"It is quickly becoming imperative that firms retool the way they do business," warned Payne, president of RAS Worldwide Operations. In a keynote speech at the Results Accountants' Network Members and Boot Campers Conference here last week, Payne outlined a new business model for local firms.

He noted several factors that indicate trouble for the current public accounting model: increasing fee pressure from clients; firms under-leveraged on average seven-to-one; failure to use technology to its advantage; clients not receiving what they need; poor operating structures inhibiting the ability to innovate; an inability to find and retain good people; insufficient business training on all levels; no global connection; and partners and staff who don't enjoy what they do.

"Technology is eliminating the intermediary -- the middleman -- from many business transactions," Payne said. "In the professional service sector, the economy is favoring the large organizations that, through economies of scale, can commit the resources and capital to develop technology-driven services that add value to the transaction."

The basic competitive advantage that local firms enjoy -- the close relationship with the small business client -- will continue to be a powerful asset, however, and firms will need to dramatically change their processes to maintain that advantage, according to Payne.

The local firm of the future will function as a client service unit, Payne said. "The firm will have fewer clients, but generate much higher annual fees from those clients through more sophisticated services, such as 'virtual CFO' functions. And the firm will be structured like a business, not a partnership, with more involvement from non-CPA professionals in order to adequately meet client needs."

Payne predicted that the heart of the "firm of the future" will be a robust, broadband technology network that provides a wide array of financial and non-financial information, and connects independent firms on a global scale. "In the future, competition among public accountants will not be so much firm versus firm as network versus network," he said.

-- SmartPros News Staff

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