Millennials are the new generation of business leaders.
With more than 75 million members, they now outnumber baby boomers. While the generation’s birth range is generally categorized as the early 1980s to the early 2000s, some researchers cite the starting year as 1977. This means that the oldest millennials can be anywhere between their early 30s and 40 years old.
Millennials have a substantial impact on the business world as leaders and decision makers. Many now control their organizations’ relationships with accounting firms. Firms that can’t meet or exceed millennial expectations risk losing clients and jeopardizing long-term growth opportunities.
The 2017 Millennial Business Owner-Accounting Firm Survey questioned more than 1,000 business owners and general managers who oversee the accounting firm relationship to determine what millennials require from their firms.
Millennial business owners and leaders prefer accounting firms that can surpass short-term performance analysis to provide strategic insight into critical areas such as long-term profitability, shareholder value, acquisition plans, managing risk, and more. Nearly one-third of the millennial respondents said they currently have CFO-level consulting services from their firms. Fifty-two percent said that strategic insight and guidance are a necessary attribute for accounting firms.
The need for this level of experience is further supported by the top accounting frustrations for millennial business owners: Reporting (24%), forecasting (20%) and managing cash flow (17%).
Another illustrative percentage stems from how accounting firms communicate. Nearly half (42%) of millennial business owners want an accountant that can translate complex financial concepts into terminology and reporting they can understand.
Unsurprisingly, millennial business owners that responded to the survey select taxes as the number one accounting service they currently have. However, they prefer a different variety of services than previous generations:
Millennials are three times more likely than those 56 and older to include accounting technology recommendations and training in their accounting firm services.
More than half (54%) of millennial business owners use bookkeeping services, while roughly one-third of those 40 and older do.
Invoicing rates as a top “must-have” service for millennial business owners at 20% (compared to 4% for 56 and older and 8% for 40-55).
Millennial business owners more often rely on their accounting firms to provide bill payment, with 22% opting for this service (compared to 14% for those 40-55 and 8% for those 56+).
Firms focusing on specific niches of business—for example franchises, professional services or retail—will have an advantage with millennial business owners. Nearly 40% indicated that they want an accounting firm that has in-depth knowledge of their specific industry.
As one millennial business owner commented:
“[Our accounting firm] just doesn’t get our business, and it’s all messed up with reporting at the end of the year.”
A Digital Accounting Experience
I doubt that it surprises you to know that the tech-savvy millennial generation prefers paperless accounting. Eighty-two percent said that paperless accounting should be the norm and not the exception.
This digital sophistication impacts other areas of accounting. Over half (56%) want their firms to work with cloud-based technologies, 33% opt for digital payments and 25% use mobile devices for accounting.
As the polled millennial business leaders explained:
“Our past bookkeeper wanted every invoice and P.O. printed, filed away, and saved. He did not want to integrate the different systems we used and was very archaic in his style of work.”
“It’s so much easier to track things and to look back on previous transactions, accounts, and reporting when there’s an e-trail and search function.”
Alternative Billing Models
Millennials are rebelling against the traditional model of hourly billing and instead gravitating toward options with a predictable or controlled financial impact.
Millennial business owners prefer monthly flat rates (44%) and fixed fees per project (35%) over hourly billing (21%), which can be difficult to predict and control expense-wise. Those 30 and younger show a sharper preference for alternatives. More than half support monthly flat rates, and only 14% prefer hourly billing.
What Do These Numbers Mean for Accounting Firms?
As the millennial generation increases its business clout, accounting firms must take assertive steps to meet their preferences.
Remember: The demand for these preferences will only increase as more millennials enter the workforce. By ignoring or discounting them, firms face huge obstacles in sustaining or growing their practices. The firms that meet (or exceed) this new business norm for millennials will create lasting and profitable relationships.
Take these steps to target this new generation of business owners:
Don’t stall on diversifying accounting services. With cloud-based technologies (and their benefits such as automation, online storage, and anytime, anywhere access), firms can increase efficiency and greatly reduce the amount of time and labor associated with tasks. Strategic partnerships (for example partnering with an outsourced CFO provider or bookkeepers) can also enable a firm to offer a variety of relevant services for millennial business owners.
Evolve your billing structure. If you aren’t offering value-based billing, it’s time to explore these options.
Go paperless. Evaluate how much paper is necessary in operations and how it can be reduced via digital payments, online invoicing, cloud-based communications, and document management.
Move to the cloud. Cloud-based technologies are mainstream, valuable tools for businesses. Firms can maximize revenue by using the cloud to attract and retain millennial-led businesses. Staff members should earn certifications for accounting solutions to stay on top of the latest advances. These certifications, in turn, can help firms build training services and technology consultations for clients.