If you had to guess how many accountants in the US have quit in the past two years, you might not put the number at 300,000.
The figure is stupefying. It’s been a 17% decline, and the gap cannot be filled by the thinning trickle of college students coming into the industry.
Why accountants are quitting has been put down to many reasons. Retirements of baby boomers don’t explain enough. According to the Bureau of Labor Statistics, a high number of professionals between the ages of 25 and 54 also said their goodbyes starting in 2019.
Let’s take a deeper dive into the case of the missing accountants.
Introduction: The State of the Accounting Profession
The accounting profession has long enjoyed a reputation for giving good wages, stable work, and job security.
This is jarringly at odds with the recent departure of so many accountants. Nearly every institution, whether a financial consulting company or a local bakery, has felt the pinch. Often, recruiters say that experienced accountants are shifting into jobs in technology and finance.
The wide gap between the number of trained accounting professionals and companies who need accountants has led to increases in both salaries and temporary workers.
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It seems that neither will fix the fundamental problem with talent – fewer college students are majoring in accounting, and even those who have accounting degrees are deciding to not enter the profession
What explains this blow to the number of accountants?
Why are Accountants Quitting?
It is unsurprising that one of the reported reasons for why accountants are quitting is long workweeks. 70 to 80 hours per week takes its toll on even the most dedicated accountants, especially those who are aging, differently abled, taking care of families, and so on. Add that to the humdrum of tedious, unvarying daily tasks, and you’ve got a pretty good recipe for people wanting to leave.
Long workweeks also directly tie into work-life balance, or lack thereof. According to Statista, even before the Covid-19 pandemic, 72% of employees in the US considered work-life balance “very important”. Small wonder, then, that accountants are leaving the industry in droves.
According to Accountancy Age, 36% of the Institute of Chartered Accountants in England and Wales (ICAEW) members are unhappy with their work-life balance. Pair that with the fact that only 31% of accounting and finance professionals have returned to full-time office work, and you’ve got an indication of how much accountants want to balance their work and home life.
The answer to the question “Why are so many accountants quitting?” becomes even more evident with the following reasons:
Non-compliance & legal problems: Some accountants are leaving due to concerns about being embroiled in ongoing scandals. For example, the Big Four accounting firms faced repeated fines for employees cheating on Certified Public Accountant (CPA) exams in both the US and UK. After this, they began to face increased scrutiny from government authorities across the globe.
Automation & technology: Automation and tech are revolutionizing accounting. For the modern accountant, technology literacy is a must-have skill. Staying relevant requires keeping up with the latest technology, such as CrushErrors, which provides reconciliation automation for huge amounts of data.
Transitioning to FP&A: Many accountants find that they add more value to organizations by transitioning to financial planning and analysis (FP&A). Furthermore, FP&A provides opportunities to work on a variety of projects with many people.
It’s time for retirement: The demanding nature of the accounting profession has many accountants deciding to leave once they’ve built enough wealth and have accomplished all their goals. After that, there simply isn’t enough the profession offers in terms of interest.
Better opportunities outside the accounting industry: Many accountants have realized there is more money and flexibility to be had in other industries. For instance, take Tanvi Shah, who quit her job at a Big Four company to become a social-media influencer. Furthermore, top students right out of college can make far more money if they work for banks and consulting outfits.
Along the lines of better opportunities, for many new accounting graduates, there remains a barrier to entry: to obtain a certified public accountant license, 150 credit hours are required – the typical bachelor’s degree requirement is 120 hours. The extra classes can cost up to tens of thousands of dollars in additional fees and tuition, not to mention add another year to college.
Companies do promise higher salaries after a few years of work. However, many fresh graduates cannot afford to wait that long. Ten years down the line is ten years too late.
Students want more money up front than many firms provide. Entry-level salaries for US accountants vary only slightly by education level. According to salary.com, generally, accountants with bachelor’s degrees make 58,000 USD per year, compared to accountants with associate degrees, who earn 57,357 USD. A PhD will get you only 59,607 USD.
Furthermore, Accounting Today found that 35% of accountants are dissatisfied with their prospects in career growth. Hence, companies need to provide more opportunities for growth for accountants.
How Companies Can Retain Accountants
Why accountants are quitting depends on many factors. Jaded responses include everything from “public accounting is all about greed” to “the CPA is losing relevance” to “the role is not challenging enough”.
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Nevertheless, every reasonable response must be considered if you want to know how to deal with the accountant exodus. Fortunately, there are ways to manage the shortage of talent.
Keep your accounting team happy. Enquire as to what matters to them so you can make the necessary changes to boost morale. For example, if they feel burned out, consider switching to a hybrid or remote work model. (See this article on how to deal with tax season burnout.) You can also increase paid time off so they can recharge after a busy season and/or during holiday seasons.
Outsourcing can take care of many tedious or challenging tasks. There’s a reason the reconciliation backlog makes every accountant groan. NextGen Accounting can deal with your bank and credit card reconciliation, audit and anti-fraud assurance, and financial reporting so your staffing issues can become a relic of the past.
Lastly, don’t dismiss the idea of recruiting students who did not major in accounting and finance. Students who demonstrate a keenness for detail and numbers can be trained well on the job.
Conclusion to Why Accountants are Quitting
The accounting profession provides steady, stable work, and an opportunity to build immense wealth. However, in a changing world where work-life balance reigns supreme and there are many ways to retire comfortably, accounting must keep up with the times.
At NextGen Accounting, we understand the difficulties that come with a shortage of the right talent. That’s why we provide credit card reconciliation services, bank reconciliation services, audit and anti-fraud assurance, financial consulting, and financial reporting. Our services are specially tailored to firms with vast amounts of data that are extremely difficult to reconcile.
To give you the fastest and most accurate reconciliation, we use our patented software CrushErrors, which you can also obtain as a product if you’d rather conduct reconciliations in-house.
NextGen Accounting’s management team has decades of experience and includes former executives of Barclays Bank, Bank of America, and ICBC. Contact us today for reconciliation solutions or book a free demo if you’d like to get CrushErrors!