For businesses and individuals the world over, accounting firms provide a crucial service; helping them manage their financial well-being with the provision of services such as auditing, tax preparation, and financial planning. But with the tax landscape in a constantly shifting state, their work becomes more challenging, year on year.

Listed below are some of the most significant challenges accounting firms face today, along with ways to mitigate them:

Coping with increased workloads when resources are limited

Particularly during tax season, when demand for accounting services is far higher than at other times of the year, many firms start exploring options to outsource tax preparation services.

At such times of the year, even the most skilled and experienced of accountants can be pushed to their limits while trying to manage huge volumes of tax preparation and filing with limited resources. They may have to spend out on extra temporary staff to help them relieve the pressure, which can stretch their budgets to the max, and put a real strain on the firm’s finances. For many, outsourced tax preparation offers them a vital, cost-effective and convenient solution to deal with:

  • Routine but time-consuming tasks
  • Staff burnout
  • Scaling

Managing the demands and expectations of clients

During busy periods of the year, most clients expect to receive regular updates from their tax professional, but this can often be overwhelming for smaller firms, and lead to a lack of customer satisfaction.

Choosing to outsource some of their tasks to a reputable third party provider, can help busy firms better manage their clients expectations, and keep the lines of communication open at all times. And, with many outsourced providers based in countries such as India, favorable time zones mean that firms can deal with client queries around the clock.   

Dealing with data security and client privacy

Protecting sensitive client data is always of paramount importance for accounting firms, and with the increased demand of tax season, strict measures must already be in place to deal with appropriately. Even the smallest of breaches could see accounting firms forced to face legal consequences, which could have a devastating impact on its reputation within the industry.

When using an outsourcing partner, however, firms can benefit from the robust frameworks for protecting data that they already have in place, such as ISO 27001 and GDPR. They can also benefit from their encryption techniques to protect client data, and strict policies surrounding access control of sensitive data.

Coping with cash flow issues

The financial strain often placed upon accounting firms can be intense, with cash flow becoming a very real issue. From delayed client payments, and software upgrades, to the cost of hiring additional staff to manage workloads during tax season, outsourcing is again the hero of the hour for busy accounting firms.

Bypassing the need to hire temporary staff who have to be trained, paid by the hour, and given additional benefits such as sick leave and insurance etc, outsourcing means that accounting firms pay only for those services they use, when they use them, and also means they don’t have to spend out on new software or tech to cope with demand.

Keeping up-to-date with tax laws

Tax laws are in a constant state of evolution, and yet accounting firms must keep themselves up-to-date with them at all times, no matter how often they change. If they don’t, client relationships are at risk of breaking down, and hefty fines and penalties may ensue.

Using the services of an outsourced tax preparation provider, enables accounting firms to stay on top of regulatory changes without having had to invest in automated compliance tools themselves.

Accounting firms may make tax preparation look easy, but behind the scenes, it’s often a very different story. With overworked accountants, dissatisfied customers, and budgetary constraints, it’s easy to see why outsourcing has become such an effective solution for the day-to-day challenges faced by many accounting firms.