consultants’ demands during different times of the year. Without real-time visibility into future demands, these firms face significant capacity planning challenges. It includes resource shortage/excess, skill mismatches, double bookings, and over-utilization, thereby compromising project quality.
So, the pertinent question is, how to address the resource capacity planning challenges in accounting & auditing firms and ensure timely delivery of projects within budget?
This informative article will delve deep into this concept. So, let’s get started.
Salient Features of an Accounting and Auditing Firm
An accounting and auditing consultancy firm provides customized and knowledge-based services to its clients. For example, it organizes and manages a company’s cash flow, conducts regular audits, gives tax advice to stay compliant, etc.
Let’s delve into the services it delivers.
A. Corporate accounting & finance advisory – It consists of services like portfolio review, capital allocation processes, financial planning, and so on. They help corporates, governments, sovereign wealth funds, family-run businesses, educational institutions, etc., with critical economic issues.
B. Auditing – Auditing is the examination and analysis of an organization’s financial records after preparing financial statements. It gives an unbiased and fair opinion on the financial position of an organization and helps make informed business decisions accordingly.
C. Tax advisory –It provides connected services across all tax disciplines. This includes calculating and filing business tax, international tax, transaction tax, etc., while avoiding legal penalties and issues related to people or compliance.
D. Consulting – This empowers a company to adapt to the latest technology trends and develop sustainable and responsible strategies and operations to stay ahead of the curve. Consulting services also help a firm become more agile and resilient and avoid threats to ensure business protection.
E. Forensics – Encompasses the investigation of fraud or financial manipulation through in-depth research and analysis of a company’s financial records. It helps resolve issues like insurance claims, insolvency, embezzlement, skimming, or any other type of financial theft.
Now that we know what accounting and auditing firms comprise let us understand the several roles involved.
A. Accountants – They are responsible for analyzing a firm’s assets and liabilities, preparing profit-and-loss statements, evaluating a business’s financial records/processes, and creating and managing other relevant financial records.
B. Auditor – The auditor analyzes an organization’s financial reports and records to ensure they are accurate and comply with business laws. They help make a business immune to potential fraud.
C. Business Analyst – They coordinate with stakeholders to determine goals, identify areas of improvement, and implement changes and strategies to strengthen the business process.
D. Tax Staff – It consists of accountants, auditors, compliance officers, and consultants to help a company file corporate tax properly, implement suitable tax-saving measures, and stay compliant with corporate national or international tax laws and regulations.
E. Risk Analyst – These consultants are often more on the technical side and help a company with its holistic risk management approach. They compile and evaluate data about risks, share it with managers, and mitigate their negative outcomes by implementing the most appropriate measures.
Subject to these roles, accounting and auditing firms often find it challenging to employ the right personnel for the right projects at the right time. The following section explains the importance of capacity planning in this industry.
Benefits of Capacity Planning in the Accounting and Auditing Industry
The capacity planning process in accounting and auditing firms involves predicting resource requirements for current and future projects and identifying shortages or surpluses.
Subsequently, in case of variances, managers can apply necessary measures to bridge the resource gaps in advance and assign the right consultants to appropriate work. This allows audit and accounting firms to minimize last-minute costly hirings, eliminate resourcing bottlenecks, and create a future-ready workforce.
A robust capacity planning strategy lets managers anticipate when consultants will be rolled off from a project. This enables them to allocate the consultants to upcoming projects ahead of the curve, leading to effective bench management in audit and accounting firms.
Lastly, capacity planning enables audit and accounting firms to forecast billable and strategic utilization of the workforce ahead of time. Accordingly, they can mobilize consultants from non-billable work to billable or high-priority projects. This process boosts the engagement levels of consultants, optimizes their health index, and facilitates smooth project execution.
Now that we understand the benefits, let’s go through the capacity planning bottlenecks in this industry.
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Capacity Planning Challenges in Accounting and Auditing Firms
As discussed above, an audit and accounting consultancy firm requires many human resources with varying skill sets. Hence, capacity issues in these firms are several. Moreover, seasonal fluctuations in the workforce demand make it an even more arduous job.
