To state the obvious, accountants are essential to your organization. They're oxygen to your corporate muscles. 98-octane to your operational V6. Without them, financial reporting stops in its tracks, budget forecasting goes off the rails, and strategic decision-making falls into a black hole of bad data and consternation. And that's just for starters. So, yes, this current shortage of accounting professionals is a very big deal.

Even worse—it doesn't look like it's getting better anytime soon. If ever. Which means it's time for finance leaders like yourself to make some tough decisions about the future of your accounting and finance functions. And that's exactly what we're helping you do today by looking at the roots of this shortage, the short and long-term impact on financial accounting—and the accounting profession itself—and what you can do to protect your people and business going forward. So let's get started.

What’s Causing the Accountant Shortage?

Just in case you think we're being a bit hyperbolic about this accountant shortage, let's begin with some eye-opening statistics:

• As of 2022, over 300,000 accountants and auditors had left their jobs since 2020.
• The U.S. Bureau of Labor Statistics projects 126,500 additional job openings for accountants and auditors each year over the next decade.
• Almost 75% of CPAs had already reached retirement age as of 2020. 
• The number of people sitting for the CPA exam fell from 48,004 in 2016 to 32,188 in 2021, marking the lowest point in 17 years.

Kind of sounds like a profession in full-blown crisis mode, right? That's because it is. Let's examine a handful of the dynamics pushing accounting to the brink.

The Accounting Educational Hurdle

Imagine running a marathon where the organizers keep extending the finish line. That's what becoming a CPA can feel like these days. A bachelor's degree is already a tough grab for many people, but throw in the extra 30 credit hours to hit the mandatory 150-hour mark for CPAs, and you see why many potential accounting graduates are choosing different paths. 

Other than just being a bit of a pain, the extra time and debt can discourage even the most eager go-getters. Recognizing this, the American Institute of Certified Public Accountants (AICPA) is ramping up efforts to pull more high schoolers and college students into the accounting world by spicing up the CPA exam with a dash more tech. The hope is to make the field more appealing and relevant to today's digitally savvy college graduates and young people in general.

Economic and Workplace Realities

When tech firms and startups offer cool jobs with comfy bean bag chairs and unlimited cappuccinos, traditional accounting roles can pale in comparison with their long hours and substandard caffeine fixes. But there are other economic and workplace forces driving the exodus as well, including: 

• The Tug-of-War for Accounting Talent: It's not just about perks. With so much competition from tech firms and other high-paying industries, financial leaders are in a bind, trying to offer salaries and career opportunities that keep pace. Likewise, the allure of working on the next big app or groundbreaking AI initiative can quickly make the prospect of crunching numbers feel pedestrian at best.
• Pay Disparities and the Overwork Dilemma: Building from the previous point, early career accountants often find their starting salaries don't make up for the steep hours they must put in. This results in hourly wages that don't match expectations for such a skilled profession, some even coming in beneath hourly minimum wage rates thanks to lower salaries and endless hours at work.
• Pandemic Burnout and the Quest for Balance: Throw a recent global pandemic into the mix and already stressful accounting gigs have accountants seeing the carpe diem side of things. In other words, many accountants are now seeking jobs offering more flexibility and a healthier work-life balance. 

Putting these pieces together, you see that it's not just the profession itself driving the shortage but how it compares to everything else out there. Opportunity costs. Good ol' FOMO. Unfortunately, until companies make these roles fulfilling and sustainable for new generations stepping into the workforce, smart and driven people will continue avoiding the full-time accounting ranks.

The Accountant Shortage IRL: Swinging and Missing on New Talent

Other fields typically offer starting salaries at least 20% higher than entry-level accountants, making it nearly impossible for companies to compete for new accounting talent.

Fair or not, people already think accounting is “boring.” Throw in the stress of the job and long hours, and management really needs to go above and beyond to lure new talent into the accounting ranks. Unfortunately, significantly lower starting salaries compared to other fields—ones that aren’t viewed as “boring” or known for 60-80 work weeks—isn’t much of a lure.

Short-Term Challenges from the Accountant Shortage

But, setting aside what accountants are experiencing these days for a moment, what does all of this actually mean for your organization and operations? Well, that's a good question, one that essentially has leadership choosing between short-term efficiency, long-term growth, or neither if a company is especially parched for bandwidth and doesn’t partner with specialists. But before we get ahead of ourselves, let’s start with a deeper dive into the short-term end of the pool and see what organizations face these days.

Operational Disruptions: More Than Just a Minor Inconvenience

Accountant shortages mean even basic accounting tasks are starting to pile up. Reports are overdue, and the data that manages to slither out is often riddled with errors, thanks to overtaxed staff scrambling to keep up.

The sheer volume of work falling onto fewer shoulders also creates bottlenecks and silos that can disrupt your entire workflow. And when accountants are overwhelmed, the risk of mistakes—once again—increases dramatically, and could be very costly to fix.

Smaller Companies Are Behind the Accounting Eight-Ball

It's one thing for giant corporations to wrestle with staffing issues. For smaller or even mid-sized companies and accounting firms, though, the accountant shortage can be a knockout punch. Lacking the resources to compete for limited talent, these organizations find themselves in an extraordinarily tough spot.

Imagine having to say no to potential customers because you just don't have the capacity to handle the workload. That's the reality for many companies right now, where the scarcity of skilled accountants means missed opportunities and stunted growth.

