It’s not just you. It’s more difficult to hire an accountant now than five years ago. While it’s tempting to consider that this challenge stems from the job listing or a competitive market, a bigger, systemic factor is at play.
The US faces an accounting staff shortage unlike any seen before. Experienced accountants are retiring, and new CPAs are trickling in. Pressured to do more with less, many organizations risk overloading their accountants, resulting in a high turnover rate.
As a CFO, it’s essential to understand the nuances of the accountant shortage, how it impacts your business, and how you and your controller can address these challenges without risking your staff or bottom line.
Key takeaways
- Experienced accountants are retiring in greater numbers than can be replaced. Simultaneously, the number of new CPA candidates has dropped significantly over the past decade.
- Insufficient accounting staff can lead to reporting errors and harm vendor relationships, which can cause irreparable damage to the organization.
- Employers should focus on improved recruiting and retention strategies and automated systems to enhance efficiency and reduce stress on accounting staff.
Understanding the accounting shortage
The current state of the accounting workforce
MineralTree’s 8th annual State of AP Report found that nearly 60% of companies feel pressured to do more with less. Numerous factors, such as the current state of the economy, rising costs, and the talent shortage, contribute to this pressure, and it’s easy to see why. Whatever the cause of the pressure felt by financial professionals, the accounting shortage and its negative effect on businesses are real.
There are currently about 340,000 unfilled accountant positions in the United States alone. The causes are well known: The number of accounting majors is shrinking, and many experienced CPAs are leaving the workforce or retiring.
The number of new CPA candidates has decreased by 45% since 2016. One of the biggest barriers is the 150-hour requirement—the prerequisite that CPA candidates have 150 college credit hours, while an undergraduate degree only requires 120 hours. Other factors include rising education costs, lower compensation compared to other finance positions, and a view that the scope of the position is too narrow. Additionally, many companies are offshoring accounting roles or hiring contractors instead of full-time accountants. These factors cause many young people to perceive the field as unattractive.
Adding to the issue, the average age of active CPAs in the US is 53, with a majority prepared to retire within the next decade. This adds a ticking clock element to the accountant shortage problem.
The business impact of the accounting shortage
Small and large organizations, public or private, will feel the impacts of the accounting shortage if they haven’t already. According to Bloomberg, companies like Lyft, Rivian, and Planet Fitness had to correct mistakes in their quarterly earnings reports this year.
Last year, over 720 companies, including Advance Auto Parts Inc. and LegalZoom.com Inc., reported potential errors due to insufficient staff in their accounting and other departments. This marks a 30% increase from 2019, according to an analysis by equity research firm Hudson Labs for Bloomberg News.
Public facing mistakes like this can result in fines and distrust from shareholders. However, even mistakes that are less public, such as late and duplicate payments, can cost companies time and harm important vendor relationships. Without the right automation processes and tools in place, companies risk expensive errors that can tarnish their reputation with shareholders and suppliers.
The challenges of the accounting shortage
As mentioned earlier in the blog, businesses will continue to be impacted by the accounting shortage. The lack of experienced CPAs or fresh junior accountants presents several challenges, including:
An increase in errors
Brand new CPAs are susceptible to making mistakes, especially when they can’t benefit from the experience of more senior teammates. Regardless of experience, the risk of error increases when accountants feel overwhelmed or overloaded, which is common when firms are understaffed.
Late payments and vendor relationships
Even the best accountants need time to complete their work. In accounts payable (AP), for example, too many tasks assigned to overworked accountants could delay invoice processing, resulting in late payments that negatively impact vendor relationships.
Challenges in hiring the right people
With a shortage tenfold greater than the number of new CPA candidates, there are so many open positions that only a handful of job postings receive qualified applicants. Therefore, CFOs need to make their open positions more attractive to candidates.
How CFOs can address the accounting shortage
While you can’t increase the number of accounting majors, you can take steps to protect your company’s future and ease the load on your employees. Here are some recommended strategies for CFOs to enhance recruitment and ease workloads.
1. Focus on employee retention and recruitment
Compensation is one of the main factors contributing to a decrease in accounting majors. To stand out, you must offer a more competitive compensation package. Likewise, there is a great incentive to reward current employees and keep them happy at your organization, lest you risk them looking for other opportunities.
Additionally, once back office functions are automated, CFOs should focus on upskilling staff on data modeling or analysis to provide employees with the tools to make sense of new data streams and make decisions accordingly.
Insights through data analytics, in particular, can be leveraged to improve business processes further. For example, finance teams can use AP reporting to determine the optimal payment mix, which can be turned into a revenue stream for the organization. Quartzy, a life science company, generated $100,000 in rebates by switching payments to virtual cards.
2. Address candidate concerns and anticipate longer hiring processes
Anticipate that an accounting staff opening on your team might take 2-3 months to fill. For this reason, you must be confident in your hiring decision and prepared to address candidates’ most common concerns (compensation, narrow scope and tedious workflow).
