Back to Basics: Navigating the New Era of Accounting Profitability
In an industry defined by rapid technological shifts, regulatory evolution, and the relentless pressure of constant change, the accounting profession often finds itself searching for a steady anchor. Each June, as thousands of professionals descend upon Las Vegas for the AICPA ENGAGE conference, the air is thick with discussions about the future. Yet, amidst the buzz of AI integration and global economic forecasting, one session consistently draws a packed room by focusing on the bedrock of the profession: the fundamentals of firm profitability.
For the tenth consecutive year, Bill Pirolli, CPA/CFF/PFS, CGMA, a veteran leader and consultant with The Succession Institute, has hosted his signature session, "Driving Firm Profitability." Since its debut in 2017, the session has evolved from a routine conference offering into a perennial touchstone for firm leaders seeking to reconcile modern challenges with traditional business excellence.
The Chronology of a Constant: A Decade of Insight
The longevity of Pirolli’s session is a testament to its relevance. When the session first launched in 2017, the accounting landscape was vastly different. Since then, the profession has navigated a period of intense prosperity followed by a tightening economic environment.
"The profession over the last dozen years has been extremely successful, but now we’ve bumped into some years where it’s harder," Pirolli observed. "When things slow down, people go back to the basics."
This year’s session saw a distinct shift in audience demeanor. Pirolli noted that attendees—particularly from younger generations now stepping into leadership roles—are demonstrating higher levels of engagement. In an era where multitasking is the default state at professional conferences, the silence of muted smartphones during Pirolli’s presentation stood out as a clear indicator of the audience’s commitment to mastering the core principles of firm health.
The New Frontier: Technology as the Eighth Pillar
While the core of Pirolli’s presentation remains rooted in seven established drivers, he has formally introduced an unofficial eighth principle: a "tech-forward" mindset.
Pirolli argues that technology, particularly artificial intelligence, is no longer a peripheral issue; it is the infrastructure upon which modern accounting is built. "Technology is such a big topic with AI that I just put it off to the side because it really touches on everything," he explained. "I want firms to be tech-forward. Whenever there’s an opportunity or a challenge, try to think of a technological solution first."
By positioning technology as the baseline for all other firm activities, Pirolli provides a framework that allows firms to filter their operations through a lens of efficiency and modern capability.
Seven Pillars of Firm Profitability
With the tech-forward mindset established, Pirolli delineates the seven critical drivers that dictate whether a firm thrives or merely survives.
1. Market Forces and Firm Knowledge
Before any internal strategy can be implemented, firm leaders must possess a high-fidelity understanding of the external environment. Pirolli challenged attendees to translate the broad insights gained at ENGAGE into local, actionable intelligence.
"The fact that you’re all here at ENGAGE, listening to all these speakers and what’s going on in the profession, you’re educating yourself on market forces. I want you to take that back to your particular region of the country and apply it," he urged. This pillar requires a granular understanding of client demographics, regional competition, and the nuances of how various service lines are managed.
2. Radical Transparency
Transparency is often treated as a corporate buzzword, but Pirolli advocates for a more rigorous application. He encourages firms to share the "how" and "why" behind the numbers with their staff. By providing employees with a clear picture of the firm’s financial performance and the mechanics of profitability, leaders empower their staff to contribute to the bottom line. "I’m a big believer in being transparent with your people," he said. "Giving them more information about how the firm makes money, how much money the firm makes."
3. The Art of Client Selection and Termination
One of the most difficult, yet necessary, aspects of firm management is the "culling" of the client list. Pirolli noted that while most firms acknowledge the need to fire underperforming or inefficient clients, few actually do it.
"Repetition equals efficiency, and efficiency equals profit," Pirolli emphasized. He warned against the "voodoo math" that suggests losing a small, low-fee engagement will lead to a proportional loss in revenue. Instead, he argues that the capacity reclaimed by offloading low-value, high-effort work allows staff to serve more profitable clients, ultimately increasing the firm’s overall financial health.
4. Standards and Service Scope
"Doing the work you are paid to do" is the central tenet of this principle. Pirolli warns against "scope creep," where firms inadvertently absorb additional work—such as acting as a surrogate controller for a client—without adjusting their billing.
"A classic is that a client loses their bookkeeper or their controller, and we just go in and pick up a whole bunch of work and don’t charge for it," Pirolli said. He stressed that while high-quality work is non-negotiable, providing services beyond the agreed-upon scope without compensation is a direct drain on profitability.
5. Billing and Collections
Even small billing inefficiencies can have a cascading effect on a firm’s financial health. Pirolli highlighted the disconnect between staff time-entry habits and the firm’s broader economic success. If every employee at a firm fails to bill for a quarter-hour of work, the cumulative loss is staggering. His advice is simple: if a firm chooses to track hours, they must commit to doing so with precision and consistency.
6. Leverage: Growing from Within
Many firms focus their growth strategy on acquiring new clients. Pirolli suggests that the most effective growth strategy is often already present within the firm’s existing client base.
"We always put the prize on getting a shiny new client, but all the growth that your firm needs for the next year or two years already exists in your client base," he noted. By leveraging existing relationships to offer additional, high-value services, firms can increase revenue without the high customer acquisition costs associated with finding new business.
7. Cultivating Accountability
The final pillar is a cultural shift. Pirolli asserts that no individual "owns" a client; the firm owns the client, and the individual professional acts as a fiduciary for the firm’s success. He shared an analogy from his colleague’s time in the Navy to illustrate the necessary hierarchy of priorities:
- Do what is best for the firm.
- Do what is best for your colleagues.
- Do what is best for yourself.
Pirolli lamented that, in many corporate cultures, this hierarchy is inverted, leading to silos and internal competition that ultimately undermine the firm’s profitability.
Implications for the Future of the Profession
The overarching implication of Pirolli’s session is that while the accounting industry is undergoing a structural transformation due to AI and global economic headwinds, the path to profitability remains remarkably consistent. The firms that succeed in the coming decade will be those that master the balance between high-tech efficiency and high-touch accountability.
By returning to these basics—transparency, disciplined client management, and an unwavering commitment to the firm’s collective success—leaders can build organizations that are not only profitable but also resilient enough to withstand whatever changes the next decade of accounting brings. As Pirolli continues to guide the profession, his message remains clear: the most advanced technological solutions are only as effective as the foundational business principles supporting them.
