Intuit Rate Survey: COVID-19’s impact on accounting professionals and their clients
In our last article, we looked at average billing rates by region, state, professional designation, and ProAdvisor® status. The biggest takeaway was that the investment in time upfront in your ProAdvisor certification can pay dividends for years to come. In fact, the average hourly rates increase as you earn more certifications. So, be sure to get your certification!
In this article, we will examine the impact COVID-19 had on our clients’ businesses and our firms. The data presented in this article is based on the answers provided by 241 accounting professionals who chose to participate in the COVID-19 survey. We report on the pandemic’s influence on average fixed prices and gross profit margins, and touch on the impact on consulting services. We also provide insight into what client industries were most negatively affected, and how much accounting professionals charged for advising on Paycheck Protection Program (PPP) and Economic Impact Disaster Loans (EIDLs).
Average fixed prices and gross profit margins
COVID-19 turned the world upside down and put an extraordinary amount of pressure on the accounting profession. It was interesting to note that despite the chaos that was occurring throughout many industries, the majority of survey respondents revealed that their average fixed prices for monthly bookkeeping, individual tax preparation, and business tax preparation services were not negatively impacted.
In addition, survey data shows that only 24% of respondents experienced a decrease in their gross profit margin as a result of the pandemic, 38% of survey respondents actually experienced an increase in their gross profit margins, and the remaining 38% were not impacted at all.
We collected specific commentary from respondents that sheds some light on what caused an increase or decrease in gross profit margins for their firms. Some respondents reported that the rates they charge have not been impacted; however, they are having a more difficult time with collections. One accounting professional reported that they “lost a couple of clients that were affected due to COVID, but new clients took their place.” Other respondents indicated that their profit margins appeared to decrease because they spent a lot more time on client work, but didn’t charge more for their time.
“Not everyone adapted well to remote work, and countless hours were wasted,” said one accounting professional.
As a result of the pandemic, some firms were forced to adopt new technology, and ways of completing their work and communicating with clients. The transition to remote work due to the pandemic impacted profit margins differently for accounting firms. For some, gross profit margins decreased because of inefficiencies experienced during the transition. Others reported that profit margins increased with their shift to remote work. For them, cloud applications, email correspondence, and online payments allowed for more flexibility when working with clients.
Impact on consulting services
The pandemic introduced new challenges, pressures, and questions for accounting professionals and their clients. For this reason, we were curious to see how consulting services were impacted by COVID-19. Some respondents reported that more businesses started seeking their help, resulting in higher demand and an increase in signed engagements. Others indicated that a large portion of consulting engagements were postponed or cancelled because clients were unable to afford their services.
Those firms who offered remote services either saw no impact or an increase in the number of consulting service engagements. Some respondents stated that their firm offered free consulting services for SBA lending and grants to assist clients affected by the pandemic, while other firms decided to charge for PPP consulting, as it was in higher demand.
Impact on client businesses and industries
On average, our survey respondents reported that 43% of their clients experienced a negative financial impact from the pandemic. We wanted to know what client industries were most negatively affected. Based on the data provided, 20% of the total responses indicated that clients in the restaurant industry were negatively impacted. The agricultural industry seems to be the least affected by the pandemic, along with the health/social care and real estate industries.
PPP and EIDL funding services
The data collected shows that 68% of accounting professionals who filled out the COVID-19 survey provided PPP and EIDL funding support services to their clients. On average, survey respondents reported that 59% of their clients received PPP funding, while 33% received EIDL funding. Of the accounting professionals who provided PPP and EIDL funding support services, 49% did not charge a fee.
If you helped your clients with emergency funding, did you charge a fee? Why or why not? Now that many of our clients have recovered and things are getting back to normal, perhaps we should reflect on how we responded to the needs of our clients. What have we learned? What implications does this have for the future?
Intuit Rate Survey app!
If you missed the last article, be sure to check out the Intuit® Rate Survey app! With this app, you can search for data by Region, State, Professional Designation, and ProAdvisor status. Check it out to see how your rates compare with other professionals like you! Also, be on the lookout for our next rate survey article, where we discuss behavior-related topics like going paperless and networking trends.