The 14th edition of The Good, The Bad & The Ugly report (GBU) has revealed one in four firms in Australia makes a loss if a notional partners salary of $200k is applied. Brad Geelan, GBU publisher and the head of business development at Business Fitness, said client fees have also dropped across the sector.
“At one end of the spectrum, there’s been an influx of break-away firms providing cheaper services; at the other, the Big 4 have introduced attractive retainer options for small businesses,” Geelan said.
Geelan said the changes come in the midst of a "scare campaign" by the cloud computing industry.
“At every industry conference for the last four years, we’ve heard the voices of doom telling accountants that technology is killing compliance fees and to embrace business advisory services. It’s a do or die message. Status quo is no longer an option," he said.
While Geelan said it was important for firms to adapt to technology, he said they needed to do so in a way that best served clients.
"The GBU research shows a 133% increase in firms’ expenditure on online services over the past four years. Yet, we’re also seeing a first-ever drop in revenue. The smaller, cheaper break-aways are not yet making a profit, but they’re targeting key clients of the mid-tiers.”
The report found that there were decreases in average revenue and net profit for firms and partners, along with a decline in productivity and the average hourly rate. Firms were also finding it challenging to identify new clients, but were spending less on marketing, the report indicated.
The accounting sector has seen its first ever drop in revenue and profits, a new report has claimed.