Top Challenges in Managing Accounting Firms Without Modern PMS

A practical, data-backed guide for firms navigating a changing industry.

If there’s one thing accountants understand better than anyone, it’s this:
The numbers tell the story, but the systems tell the truth.

And in 2026, that truth is unavoidable.

Accounting teams are working in an environment where expectations keep rising, regulations keep expanding, and technology advances faster than workflows can keep up. Yet behind that external pressure lies the invisible factor that determines whether a firm thrives or struggles:

👉 The quality, cleanliness, and consistency of its internal operations.

Even as the U.S. accounting services industry hit $145.5B in revenue in 2025, according to Statista, growth hasn’t reduced friction — it has amplified the weaknesses of manual processes, siloed systems, and inconsistent data hygiene.

This guide breaks down 16 challenges shaping 2026, and highlights the modern operational principles top firms use to stay accurate, efficient, and sane, principles that reflect the very problems platforms like Xenett are designed to eliminate.
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1. The Accounting Talent Shortage Is Now Structural

Statista data shows accounting employment rising since 2020, yet workloads are scaling faster than teams.

The root issue:

‍Manual review, repetitive cleanup, and scattered processes drain capacity faster than firms can hire.
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Modern operational solutions:

• Automate repetitive review and reconciliation tasks to protect senior staff time.
  
• Reduce onboarding time with clear, standardized process documentation.
  
• Create roles centered on analytics, not data cleanup.
  
• Prevent burnout by eliminating unnecessary manual steps.
  
  

The core truth: People aren’t leaving accounting. They’re leaving workflows that don’t support them.

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2. Cash Flow Volatility Isn’t Slowing Down

Interest rates remain high, payment cycles are stretched, and unpredictability is the norm.

The operational blocker:

‍Cash-flow modeling collapses when the underlying data is messy, duplicates, late entries, uncategorized expenses, or inconsistent AP/AR data.

Modern solutions:

• Daily, automated cash visibility.
  
• Automated AR nudges + scheduled AP workflows.
  
• Continuous data cleanup instead of month-end catch-up.
  
• Rolling 13-week models fed by clean, real-time data.
  
  

Cash flow isn’t harder. The data feeding it is less forgiving.
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3. Regulatory Reporting Expectations Keep Expanding

ESG disclosures, cybersecurity rules, global tax synchronization, and GAAP updates.  2026 brought more requirements than most firms can manually keep up with.

Why does it become a bottleneck:

‍Regulations evolve faster than templates, spreadsheets, or manual control updates.

Operational solutions:

• Centralized documentation and version control.
  
• Automated flags for missing disclosures or inconsistent assumptions.
  
• Monthly alignment across finance, legal, and compliance.
  
• Automation for recurring regulatory workflows.
  
  

Compliance doesn’t get simpler, but your systems can.

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4. AI Adoption Is Rising Faster Than AI Understanding

Every platform markets “AI-powered,” yet half of them create more work than they remove.

The real friction:‍

AI without transparency or accuracy incrses review load instead of reducing it.
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Modern solutions:

• Use AI that explains its suggestions (no black-box logic).
  
• Enforce human approval for judgment tasks.
  
• Measure improvement in hard numbers: hours saved, accuracy, close speed.
  
• Use AI for anomaly detection and cleanup, not autonomous decisions.
  
  

AI shouldn’t replace accountants, it should replace chaos.

5. Upskilling Becomes Mandatory, Not Optional

Accountants now need to understand automation, data flows, analytics, AI behavior, and multi-system logic.

The friction point:

Legacy processes demand yesterday’s skills; modern firms require tomorrow’s.
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Operational solutions:

• 10–15 minutes of weekly micro-learning.
  
• Internal  “automation champions.”
  
• Performance incentives tied to process improvements.
  
  

Teams that level up → make fewer errors and deliver bigger impact.

6. Tax Law Changes Keep Multiplying

Digital commerce taxes, AMT updates, ESG incentives — the list continues growing.

Operational problem:

‍Tax rules shift faster than manual workflows can adapt.

Solutions:

• Cloud-based tax libraries.
  
• Automated entity-level document checks.
  
• Always-on tax folders tied to ongoing bookkeeping.
  
• Integrated payroll + accounting to prevent jurisdiction errors.
  
  

Clean data today = fewer panic moments tomorrow.
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7. Expense Management Oversight Tightens

Budgets are tighter, CFOs want clarity, and hybrid work introduces variability.