Here are a few major capacity planning challenges that accounting and auditing firms face.
Lack of Real-Time Visibility into Project Resource Demands
Due to the absence of foresight into upcoming accounting and auditing projects, managers fail to forward-plan them efficiently. As a result, they are unable to identify resource shortages/excess in advance and take measures. In case of resource shortage, it may lead to last-minute firefighting and hiring of high-cost or incompetent consultants, compromising project quality.
On the contrary, excess accounting consultants can escalate project costs and lead to a loss of billable hours as managers can’t find suitable activities for them. In either case, this causes project delays, budget/schedule overruns, and subpar deliverable quality.
Shortage of Skilled Accounting Consultants
Accounting and auditing is a knowledge-intensive industry. Therefore, it is often challenging for accounting firms to maintain a large talent pool of highly skilled accounting and auditing consultants all the time. That is why,
Managers often face resource constraints, especially in a multi-project environment, due to the shortage of experienced consultants.
Failure to cater to resource demands across all the projects jeopardizes one or the other project and affects the bottom line. Moreover, an ongoing shortage of accounting consultants causes a loss of billable opportunities as the firm fails to acquire new clients.
High Consultants’ Costs Due to Global Competition
An increase in global competition has caused a rise in the demand for audit and accounting professionals across the globe. As a result, the costs of hiring and retaining a skilled workforce have also increased.
While a large-scale accounting consultancy firm can offer high salaries and other monetary benefits, it is not the same with small to mid-sized companies. Therefore, it becomes challenging to maintain a large talent pool for them on a permanent basis.
Inability to Manage Seasonal Fluctuations During Financial Year-End
During the financial year-end, audit and accounting firms often face high demands for accountants, tax analysts, budget analysts, etc. As a result, it becomes infeasible for these companies, especially small ones, to scale up and cater to these client requirements adequately.
Eventually, this failure to manage the seasonal increase in demand can lead to a loss of business opportunities and client dissatisfaction. Thus, it affects the firm’s revenue, reputation, and long-term sustainability.
Difficulty in Increasing Billable Hours of Accounting Consultants
Resource managers find it hard to ensure that all the consultants are utilized to their maximum capacity throughout the financial year. This problem becomes more pertinent during the trough season when there are not enough billable opportunities to deploy all the consultants.
For instance, tax consultants are often required towards the financial year closing and have comparatively higher availability at other times. So, finding billable projects during the trough period becomes arduous. As a result, their bench time goes up, leading to a significant decrease in billable utilization and overall profitability.
Read more: What are Billable Hours & its Importance in Consulting?
Surge in Employee Burnout Resulting in Unplanned Attrition
Resource managers often tend to book high-performing accounting consultants on multiple projects. This leads to scheduling conflicts, wherein the resources are booked beyond their capacity, or some of their allocations overlap with one another. Ultimately, it results in consultants being stretched too thin and overexerted.
If not checked at the right time, continuous overallocation of work results in employee burnout. In the long run, they may decide to leave the organization for better opportunities elsewhere, causing a surge in unplanned attrition.
Now that we know the challenges, let’s go through the steps to combat them in audit and accounting firms.
How to Overcome Capacity Planning Challenges in Audit & Accounting Firms?
Addressing capacity planning challenges in audit and accounting firms is essential, as it ensures that the necessary consultants are available for timely project initiation, ultimately facilitating successful delivery.
Let’s explore the different strategies through which audit and accounting firms can achieve this.
Forecast Resource Demands and Plan Accordingly
Resource managers can gain foresight into the consultants’ demands in current and pipeline projects. This will help them analyze the capacity vs. demand gap and identify the resource shortage/excess. Accordingly, they can implement resourcing measures to bridge the gap.
Managers can plan ahead to hire new consultants or upskill/retrain benched resources or employees with partially matching skillet before the project’s onset. This way, one can avoid excess/shortage of accounting consultants, fill project vacancies, and allocate competent resources. It also helps to save last-minute firefighting costs, ensuring profitability.
