In this video, Isaac P. of Opsur argues that automation and cloud‑based tools are not a threat to accounting firms but a strategic advantage. He outlines three financial benefits of adopting automation: (1) freeing up staff time for high‑value activities such as business development, talent recruitment, and client advisory work, which indirectly drives revenue; (2) boosting operating margins by either cutting costs or increasing capacity by roughly 10%, which can raise a typical firm’s median margin from 13% to over 20% and enable the offering of higher‑value services; and (3) increasing practice valuation and exit multiples, as cloud‑oriented firms sell for 1.5× revenue versus roughly 1× for traditional local firms, according to listings on accountingpracticesales.com and poegroupadvisors.com. The presenter supports these points with data from a Thomson Reuters sample of 1,400 firms and live screen‑share examples of practice listings. He concludes with a call to action to book a free consultation with Opsur for firms interested in modernizing their processes.
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Today we're debunking the myth that AI automation and robotic processes are the enemy for the accounting industry. They're not. And in fact, if you embrace automation, you can make your firm more effective, more efficient, and more profitable. So stick around as we discuss the 3 main financial advantages of automation for accounting firms. We know you're all about the numbers, so we'll talk to you about how automation can impact your business financials. If you're keen to know more, let's get to it. Benefit number 1, space for high-value activities. Let's talk about the biggest benefit of automation for accounting firms, which is more time for high-value activities. Although this is not a financial benefit per se, this is what leads to the 2 other financial metrics that we'll discuss in a second. And let's be real, if you were to eliminate the time you spend doing paperwork, data entry, dealing with spreadsheets, replying to client questions, et cetera, et cetera, and instead you could free up your time for high-value activities, Activities like promoting your practice, connecting with prospects, recruiting great talent, improving your process, or even just you know doing activities that recharge you and de-stress you. How much more revenue do you think you could bring to your business? And it's not it's not just the founders that can benefit from automation. You know your your staff, the people delivering to clients can also make the most of their time when you remove a lot of the administrative and repetitive tasks around what you do, and you allow them to focus on data analysis, problem solving, and. Biding to clients and making competent decisions. You can fully delegate the rest to the right cloud-based software tools and automation tools. Things like data entry, number crunching, reconciliations, client reminders, file management, right? So many firms are still today primarily relying on fax, on paper copies, filing cabinets, things like that. And there might be a place for it, you know, if you're making the transition to become a cloud firm, but the old ways of doing things are almost always more time-consuming and as such less profitable, which leads me to benefit number 2, which is higher margins. So we're getting to the numbers here. According to a sample taken from the Thomson Reuters database of more than 1,400 accounting firms, the median operating margins were 13%. That's 1-3, 13%. And you know what that means is that half of the accounting firms were operating below 13%, right? Now, here's where automation comes in, 'cause through automation, it's not uncommon for you to be able to reduce costs by 10%. Or maybe another way to look at it, depending on how your team compensation is structured, you could increase your capacity by 10% with the same staff. Now, 10% might not sound like much, but if you're operating at 13, adding 10 percentage points, going from 13 to 23, that's almost twice the bottom line. So that's significant depending on, you know, the stage you are in business. And of course, this simply assumes that you offer more of the same. But some business owners that we've engaged with, they usually use their time to come up with new and more valuable services for their clients. So they might stop doing things like individual returns or bookkeeping, and instead they start offering more services that have higher perceived value, like tax planning or advisory service. And they can easily justify a higher price and higher margins with those services. So whether it's through reduced cost, increased capacity, or introducing more valuable service, automation can help you run a more profitable firm if you And here at Opsur, we help accounting firms modernize, standardize, and automate their processes. So if you're interested, feel free to check the first link in the description to book a call. Benefit number 3 is higher practice valuations. Let me explain. Small local firms are so dependent on their founders that they're rarely sellable. Most owners have to give the firm to their children, if that's a possibility, or close up shop with nothing to show for it. And that's a bummer. Cloud firms, on the other hand, are typically more sellable businesses, and they also sell at a higher multiple. So if you as an accountant for owner intend to retire, whether that's 2 years from now or 20 years from now, your business will probably be your greatest asset. So it's very important that you build it in a way that can be sold, even if you're not thinking about that possibility right now. And with the growth of cloud firms, exiting or selling accounting practices is becoming a lot more common. There are actually many websites like accountingpracticesales.com or poegroupadvisors.com that allow you to see real listings being sold. And I want to show you— let me share my screen real quick to show you the difference in evaluations between traditional local firms and accounting firms. Okay, let me go ahead and share my screen to walk you through that. So this is one of the most popular sites, accountingpracticesales.com. More than a billion dollars in leads closed, in deals closed. And you can see the practice listings. They show you practices in the United States, Canada, but also virtual practices. If I click on virtual practices, I'm gonna start seeing the annual revenue And the asking price of those practices. You can see, you know, 240 being sold for 350, 310 being sold for 360, 325 being sold for 475. At a high level, you have essentially like close to 1.5 times revenue. It's what most of the virtual and cloud firms are being sold for. Now, if I go back and select, say, United States, You're gonna see that the the revenue to asking price ratios—it's about one to one. So multiples are just one. As you can see, annual revenue two nineteen, two fifteen, two and a half million, two and a half million, two hundred thousand. This is a little higher than usual, but most of them are close to that one to one ratio versus one to five ratio in the in the example of the virtual firms. So you can in a very real way get more dollars out of every dollar of revenue if you. operating a firm that's in the cloud, and you can make that transition. It's not an easy transition, but it's a transition that we help people with in our day-to-day. So it's definitely something worth considering. That said, that's it for me. Again, if you want to know more about what we do here, you could book a free consultation with our team in the first link in the description. And I— if you enjoyed, give me a like, and I'll see you in the next one.
