CFOs in Singapore and Hong Kong: Do you think accounting firms on your home turf adopt technology fast enough?
According to a report by Xero, an online accounting software provider accounting firms in Singapore are slower to adopt technology into their practice compared to practices in Hong Kong, where technology adoption plays a key role in business growth and productivity.
While 25.8% of accounting firms in Singapore have adopted data automation apps to improve operational efficiency, 59.5% of firms in Hong Kong firms have already done so, said Xero.
Likewise, 34.5% of pacesetting firms in Singapore versus 81% in Hong Kong have embraced data automation, Xero added.
Singapore’s pacesetting firms are making on average 99.5% more revenue and growing nearly three times faster than the industry average and are saving around 215 hours serving each client every year, according to the tech firm.
Routine, year-on-year compliance work is still the bread and butter for Singapore’s accounting practices, Xero pointed out.
According to the firm, compliance services, which involve helping a client to meet their compliance obligations, make up an average of 70% of a firm’s revenue, much higher than it’s for more simple and complex advisory services.
This is in contrast to the Hong Kong market which appears to have a bigger appetite for advisory services, Xero observed, adding that the demand in Hong Kong for simple and complex advisory services is already on par with the demand for compliance.
According to the software firm, simple advisory practices have gained prominence in the last decade and are involved in advising clients on cash flow forecasting, budgeting and planning while complex advisory practices are common in larger, well-established firms and boutique advisory practices that have earned a reputation for steering businesses through the intricacies of complex business transactions or multi-jurisdictional regulations.
Accounting firms that move towards providing advisory services are prioritizing the implementation of time-saving methods to reduce the time spent chasing clients for documents and information, said Xero, adding that these types of practices report the highest rate of revenue growth.
Simple advisory firms reported 13.7% growth while complex advisory firms reported 13.5% growth. Growth for compliance firms was also strong at 10.3 percent, reflecting the favorable market conditions in Singapore, the firm observed.
Despite accounting practices in Singapore currently lagging behind their Hong Kong counterparts in the adoption of technology and data automation tools, they are expected to catch up with their Hong Kong counterparts in the new year, Xero pointed out.
Just over half of Singapore firms—at 52%—intend to implement data automation tools into their practices in 2019, compared with just 32% of firms in Hong Kong, the company noted.