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Richard Bourgault

Graduating from Georgia Tech with a degree in Electrical Engineering, Richard began his Cost Segregation career working for Ernst & Morris Consulting, one of the very first firms to specialize in Cost Segregation.

Many CPAs are facing the same challenges around cost segregation, but they wouldn’t know it because firms don’t communicate with each other. There is an opportunity for CPAs to learn and grow from learning about the challenges others face, and how they overcome them.

Our cost segregation survey revealed insights into the top challenges in the cost segregation industry and what firms are doing to overcome them.

cost seg study

The top four challenges in the cost segregation industry

According to our survey of dozens of CPA firms that complete cost segregation studies, the following four challenges were repeated the most. 

  1. Getting information from clients

Cost segregation studies require a wealth of information to complete accurately. CPAs face the challenge of both knowing exactly what information to gather down the last detail, but also getting that information from clients. Once this information is gathered, it’s all downhill from there, but this is often the hard part. 

  1. Finding new clients

There’s a large market for cost segregation, although breaking into it can be hard. Networking and referrals and often the top way that CPAs get new clients, but referrals aren’t always a reliable way to gain new clients. Other marketing strategies should be explored. 

  1. Not enough labor 

Once they do find enough clients, firms often struggle with finding qualified engineers and CPAs to complete the studies. This is largely because they’re using manual and time-consuming methods to complete the work, which automated solutions can help with. 

  1. Setting the price

There’s a lack of transparency around cost segregation pricing, as firms don’t know what their competition is charging. To help shed some light on this, we also surveyed CPAs on how much they’re charging to give firms an idea of what the right price might be.

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How these challenges are hurting CPA firms

These challenges hurt CPA firms in many ways, all of which result in lost profits. The ways they’re getting hit the hardest include:

Cost segregation studies take too long: Not getting information and lacking labor to get studies done quickly is dragging out the process, which hurts profits.

They are losing business to competitors: Lack of price transparency or simply not having the staff to take on more projects leads to competitors sweeping in to pick up the slack. 

They aren’t able to grow beyond their current capacity: Again, lack of labor limits the ability for cost segregation firms to grow, which is why they should look into automating some of that work. 

They’re working longer hours: Another symptom of not having enough labor and using inefficient processes is longer hours during an already busy tax season. 

Sometimes they aren’t getting paid: When studies don’t get completed, CPAs don’t get paid. For example, if a firm was planning to complete a study before the end of the tax season, but isn’t able to because of lack of information and labor needed to complete it, they probably won’t get paid for the work they put in.

cost segregation for dummies

What’s working well? How firms are overcoming these challenges

It’s not all bad news, certain tools and processes are helping CPA firms overcome the common challenges of cost segregation—and coming out the other side with higher profits and happier clients and employees. 

Standardized processes: Creating a single method that works and sticking to it is helping firms get more studies done faster. When there are opaque or no standard operating procedures, it slows down the process. 

Templates and software: Having a template or software in place can greatly reduce the time it takes to gather information from clients and complete the accounting side of the work. This is much better than forcing yourself or employees to “figure it out” anew for each study. 

Streamlining and automation: The cost segregation process is ripe for automation. No longer do CPAs need to hire engineers to gather every detail and spend countless hours crunching numbers. Tools like SegStream can aid in the information-gathering process and crunch the numbers for you, without sacrificing quality. This can help firms do more studies in less time, which further increases profits. 

real estate cost segregation

It’s not about headcount, but the tools you use to get studies done

There’s no doubt that more headcount will help you complete more studies, but you should equip employees with the tools to do cost segregation faster and more efficiently. By automating the work normally done in Access or Excel, SegStream can increase your cost segregation efficiency while reducing the need to hire more staff. It’s a surefire model to grow your business and streamline productivity.

Interested in seeing SegStream in action? Schedule a free live demo and see how it works.