3. Embrace a paperless workflow
When you have a small team with a large workload, you should take steps to streamline their processes through a paperless AP workflow. Digitizing workflows with AP automation solutions and other tools enhances collaboration and accessibility, reducing the time accountants spend on manual data entry and retrieval. Additionally, accountants can spend their time on more meaningful tasks to drive the business forward.
4. Digitize invoice approvals
When processes are digitized, accounts payable professionals are forced to dedicate numerous hours to follow up with decision-makers. They also have to ensure that invoices are approved in a timely manner, so vendors can get paid. Paperless approval systems solve this challenge since decision-makers make all approvals via email.
5. Focus on accurate data and visibility into the process
Tracking the status of an invoice is a common pain point in paper-based processes. By switching to a digital system, teams can gain more insight into the payment status without shuffling through large amounts of paperwork. This increased visibility helps expedite the entire invoice approval process, ensuring accuracy and efficiency.
6. Automate the back office
Automating back office tasks such as invoice processing allows you to handle more work with a team of the same size. MineralTree’s 8th annual State of AP Report found that 58% of companies using AP automation could maintain or increase their output without increasing personnel.
How controllers can address the accounting shortage
While CFOs focus on broader strategic initiatives, controllers can take practical steps to streamline processes, use technology, and foster a positive work environment. Below are recommended strategies for controllers to address the accounting shortage and ensure their teams remain productive and engaged.
1. Enhance staff efficiency and engagement
Controllers can implement strategies and processes to ensure smooth operations and maintain employee morale, even amid staffing shortages.
2. Prioritize employee development and training
When a job gets stagnant, and employees feel like they’re no longer learning, they’re more likely to find a new job that challenges them.
That’s why investing in continuous learning opportunities for your team is so important. Training in accounting software and analytical tools can empower employees to take on more sophisticated tasks, enhancing job satisfaction and retention.
3. Use technology and automation
Implementing technology like AP automation to automate repetitive tasks can ease the burden on your employees and allow them to focus on more strategic activities. It can also minimize human error while making accounts payable more efficient.
4. Offer flexible work arrangements
Gone are the days when offering free snacks, drinks, and a game room appealed to employees. These days, it’s all about work-life balance.
Offering flexible working conditions, such as remote work, hybrid work, and flexible hours, can attract a broader pool of candidates who may prioritize their work-life balance. Being more accommodating can also improve the retention and morale of existing accounting staff.
5. Cultivate a positive work environment
Recognizing employees for their hard work and contributions can sometimes make or break company culture. Employees want to be recognized when they’re giving it their all, even if it’s simply by saying “thank you” or giving them a $15 gift card to get a coffee.
A supportive and inclusive work culture can improve employee satisfaction and loyalty and reduce turnover rates.
Final thoughts
While there’s no quick fix to the accountant shortage, there are steps you can take to reduce its impact. Invest extra resources into recruiting and employee retention, and automate back office processes to relieve the mounting pressure.
Automating your systems enhances overall efficiency, allowing you to do more with less. It reduces current employees’ workload while boosting data transparency and accuracy. Automating your AP function with MineralTree is a great place to start.
An AP automation solution like MineralTree can reduce the workload on your accounting staff by streamlining invoice processing and approvals, ensuring faster and more accurate financial operations. That increased efficiency allows your team to focus on higher-value tasks, making it easier to manage with fewer accountants. Even if you are satisfied with your current accounting staff, AP automation can help increase their output.
Ready to discover how automation can enhance your business? Schedule a demo today.
FAQs about the accounting staff shortage
1. Why is there an accounting shortage?
The accounting shortage is a two-pronged problem. First, the average age of CPAs is 53, with a significant portion of the workforce retiring yearly. Second, the number of new CPA candidates has fallen by 45% over the past decade. Simply put, the number of accountants leaving the workforce exceeds the number of new CPAs.
2. How can technology help companies with the accounting shortage?
Companies can leverage technologies like AP automation to enhance output without increasing personnel. This can make workloads more manageable, reducing the likelihood of errors, late payments, and employee turnover.
3. What are some effective strategies for retaining current accounting staff during a shortage?
To retain current accounting staff during a shortage, companies should focus on offering competitive compensation packages, providing opportunities for continuous professional development, and creating a positive and supportive work environment. Additionally, implementing flexible work schedules and recognizing employee contributions can improve job satisfaction and reduce turnover.
4. How can companies make their accounting positions more attractive to potential candidates?
To make accounting positions more attractive, companies should highlight the benefits of the role, such as:
- Career growth opportunities
- Professional development programs
- A supportive work environment
Offering competitive salaries and benefits, promoting a good work-life balance, and using technology to reduce repetitive tasks can also help attract qualified candidates.
