Accounting Practice Management Market Is Estimated To Witness High Growth Owing To Increasing Demand For Automated Solutions And Growing Need For Regulatory Compliance
The Accounting practice management market is estimated to be valued at US$ 621.4 Bn in 2024, exhibiting a CAGR of 13.9% over the forecast period (2024-2031). The market is witnessing high growth owing to factors such as increasing demand for automated accounting software and solutions to streamline workflows. Furthermore, with growing regulatory compliances across countries, accounting practice management systems are becoming a necessity for accounting firms to avoid discrepancies.
Market Dynamics:
Accounting practice management systems help firms maintain compliance with statutory accounting standards and regulatory guidelines mandated in respective countries or regions. With financial regulations becoming more stringent, accounting software ensure compliance requirements are met through automated workflows and controls. This is driving the increased adoption of accounting practice management solutions globally.
Busy work schedules and large client base have increased the demand for automated accounting software that can streamline workflows and processes. Accounting practice management systems digitalize routine accounting tasks, allowing accountants to focus more on value-added services. They provide capabilities like automated bank feeds, invoice generation, billing, and receivables which enhance efficiency. This growing need for automation is a key growth driver in the market.
Major Driver: Growing Demand for Cloud-based Accounting Solutions
The accounting practice management market is witnessing significant growth in demand for cloud-based accounting solutions from small and medium sized accounting firms and practices. Cloud-based solutions offer advantages such as low upfront costs, scalability, easy collaboration, mobility, and automatic updates. Accounting firms are increasingly adopting cloud-based solutions as it allows accountants and their clients to access accounting data from anywhere using internet connected devices. The demand for cloud is growing due to benefits such as no expensive hardware or complex infrastructure requirements. Accounting firms find cloud solutions more affordable compared to expensive on-premise Enterprise resource planning (ERP) systems. This growing shift towards cloud-based models is a major driver for growth in the global accounting practice management market.
Major Driver: Increasing Digitization of Accounting Processes
Another key driver is the increasing digitization and automation of accounting processes. Traditional manual accounting practices are gradually becoming outdated. Accounting firms are investing in digital solutions to streamline processes such as billing, payroll, financial reporting, and compliance. Practice management solutions help automate repetitive tasks and integrate with other business applications such as CRM systems. This allows accountants to focus more on value-added services rather than administrative tasks. TheCovid-19 pandemic has further accelerated this digital transformation as more companies and accounting professionals adopt digital tools for remote working. The demand for digital accounting practice management solutions is growing significantly due to benefits such as improved efficiency, data accuracy, and enhanced client services.
Major Restraint: Data Security and Privacy Concerns
A major challenge faced by the accounting practice management market is concerns around data security and privacy of sensitive client information stored in these solutions. Accounting data contains confidential financial and operational details of companies which could be misused. Any security breach in practice management platforms can damage client trust and reputation of accounting firms. While cloud-based solutions offer advantages, firms hesitate to move sensitive data to the cloud over security and regulatory compliance issues. Ensuring high-level data protection through robust access controls, encryption and regular audits is critical. High profile cyber-attacks have increased awareness about security vulnerabilities of business applications containing confidential data. Addressing privacy and security challenges through continuous upgrades is key to boost the adoption of practice management systems.
Major Restraint: Lack of Digital Skills
Another restraint to the market growth is the lack of digital skills among existing accounting professionals to fully leverage new technology tools. Many accountants have traditional skill-sets optimized for manual processes and are hesitant to transition to digital. Younger generations with inherent technology affinity are gradually entering the industry but a major reskilling is required for current workforce. Limited technical expertise acts as a barrier for small practices to select and customize the right platforms as per their unique needs. Vendors need to simplify software, provide extensive training programs and enable accountants to gradually learn new skills. Addressing the digital skills gap through partnerships with training institutes can accelerate technology adoption in the accounting field.
Major Opportunity: Growing SMB Customer Base
The growth of small and medium businesses globally presents a major opportunity for providers of accounting practice management solutions. SMBs are increasingly relying on professional accounting services and compliance support. Streamlined practice management platforms catered for SMB needs can help firms scale their customer base. Solution providers can offer tailored solutions and pricing models for SMB segments. Enhanced mobility features, templates, and automating repetitive compliance tasks can offer greater value to growing SMBs operating with fewer resources. Strategic partnerships with business consultants, banks, and Chambers of Commerce can help expand reach and acquire SMB customers looking to outsource their accounting requirements. Tapping this growth in the SMB customer segment presents significant opportunity for revenue expansion.
Major Opportunity: Rising Accounting Needs of Gig Economy Workers
Another key opportunity lies in the rising accounting and tax requirements of the global gig workforce engaged in freelancing platforms. The popularity of gig and platform-based work models is continuously growing across developed and emerging markets. These independent contractors and freelancers need basic accounting software for invoicing, expense tracking, and tax filing support. Simplified cloud-based practice management tools catered specifically for this audience can help gain new customers. Features like connecting payment platforms, auto-calculating taxes payable, and fast e-filing can add value. Establishing partnerships with top freelancing websites and apps can introduce accounting solutions to their huge global member networks. Tapping into the growing $1.5 trillion gig economy presents a major business potential.
In conclusion, the global accounting practice management market is poised for continued growth driven by demand for cloud solutions and digitization. While data security challenges and lack of digital skills currently restrain adoption, opportunities around SMB segment and gig workforce can boost the customer base and revenue streams.
Link: https://www.coherentmarketinsights.com/market-insight/accounting-practice-management-market-2590
Key Developments:
- In May 2022, Trintech, a leading global provider of cloud-based financial close solutions, formed a strategic partnership with IQ BackOffice, a global leader in financial process automation and business process outsourcing. The goal of this partnership is to help finance and accounting (F&A) teams reduce business process costs while optimizing process effectiveness and efficiency.
- In March 2022, AccountancyManager (AM), the leading onboarding and practice management software provider in the UK, announced that it had been acquired by Bright Software Group (Bright). Bright, the provider of the award-winning BrightPay payroll product, is recognized for delivering high-quality software solutions to SMEs and accounting firms across the UK and Ireland.
- In February 2020, Intuit ProConnect, a division of Intuit, announced a strategic partnership with Karbon, a leading practice management solution provider. The collaboration aims to deliver Intuit Practice Management powered by Karbon to tax professionals. This integrated platform will enable firms to streamline their workflow from end-to-end, allowing them to work more efficiently, make better-informed decisions, and improve client service. The centralized, collaborative work management platform will be deeply integrated with users' email, Intuit ProConnect Tax Online, and Lacerte tax software, increasing team output and productivity.
Key Players:
Baker Tilly, BDO USA LLP, CBIZ & MHM, CLA, CohnReznick LLP, Crowe LLP, Deloitte, Eide Bailly LLP, Ernst & Young LLP, FORVIS LLP, Grant Thornton LLP, KPMG LLP, Marcum LLP, Moss Adams LLP, and PwC
