In today's fast-paced accounting landscape with low CPA graduation rates, high retirement rates, and growing client demands, time constraints have emerged as the most significant pain point faced by Canadian accounting firms and firms globally. As the industry grapples with a dwindling CPA population, the challenge of balancing less human capital and increasing client demand has become more pressing than ever. Fortunately, amidst these challenges, there is a clear and transformative solution - automation.
Automation in accounting is not a novel concept; its ability to streamline processes has been recognized for ages. With limited time and resources at hand, automation continues to serve as a crucial tool for firms worldwide and is widely used to help create capacity. The rising recognition of this fact has sparked a surge in discussions around automation and AI, as firms seek ways to maximize efficiency and meet the evolving needs of their clients.
Among the various aspects of accounting activities affected by time constraints, one of the most critical is the art of discovery. Unveiling new opportunities within a business client base, driving advisory services, and fostering growth and tax savings for business owners, discovery plays a pivotal role in the success of accounting firms. However, it's also an aspect that often gets overlooked and falls under an accountant’s already full plate, as it's typically not billable time.
This is where automated discovery steps in as a game-changer. Leveraging anonymized data from the Canadian developed interVal platform over the past 12 months, collected from 500 SMBs across diverse industries, automated discovery reveals compelling patterns that provide crucial insights for businesses.
For instance, the discovery of excess cash and non-operating assets in a substantial percentage of businesses highlights the missed opportunities within their operations. interVal found that 45% of SMBs possessed over $200,000 in non-operating assets, primarily excess cash. The average non-operating asset size among this group was $1.3M. These findings support the notion that SMBs often concentrate on day-to-day operations and may not leverage opportunities that exist beyond their immediate focus.
Additionally, debt serviceability calculations shed light on the potential for businesses to secure significant loans, unlocking avenues for further growth and development. Through debt to equity ratios and serviceability calculations, interVal discovered that nearly 81% of business owners could service a bank loan of $50,000 or more. These businesses collectively could safely service loans exceeding $2.2M, with an average loan amount of over $872,000.
Furthermore, monitoring business health emerges as a key driver of faster growth rates.. interVal's analysis reveals average year-over-year enterprise valuation growth rates of 29% for businesses monitored annually, surpassing typical SMB growth rates of 8-12%. This underscores the importance of measuring and managing key metrics to drive positive outcomes.
The significance of automated discovery becomes apparent when considering the challenges faced by accounting firms in providing proactive advice and solutions to their clients. Limited time and resources, coupled with attrition within the industry, hinder accountants' ability to optimize financial outcomes for SMBs and affect overall client satisfaction.
However, embracing automation in accounting not only streamlines processes but also enables firms to enhance their advisory services, exceeding client expectations. The insights garnered through automated discovery empower businesses to make informed decisions, seize untapped opportunities, and drive substantial growth. "Using interVal's automated discovery has been a game changer for me and my clients. Having access to automated actionable insights surfaced through the platform has allowed me to proactively advise my clients efficiently,” says Yann Brisebois, Partner at Turner Moore LLP. “They may need to invest excess working capital or have a better understanding of their serviceable debt, but they are trusting me as their advisor to do so, and interVal saves me time to help them."
Our Canadian national partners are seeing the results already, with a 30% reduction in manual time spent on discovery. interVal surfaces redundant assets and excess working capital, providing accountants with proactive sight-lines to tax engagements and the ability to unlock more tax-focused billable opportunities.
As accounting firms worldwide recognize the benefits of automation and AI, they position themselves at the forefront of the industry, ready to thrive in the face of evolving challenges and increasing client demands.
The art of automated discovery heralds a new era of efficiency, profitability, and client satisfaction for the accounting profession. By embracing automation and leveraging its power to unlock valuable insights, accountants can confidently navigate the future, better equipped to serve their clients and drive business success. As the industry continues to evolve, automated discovery stands as a beacon of progress and innovation, empowering accountants to pave the way towards a more prosperous and impactful future.