Read more: 5 Best Practices for Capacity Management
Implement Appropriate Resourcing Treatments Proactively
Consulting managers can examine the project pipeline to assess future skill requirements. This helps identify the shortfall of consultants across the organization. Accordingly, resource managers can implement corrective resourcing measures to fill the talent gaps.
First, they can look into internal channels, including the bench, to identify suitable candidates for upcoming projects. If the right consultants are still not found, they can go for external resourcing channels. They can initiate project-specific or skill-based hiring based on business requirements and contact their empaneled vendors to get the requisite consultants.
Leverage Cost-effective Global Accounting Consultants
Before assigning resources to consulting projects, managers can get visibility into accounting professionals and their attributes, such as skills, cost rates, charge-out rates, competencies, locations, availability, etc. This helps them to identify and assign cost-effective resources from low-cost regions or countries and maintain the project’s financial health.
Since these professionals hail from different countries, managers can provide them with a fast-track course on local law and accounting practices to ensure compliance. So, such an approach allows audit and accounting companies to reduce project resourcing costs without compromising quality.
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Create the right mix of permanent and contingent workforce
Resource managers must acquire complete visibility into current and future project demands to manage seasonal fluctuations effectively. Such granular insights help them understand the nature of project resource requirements and evaluate if they are one-off or recurring.
They can then make an informed decision on whether to hire permanent and on-demand consultants to fulfill given project requirements. They can eventually form the right balance of permanent and contingent workforce to bridge capacity gaps and handle all projects efficiently.
Maximize Productive Utilization with Suitable Measures
Audit and accounting organizations must maximize the profitable utilization of consultants to ensure steady cash flow and revenue. For this, resource managers must gain visibility into the current and future schedules of the consultants. It allows them to understand the billable, non-billable, and strategic utilization of every organizational resource.
Accordingly, managers can increase the billability of consultants by mobilizing them from non-billable to billable and strategic tasks. They can also bring forward various projects’ timelines to make the people on the bench billable and maximize productive resource utilization.
Ensure Uniform Workload Capacity Distribution
Accounting managers can regularly check the utilization levels of consultants to analyze whether they are overburdened with work and take appropriate resource optimization techniques to ease their workload. They can use resource leveling techniques for projects with flexible deadlines and readjust the demand against the capacity.
For projects with stringent timelines, they can pull in more consultants to complete the project without overloading the existing team members. Managers can also raise the minimum acceptable benchmark percentage of billable utilization rates by a certain percentage during trough seasons to evaluate burnout accordingly.
Read more: How can you Implement Workforce Optimization to Improve Productivity?
Now that we understand the solutions, let’s see how a modern capacity planning tool can help.
How Can a Modern Capacity Planning Tool Help Combat Resourcing Challenges in Audit & Accounting Firms?
Implementing an advanced capacity planning tool can help these firms efficiently overcome common resource-centric challenges. The software offers advanced features and functionalities like:
- 360-degree visibility into the workforce and their professional attributes such as skills, competencies, cost rates, demand, availability, utilization, etc., that helps managers based on key attributes like
- Advanced search and filter options that allow managers to identify and assign cost-effective local and global consultants to client projects.
- Powerful forecasting and capacity planning facility let the audit and accounting organizations stay forewarned of resource excess/shortage and build an optimized workforce.
- A multi-dimensional resource scheduler enables managers to keep track of consultants’ work schedules in real-time.
- Real-time BI dashboards like utilization and forecast vs. actual reports provide insights into consultants’ usage. It allows managers to prevent under/overallocation and reduce the risk of burnout and unplanned attrition.
Conclusion
Rightly expressed in the words of Waren Buffett, Berkshire Hathaway’s former CEO, “Accounting is the language of businesses.” Hence, it has become a valuable industry in this fast-paced modern business landscape.
However, capacity planning in this industry can pose several challenges, as explained above. Nevertheless, the right strategies combined with a robust capacity planning solution can help these organizations overcome them and streamline operational and project workflows to maximize ROI.
How are you addressing the capacity planning challenges in your accounting and auditing firm?
The Glossary
Read more: Glossary of Resource Workforce Planning, Scheduling and Management
The SAVIOM Solution
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