The friction:

‍Manual review = missed violations, overspending, inconsistent enforcement.

Operational solutions:

• Automated policy flags (caps, travel limits, GL mismatch).
  
• Smart routing based on department or risk.
  
• Real-time dashboards.
  
• Normalized spend categories for better trend insights.
  
  

Expense discipline is no longer defensive — it’s an advantage.
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8. Payroll Complexity Grows with Remote & Hybrid Work

Multi-state + multi-country workforces create compliance minefields.

The operational risk:

‍Incorrect withholdings → penalties, audits, hours of rework.

Solutions:

• Automated location-based tax calculations.
  
• HRIS ↔ payroll ↔ accounting sync.
  
• Audit-proof logs for changes in pay, classification, or benefits.
  
  

Payroll is too sensitive for spreadsheets — it demands clean systems.
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9. Cybersecurity Risks Rise in Accounting Systems

Finance data is the #1 target for cyberattacks; deepfake invoice scams are up dramatically.

Why it’s an accounting challenge:

‍Weak internal controls become a financial risk.

Operational solutions:

• MFA + role-based access.
  
• Alerts for unusual vendor changes.
  
• Automatic audit trails.
  
• Frequent updates and patches.
  
  

Security is no longer IT’s job alone. It’s a financial control.
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10. Burnout & Low Morale Persist

Heavy workloads + unclear processes + manual cleanup = predictable burnout.

Operational reason:

‍Teams spend more time fixing data than using data.

Solutions:

• Automate repetitive cleanup tasks.
  
• Standardize workflows.
  
• Recognize clean closes as a metric of excellence.
  
• Reduce dependency on “hero employees.”
  
  

Morale improves when workflows make sense.
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11. Forecasting Accuracy Suffers from Data Inconsistency

Markets shift. Revenue fluctuates. Leadership wants clarity fast.

But forecasts fail for one reason:

‍Dirty or inconsistent data.

Symptoms include:

• Wrong-period transactions
  
• Unclassified or duplicated expenses
  
• Lagging reconciliations
  
• Scattered data
  
• Fragile spreadsheet models
  
  

Modern firms optimize by:

• Using real-time dashboards
  
• Cleaning historical data
  
• Running multiple monthly scenarios
  
• Connecting sales, ops, payroll, and accounting
  
  

Your forecast is only as good as your data,
and your data is only as good as your systems keep it.

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12. Tech Sprawl Creates Fragmented Financial Data

Most firms run 7–15 tools.

The challenge:

‍Broken integrations → unreliable data → rework.

Solutions:

• Consolidate where possible.
  
• Choose interoperable platforms.
  
• Automate cross-system reconciliation.
  
• Assign clear ownership.
  
  

Tech should reduce complexity, not multiply it.

13. Innovation Fatigue Is Real

New tools come faster than teams can adopt them.

Operational blocker:‍

Change without process discipline = confusion.

Solutions:

• Dedicated monthly “Ops Hour.”
  
• Frequent small improvements.
  
• Documentation-first changes.
  
• ROI tracking.
  
  

Innovation isn’t a project — it’s a muscle.

14. Globalization Expands Accounting Complexity

Even small firms now operate globally.

Challenges:

‍Currency, taxes, reporting rules, timelines, compliance.

Operational solutions:

• Automated multi-currency conversions.
  
• Standardized workflows across entities.
  
• Country-specific compliance trackers.
  
• Automated intercompany entries.
  
  

Global operations require global consistency.

15. Economic Instability Requires Faster Decision-Making

Leadership needs real-time accuracy, not month-old numbers.

The blocker:

‍12–15-day closes limit agility.

Solutions:

• Automated reconciliations + cleanup + review.
  
• Rolling close.
  
• Daily data hygiene.
  
• Reduced manual AP/AR/payroll touchpoints.
  
  

Speed comes from clean, automated, trusted data.
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Conclusion: Clean Operations Will Define Every Firm’s Success in 2026

2026 isn’t about doing more with less.
It’s about doing better with less.

The firms that win aren’t the ones with the biggest teams
they’re the ones with the cleanest systems.

• Predictable workflows
  
• Accurate, automatically maintained data
  
• Automation that removes friction instead of adding it
  
• Teams focused on judgment, not cleanup
  
  

When your operations run clean, your team runs strong — and your firm becomes unshakeable.