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DIGITAL OPTIMIZATION
Much has been written over the past few years about how firms of all sizes transitioned to a completely digital (paperless) environment. Whether the desire is to increase the effectiveness of client service or to improve firm profitability, the goal for all CPA firms should be to create a digital environment where data is managed effectively and efficiently. A well-designed digital environment can help a firm enhance its use of human resources and facilities.
A digital firm is able to serve more clients with fewer people. The typical CPA firm has 20 percent of its operating facility devoted to the storage and retention of paper files! Storage and retention of excessive files cost money. Going paperless does not mean "no paper." More realistically, it means "less paper." Some clients will still provide manually prepared documents during an engagement, and most will continue to issue financial statements and tax returns in a paper format. Paperless, then, is the digital storage, manipulation and retrieval of client data.
Firms that made the transition to a digital environment report marked reductions in administrative support personnel. These valuable people do not necessarily need to be terminated; they can be re-tasked with more profitable assignments. Today's accounting software packages are designed to help eliminate or significantly reduce clerical tasks, such as typing financial statements and other engagement reports.
Benefits of Working Digitally
The current trend in our industry is for more fixed fee engagements. Whether you choose to believe it, many clients, today, view traditional audit and tax compliance services as "commodities." These "commodity" services are the foundation for many firms, and those that can operate more efficiently will see higher profits. Firms that implemented digital environments are already showing higher profits, in addition to seeing increased efficiency. On average, in the second year of a digital office implementation, engagement hours are reduced by approximately 25 percent for audit engagements and 50 percent for tax engagements. This, in itself, is incentive to make the change.
Increased profits, however, are not the only benefit of a digital environment. Many firms report improvements in the quality and timeliness of client service. Sharing information digitally is already available in many of the accounting software solutions. This digital sharing of electronic...