Impact of Competition on an Accounting Practice Flashcards
(6 cards)
Name 5 impacts of competition on an accounting practice.
- Pressure on fees and profit margin
- Service differentiation and specialization
- Technology and efficiency
- Talent acquisition and retention
- Client relationship management
Why does pressure on fees and profit margins matter?
Price sensitivity is high in a competitive market as clients may switch for lower fees, causing practices to reduce fees or justify premium through added value.
However, cutting prices too much without reducing costs or increasing efficiency can erode profitability.
Why does service differentiation and specialization matter?
Clients will look for accountants who understand their specific sector or offer broader advice beyond compliance, giving an advantage to an accounting practice with the expertise the clients want or several advisory services, retaining clients and allowing them to charge higher fees.
Why does technology and efficiency matter?
Tech-savvy practices can serve more clients with fewer resources, allowing them to improve their margin and client satisfaction.
Cloud accounting, automation, and integrations with HMRC (MTD) are now expected because of this, allowing firms that have adopted the technology earlier on to offer faster turnaround, better insights, and improved client experience.
Why does talent acquisition and retention matter?
As skilled accountants are in short supply, without the correct team, an accounting practice cannot grow, deliver quality service, or innovate efficiency.
However, for a smaller business, offering flexibility CPD (Continuing Professional Development, and a good work culture, will help them to compete with the larger firms.
Why does client relationship management matter?
Strong relationships are a major barrier to client churn, and providing proactive support and clear communication builds trust, especially in a competitive field.
Clients who have been with the practice for a while and are loyal often bring in references and are more open to higher-value services.
