Author
Megan Weis, VP and General Manager, FAO Services, Personiv
Date published
November 18, 2024
Categories
Before, those working in accounting traditionally worked behind the scenes to ensure financial accuracy and business stability, and allowed those outside the field to rarely consider it. But with an accounting talent shortage on the rise, overworked and under qualified staff is leading to an increase of incorrect reporting numbers and lost wages – impacting the entire business. As a result, an industry we used to count on now isn’t quite adding up.
With one recent report finding one-third of accountants make “at least a few financial errors every week” due to capacity constraints, the ongoing accounting talent shortage has a domino effect on financial accuracy, reporting, and staff well-being, leaving companies to deal with an accounting crisis and a numbers nightmare.
An ongoing talent shortage is worsening
The accounting talent shortage is not a new issue, however, in the last year, it has grown worse: 83% of senior leaders report a talent shortage, with 10% stating it’s worsening. What’s more alarming is that 67% of CFOs said they’ll need to hire staff accountants in the year ahead, drawing from a pool that is already limited in qualified candidates.
But what exactly is contributing to this shortage?
The Association of International Certified Public Accountants found that the number of students earning a bachelor’s degree in accounting fell by 7.8% in 2022, while those earning a master’s degree dropped by 6.4%. With fewer students and young professionals entering the field, businesses are left unable to fulfill the gap created by an aging workforce. Moreover, the increased complexity of evolving regulation and financial reporting requirements is intensifying the demand for skilled accountants. Decreased team efficiency and increased stress levels are leading to higher turnover, further widening the talent gap. The result is a shrinking talent pool that struggles to meet the growing needs of businesses – and an increase in fiscal reporting errors.
The rippling effect of financial inaccuracies
Financial impacts are becoming more significant due to a lack of accounting employees, resulting in incorrect reporting numbers and lost wages from overworked or underqualified staff. A quick look at recent earnings reports will show that these errors are increasing in frequency and becoming worse year over year. These errors can have devastating consequences, including shareholder lawsuits, damaged reputations, and loss of trust in the financial stability of businesses.
The true cost of empty seats has a cascading impact on businesses. Hiring is taking longer than ever before, with difficult to fill positions remaining vacant for 2-3 months. As the talent shortage deepens, existing staff are stretched thinner, increasing employee stress levels and likelihood of mistakes. Employees now more than ever are looking for a balance between work and life, meaning they’ll be more likely to leave a company if there isn’t enough support in the role they’re in. This not only impacts the accuracy of financial reporting but also the overall efficiency of financial departments, leading to a vicious cycle of errors and overwork.
Restoring the fiscal pillars
To minimise impacts before they become catastrophic, it’s critical for companies to act now and begin strategizing ways to navigate the talent shortage. In response to the decrease in easily accessible and available talent, many companies are turning to outsourcing and technology as solutions. In fact, 90% of surveyed CFOs are already outsourcing some accounting functions to manage the shortage, leveraging specialized talent to maintain productivity and focus on strategic goals. Outsourcing allows companies to access qualified professionals without costly and long winded in-house hires. It can also help alleviate the burden on existing staff, creating a better balanced and happier team.
Companies are also cautiously adopting AI and automation technologies to help handle routine tasks. These technologies can reduce the workload on human staff, thereby minimizing errors and improving overall performance and effectiveness. While AI offers potential, finance and accounting leaders are careful with its implementation, highlighting a blend of human expertise and technology as the optimal solution. By incorporating AI solutions and outsourcing new talent, organizations can get back on track and meet accounting needs.
With the demand quickly becoming more urgent, there’s no better time for companies to implement proactive strategies now, instead of being faced with reactive responses resulting from critical errors.
Turning the page and closing the books
The accounting talent shortage is creating a crisis that affects not just financial departments but entire businesses. As errors increase and workloads become unsustainable, companies must adopt a multi-faceted approach to mitigate the financial impact. Outsourcing and technology offer viable solutions, but proactive planning and strategic implementation are essential to ensure financial stability and accuracy. With no end in sight for the talent shortage, now is the time for companies to invest in these strategies and navigate the numbers nightmare before it further destabilises operations.
Megan Weis is the Vice President and General Manager at Personiv, where she spearheads the development and management of a world-class Finance & Accounting Outsourcing (FAO) offering. With over 20 years of experience in finance, accounting, and business process outsourcing, Megan expertly combines her industry knowledge to deliver exceptional value to her clients.
