Counting Dollars: New Study Reveals Digital Accounting Driving Profitability for SMEs, with 32% Leaving Traditional Support Behind
FOR IMMEDIATE RELEASE
Ottawa, ON – January 30, 2024
Zenbooks, a leading online accounting firm dedicated to empowering businesses with innovative financial solutions and services, has partnered with Abacus Data to conduct a comprehensive research project to understand the changing relationship between small and medium-sized business owners and their accounting professionals. The findings of this study shed light on the evolving landscape of accounting services, focusing on technology trends and generational differences among business leaders.
In the shift to remote and hybrid models, younger SMEs prioritize efficiency, cost-effectiveness, and openness to modern accounting tech solutions. The study underscores the urgency to adapt to avoid falling behind. Amid tight budgets and impending COVID small business loan repayments, SME leaders embracing digital accounting (82% among the younger generation, 75% among growth-focused businesses) demonstrate stronger financial resilience. Conversely, those struggling with revenue often stick to traditional methods, highlighting the critical link between affordability and modern accounting practices for SME success.
“This study essentially confirms the trends we’ve observed in response to the evolving 21st-century workforce,” explained Eric Saumure, CPA, CA, Principal at Zenbooks. “Modern accounting firms provide a fresh perspective, demonstrating agility in adapting to remote and automated practices. This adaptability broadens service offerings and advocates for small business owners, addressing their most crucial challenges, many of which are being experienced for the first time in this post-COVID, high-inflation era.”
The study underscores the importance of professional support in business success. As experience grows, accounting-related challenges decrease. Businesses handling their own accounting represent 76% of those with stagnant or decreasing revenue, while those using online/virtual bookkeepers experience a 9% revenue growth compared to 3% for stagnant or decreasing revenue.
“Our research reinforces what we’ve been doing as a modern accounting firm for younger business owners. Progress involves aligning our services with SME pain points, like addressing critical but time-consuming tasks such as managing cash flows and paying bills. This is a unique time in the profession’s history to be a young and tech-friendly accountant,” added Mr. Saumure.
The research, which surveyed 500 small business owners in Canada, revealed several significant insights into the relationship between business owners and their accountants.
- Growing Divide: A substantial portion of small and medium-sized business leaders, 1 in 3 (32%) of all SMEs surveyed, feel they have outgrown their accountant. Only one-third of small and medium-sized business leaders (32%) reported being “very satisfied” with how their accounting and bookkeeping needs are currently addressed. This number drops significantly to only 24% among younger business owners seeking to expand their businesses.
- Technology Adoption: Younger business owners, those under 45, are embracing online accounting firms and technology at a higher rate than their older counterparts. They are nearly twice as likely to perceive value in cloud-based accounting (88%) compared to the older generation (47%).
- Business Challenges: The most common headaches for businesses are paying bills (34%) and managing cash flow (34%). Surprisingly, traditional accounting firms do not typically offer services that directly address these challenges, while modern accounting firms do.
- Age and Growth: Younger businesses tend to experience more growth-related challenges, with the most significant headaches occurring during the growth phase. Business owners under 45 are nearly twice as concerned about labor costs compared to older business owners.
- In-House vs. Outsourced: Younger businesses are more likely to hire in-house employees or online/virtual bookkeepers to manage their accounting needs, possibly reflecting a shift in their approach to accounting expertise away from traditional accounting firms. Business owners who are very or fairly profitable, are 12% less likely to use a traditional accountant or accounting firm than those who are breaking even or unprofitable.
- Digital Transformation: Accounting is increasingly being done digitally, especially among the younger generation (82%) and businesses aiming for growth (75%). However, businesses experiencing stagnant or decreasing revenue are more likely to use analog methods.
For more details on Zenbooks’ research findings, please visit https://Zenbooks.ca/TechnologyInAccounting.
The survey, conducted between June 16 and July 7, 2023, captures the responses of 500 participants based in Canada. Every participant is an SME owner responsible for their business finances. The data is weighted by region. The margin of error for a comparable probability-based random sample of the same size is +/- 4.35%, 19 times out of 20.
Zenbooks is a forward-thinking accounting firm dedicated to helping businesses thrive in the modern era. With a focus on cutting-edge technology and personalized service, Zenbooks empowers business owners to achieve their financial goals. Through a combination of expertise, innovation, and a commitment to excellence, Zenbooks stands as a trusted partner in financial success.
Eric Saumure, CPA, CA – Principal, Zenbooks