The hidden cost of operational friction in CPA firms

Operational inefficiency hides itself well, but its effects are felt in your firm's profits.

There are symptoms you can spot, if you know what to look for. These include a constant lack of resources, a drop in billable hours, and overworked staff.

But what’s the cause of this operational friction? Research across hundreds of firms shows three main drivers: burnout, inefficient workflows, and too much time spent on manual document processes.

So, while leaders are focusing on winning clients, friction begins causing problems behind the scenes. It quietly undermines revenue, staff morale, and client service: three things leaders value most.

Operational friction in accounting—what accountants told us

IRIS has conducted research alongside leading experts. Our aim was to examine operational patterns across hundreds of CPA firms.

Here's what we discovered:

Staff burnout is the main source of friction: When asked “What’s your firm’s biggest source of operational friction right now?” nearly 28% of companies said staff burnout or overcapacity. That's a higher response than for those that said "technology failures" or "client demands". As well as being a workforce issue, burnout is a clear sign of systemic operational friction.

Process inefficiency fuels a rework cycle: Over 21% of companies face inefficient workflows that cause ongoing rework. These aren't occasional issues, but ingrained patterns that build up daily. They lead to a multiplier effect on wasted resources.

Administrative time drain: Manual document prep and approval chasing seriously impacts 49% of the firms we spoke to. In a billable-hours model, this is one of the most expensive hidden costs.

The real cost of inefficiency

For a typical 50-person CPA, consider the following:

• If staff spend just over 2 hours weekly on manual document processing…
• That’s 100+ hours per month lost.
• At an average billing rate of $150/hour, that's $15,000 in lost billable capacity a month.
• Annually, this single friction point costs the firm $180,000 in opportunity.

This cost doesn’t only show up in missed revenue. It also cascades into stress, errors, turnover, and poor client experiences.

The burnout multiplier—how things get even worse

When systems and processes create unnecessary complexity, staff members experience cognitive overload. They're working harder and, ironically, they're having to work against their own tools and processes. This friction-induced stress accelerates burnout, leading to:

• Increased turnover costs (it’s generally estimated recruiting replacement staff costs 50-75% of the role’s annual salary, on average; some say it’s as high as twice the role’s salary).
• Reduced quality of work due to mental fatigue.
• Decreased client satisfaction as stressed teams deliver inconsistent services.
• Lost institutional knowledge when experienced staff leave.

How operational friction compounds

Operational friction doesn’t happen in isolation, and one inefficiency leads to another. A manual document process leads to approval delays, which create scheduling conflicts, which generate rework, which increases stress, which reduces accuracy... which creates more rework.

What hidden friction points do leaders often miss?

Even when CPA firms think they’ve “fixed” inefficiencies, small, daily pain points can add up:

The software overload issue: While 48% of companies keep operations simple, with 1-2 main systems, over 51% depend on three or more separate tools. Each extra system brings integration issues, data problems, and mental fatigue for staff.

The documentation dilemma: Only 23% of companies have established organized, automated document management. The remaining 77% rely on mixed or manual processes that cause daily friction for every team member.

The planning paradox: Despite the predictable nature of tax seasons and client cycles, nearly 60% of firms lack proactive, technology-supported planning processes. This reactive approach generates unnecessary urgency and stress throughout the organization.

Small annoyances, big problems: a firm’s invisible friction points

While firms can spot obvious inefficiencies in their system, the most expensive friction often lurks in small, day-to-day inconveniences.

Context-switching: When staff have to switch between multiple systems to finish a task, the mental effort can lower productivity by as much as 40%.

Information-seeking: In firms struggling document organization, professionals can spend 1.8 hours a day just searching for information. Cumulatively, this is like being one staff member down per week for every five.

Approval bottlenecks: Manual approval processes cause psychological stress even when they do not lead to delays, as staff worry about timing and must mentally keep track of outstanding items.

Version control confusion: When document management isn't clear, teams waste time fixing conflicting versions and recreating lost work.

Why leaders underestimate friction

The most concerning finding from the data we’ve looked at is leadership's oversight of friction costs.

Although 63% of companies say they are prepared for operational change, many leaders struggle to measure the actual cost of their current inefficiencies.

This creates a dangerous cycle: without understanding the full cost of friction, firms underinvest in solutions. They choose quick fixes over systematic improvements, which often add new friction while failing to eliminate existing pain points.

How your CPA firm can eliminate friction

Understanding friction is just the first step. The companies that succeed in the future will be those that adopt systematic methods to identify and eliminate friction. This requires you to:

1. Conduct a friction audit: Collect regular evaluations of processes from your staff's perspective, focusing on cognitive load and unnecessary complexity.
2. Measure total costs: Evaluate not only direct costs but also opportunity costs, stress-related impacts, and cumulative effects.
3. Systematically improve: Target root causes instead of symptoms, and ensure solutions simplify rather than complicate.

Why you need to act now

The accounting profession faces a crucial turning point. Staff are becoming harder to find, technology is changing everything, and client needs are becoming more complex. Firms that tackle operational friction today will gain:

• Stronger talent retention
• More consistent client service
• Higher profitability and competitive advantage

The question isn't whether your firm faces operational friction—the data almost certainly indicates it does. The real question is: will you act before inefficiency becomes your biggest liability?

Discover how IRIS can help you.