The persistent accountant shortage sees firms struggling and SMBs turning to software as a savior

Within the last two years, droves of accountants and auditors across the U.S. have exited the financial field, severely limiting the services and expertise that accounting firms provide many small and midsize businesses (SMBs).

Unfortunately, America’s accountant shortage shows no signs of stopping, and many SMBs continue to face significant challenges when partnering with outside accounting firms. In fact, according to Capterra's Accounting Shortage Survey, 64 percent of SMBs are struggling to find outside firms that can handle their accounting and finance needs.

Most businesses (65 percent) look for full-time support from firms, especially when it comes to time-intensive tasks that lend themselves well to specialized expertise -- like navigating the complicated tax compliance process or conducting an audit, for instance.

Firms are doing their best to support SMBs. However, high turnover, decreased bandwidth, and a drought of qualified professionals able to handle specialized tasks have made this more difficult than ever.

Businesses report grappling with challenges like rising costs -- incurred by firms having to increase prices to compensate for heavier workloads -- and firms' overall inability to support requests, whether that’s due to a lack of headcount or expertise.

Even among businesses that have full-time outside support, only 7 percent say that they have not had to delay any accounting tasks this year due to issues with their service provider.

In an effort to avoid delaying critical tasks, 52 percent of SMBs turned from outsourcing to another alternative that can help them save money, free up time, and improve their financial decision-making -- software.

Software to the rescue

The appeal of accounting software isn’t lost on businesses -- in the next year, 58 percent of respondents plan to spend more than $10K on new accounting software alone. Time-consuming and routine tasks such as preparing financial statements or data entry can be handled with this technology, and more nuanced software can even provide guidance on financial planning and analysis or assist with tasks that most SMBs outsource, such as ensuring tax compliance.

Our research finds that there are three leading technologies that SMBs say they plan to adopt within the next two years. Each of these tools streamlines and simplifies a variety of financial tasks that businesses often outsource and can be useful solutions to challenges incurred by the accountant shortage.

1.      Billing and invoice software

On paper, invoice management sounds simple. However, in practice, managing multiple invoices from different vendors and in different formats can get complicated quickly. This technology, like outsourcing, can save SMBs money and free up talent to handle other financial tasks. However, software uniquely has the ability to keep payment records seamlessly up-to-date and can even automate communication with vendors and customers. With many outside accounting firms lacking the bandwidth to take on time-consuming tasks, this solution can be especially valuable for SMBs seeking assistance with their routine accounting needs.

2.      Budgeting and forecasting software

Many businesses rely on the expertise of certified financial planners or other advisors in accounting firms to formulate and manage budgets or to use collected data to craft customized financial strategies. As the shortage raises the cost of these outsourced services -- or in some cases, eliminates their accessibility altogether -- adopting software in this vein can help SMBs plan for what-if scenarios and make predictions on where their business is headed based on data, all of which can be displayed through easily created charts and graphs. Technology of this kind shortens the process and focuses collaboration into one single tool, streamlining internal coordination immensely.

3.      Accounts payable and receivable software

It can be difficult for SMBs to justify hiring an accounts payable/receivable specialist -- that's one of the many reasons why they outsource to handle this time-consuming process that’s unfortunately prone to human error. Software of this nature streamlines these activities, consolidates important data, and offers real-time reporting so that businesses have a better understanding of their cash collections and payment processes. Automating this function also reduces costs and can create a standardized process to free up more time for other critical accounting needs.

Technology is a turnkey solution to tackle the accountant shortage

Navigating the accounting shortage isn’t easy and requires businesses to thoughtfully consider where they turn for assistance with financial operations. Accounting software in all its many shades and solutions is a more than viable option to save SMBs money, time, and unnecessary stress.

Businesses should focus on what accounting tasks can be best served with technology -- if invoices are piling up, billing and invoice software can lighten the load. If allocation funds and strategy are top of mind, budgeting and forecasting software might be better solutions.

No matter where they choose to invest, SMBs would be remiss to neglect the impact technology is having on the financial landscape. As 2023 rolls on and America’s accounting shortage persists, software just might end up being the hero SMBs need.

Image Credit: EM Karuna / Shutterstock

Max Lillard is a senior finance analyst at Capterra, the #1 destination for organizations to find the right software and services, so they can save time, increase productivity, and accelerate growth.