Financial Leadership Turnover: A Looming Leadership Vacuum

Of course, the talent void isn't just plaguing the lower and mid-level ranks and accounting. It's also hitting leadership squarely in the jaw, largely driven by the allure of retirement. As mentioned up top, with such a significant portion of experienced CPAs hanging up their hats, filling those shoes has become a formidable challenge. And by formidable, we mean practically impossible, resulting in decades of expertise lost to early bird buffets and half-priced matinees.

With fewer seasoned professionals available, less experienced staff now find themselves in roles that traditionally require years of nuanced expertise. This scenario not only impacts decision-making but also heightens risks associated with financial controls and compliance, particularly in sectors where regulatory demands are especially stringent.

The Accountant Shortage IRL: The Domino Effect

65% of companies say accountant turnover has placed a greater burden on employees at similar levels as those who left, exceeding 67% for turnover at the leadership level.

The shortage of accountants is the gift that keeps on giving. As if seeing your best and brightest walk out the door for greener pastures isn’t bad enough, the dynamic compounds itself by placing even greater pressure on your remaining accounting team, creating a toxic negative feedback loop if there ever was one.

Long-Term Effects on Industry and Operations

But the shortage of accountants doesn't just affect the day-to-day, of course. Over time, it will structurally change how businesses operate, something we're already starting to see in response to the crisis.

Rethinking Recruitment and Workplace Culture

The accountant shortage is driving a significant overhaul on the workforce and workplace fronts as well, prompting organizations to emphasize flexibility and innovation rather than just competitive salaries. In fact, flexible work arrangements are now a key part of the benefits p ackage, appealing to a broader demographic and, ultimately, higher retention rates.

Embracing Technology: The New Frontier in Accounting

The accountant shortage is also accelerating technology integration in finance, sparking both adoption and innovation. In short, a fight-or-flight mentality is forcing organizations to reimagine their operations and the role technology plays within them.

Specifically, companies are increasingly relying on innovations and solutions like AI, ERP (enterprise resource planning) software, and automation—among countless others—to reduce manual workloads and let staff focus on more strategic tasks that need human insight and ingenuity.

The Rise of Data Analytics in Accounting

Similarly, the accountant's role is shifting from traditional number-crunching to a more nuanced, analytical position that drives business strategy through deep insights. As such, today's financial teams need robust data analytics capabilities to parse through and make sense of the mountains of data they handle. This skill set is particularly crucial in transforming raw data into actionable, strategic insights and business intelligence that can help decision-makers steer the ship.

Recognizing the importance of data analytics, forward-thinking CFOs are increasingly upping the technology ante, helping accountants unlock new opportunities that offer greater value in their roles, all while pushing the boundaries of what finance organizations can achieve.

Unlike the short-term challenges it poses, the long-term impacts of the accountant shortage present both challenges and opportunities. By leading the charge in technology adoption, redefining hiring practices, and emphasizing data analytics, leadership can not only navigate this shortage, but emerge stronger and more adaptable. 

The Accountant Shortage IRL: Technology Is King

Accountants are 80% more likely to stick with a company when it integrates technology into the accounting function.

Technology isn’t just useful in helping organizations deal with empty accounting seats. It also helps keep those seats full by making life easier for accountants. Streamline workloads through automation, give accountants the time and flexibility to work on more strategic, value-adding projects, and they’ll want to stick around. 

A Call to Action for Finance Leaders

If we were to choose just one takeaway from these musings, it'd be the indefinite, likely permanent changes the accountant shortage is causing. Put another way, this shortage isn't going away anytime soon—if ever—so the time to adapt and evolve is now.

Like it or not, failing to take action could very well undermine your organization's financial health and agility. And the risks increase with every unfilled position, both in day-to-day operations as well as strategic decision-making and long-term planning. And none of that is good.

So, where do you even start? Well, three immediate steps come to mind:

• Rethink Staffing Models: Moving away from traditional models towards more dynamic, flexible staffing solutions can help address immediate needs and prepare for future changes.
• Invest in Technology: Embracing automation and artificial intelligence streamlines operations and frees up existing staff to focus on more strategic tasks.
• Upskill Teams: Continuous learning and development are essential. Upskilling teams to handle new technologies and complex financial strategies can enhance both efficiency and efficacy in financial roles.

But those are just where you start. Going forward, to truly prepare your organization for this brave new world, you'll need the right help for the right needs. Genuine expertise. Actual experience. Whether to fill critical talent gaps or overhaul your technology, you need people who have been on the frontlines, not just placeholders. 

It’s a lesson we learned at Embark years ago, when we started investing in all three of those bullet points in earnest. Basically, we saw the writing on the accounting wall, listened to why CPAs—at first in public accounting—were burning out and looking for different career paths, and started building the anecdote. And that’s when our firm really started to flourish, by creating the ideal workplace with the ideal culture, providing balance and fulfillment so our people can thrive.

The result? Embark now occupies rarified air, combining genuine expertise with consultants who actually love their jobs. Therefore, from an interim controller with a manufacturing background to overhauling the month-end close, ERP implementation gurus to automation wizardry, Embark can quickly, efficiently, and effectively fill those critical voids left by the accounting talent shortage. And then some. Even more importantly, we can also help you prepare and future-proof your organization for a patently different road ahead, one with a refined role and purpose for accountants and accounting.

So let's talk and get this ball rolling while there's still time to take action. Remember, no army of new accounting students is marching over the horizon. No surge of popularity in traditional accounting programs, at least in the foreseeable future. No, times have officially changed. But that's why Embark exists—to help you evolve. And we're the best at what we do.