As an accounting firm owner, focusing on clients can take up all your time and effort. However, do you take the time to prepare yourself for financial and strategic threats?

There are several threats to your business that range from being sued for professional mistakes all the way to changes in the accounting industry as whole.

The good news is that these risks can be avoided through proper insurance and planning. Having a well thought out financial and strategic risk management plan is crucial to any accounting firm’s long-term success.

Below are our top seven threats to your accounting firm and tips to secure your business against them.

 

1.     Data Breach

Type:                     Financial threat

Solution:          Cyber insurance & proper IT security

In the case of a data breach or cyber attack, your business could be liable for the loss of confidential and protected information. There are precautions you can take, such as setting up proper IT security, like a Firewall. However, what if an employee accidentally releases confidential client data? Having proper cyber insurance for your firm can cover the costs of such a breach.

2.     Client Lawsuits

Type:                    Financial threat

Solution:      Professional indemnity insurance

Mistakes happen; sometimes they are harmless, but on occasion they can have dire consequences. Incorrect tax return could lead to serious legal costs and reparations. Accounting malpractice lawsuits are primarily the result of bookkeeping mistakes. Having proper professional indemnity insurance protects your business against the cost of the lawsuits.

 

3.     Property Damage

Type:                    Financial threat

Solution:      Building and commercial property insurance

Fire or theft may bankrupt a business overnight. Whether you work from home or rent a commercial space, having property insurance is the best way to secure yourself against these threats. Property insurance also covers items such as furniture, computers and supplies.

 

4.     Personal Injury

Type:                     Financial threat

Solution:          Workers’ Compensation and General Liability

If a client is injured while visiting your office, or an employee begins to suffer the effects of repetitive motion injury, it is important to have the proper insurance in place. Although an office might not seem like a dangerous place, simple trips, falls or repetitive stress injuries can accrue significant medical costs. Having Workers’ Compensation Insurance for your employees and General Liability Insurance for any third party injuries is the safest way to insure your business properly against these types of accidents.

 

5.     Automation

Type:                    Strategic threat

Solution:          Invest long-term in innovation and consulting services

Automation is a trending topic at the moment in the accounting industry. Recent articles by Forbes and studies by big four companies such as Deloitte, have raised the profile of this threat. It is presumed that 94% of accounting jobs will be replaced by automated technology in the next 20 years. According to experts at The Journal of Accountancy, a peer reviewed academic journal associated with the University of Chicago, investing in innovation and consulting services early is key to protecting your business in the long term.

 

6.     Bigger Firms

 

Type:                    Strategic threat

Solution:          Secure local networks and create an industry niche

The accounting industry has become decreasingly diverse. The top 100 accounting firms, including the Big Four, are beginning to use personalised marketing to target small businesses. Smaller accounting firms can still compete though. By focusing on your local network and finding a niche within the market, you will be able to stand apart from these bigger firms.

 

7.     Out-dated Marketing

Type:              Strategic threat

Solution:      Integrate digital marketing into your traditional marketing activities

Marketing has changed dramatically in the past decade. Traditional marketing was limited to a dozen channels, the advent of digital marketing channels has made the process more sophisticated. In order to compete, accounting firms need to be investing in a variety of marketing activities. Integrating SEO, SEM and other digital activities into your traditional marketing strategy is crucial to reaching new clients.

 

There are dozens of other risks facing accounting. What do you see as the most immediate threats to your accounting firm? Share with us your questions or insights.

For more information about secure business insurance, by accountants for accountants, contact Abacus Australia today.

 

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