Business advice: modern accounting – staying relevant!

I’ve seen a lot of changes in my industry over the past 10 years. Just as other aspects of our lives have been radically affected by changes in technology, communications and the economy, accounting has been undergoing its own quiet revolution.

The role itself

If you go back a decade or two, accountants had a far more formal role in society, with a respected position similar to that of a bank manager. From the client’s perspective, it was his/her duty to have the books in order and ready to hand over to the accountant so that they could be prepared for whatever statutory obligation was up next. In a way, the accountant stood between the client and the Revenue or Companies’ Registration Office. It was almost as though the accountant worked more for those official bodies than for the business itself.

Audits

It used to be the case that the majority of Irish companies needed audits, and the only way to get this done was through an accountancy firm. This was a service that didn’t offer much value to the company – it was simply a legal requirements and the company had to pay for it. Many accountancy firms were founded to serve this market, and most are still structured like that today. The whole profession was geared around getting accountants qualified to do audits.

In the past decade, audit exemption thresholds have been increased to the current level of €8.8 million in turnover. This means that today around 98% of Irish companies are no longer required to have an audit. This has obviously led to huge changes in the structuring of companies, services and the qualifications of accountancy firms. We rarely do audits at Beyond Accounting, for instance. It is just the very rare occasion that a client needs an audit, e.g. if they were late filing their annual returns, or in the case of a charity voluntarily doing an audit as part of transparency for donors.

Software

The biggest development to impact the way we work, and how we engage with clients, is technology. This covers many aspects of our work, one of which is accounts software. Before, if a client didn’t have accounts software, they would probably ask their accountant for a recommendation. In all probability, the accountant would have advised software such as Sage, because he knew other clients used it. The client would go to a Sage reseller (a completely different company) to purchase the software, as well as training on how to use it.

With cloud solutions now the norm, clients are no longer going through resellers. Client expectations have evolved, and they now want their accountant to help them in the implementation of accounting solutions; supporting the client as well as having broad knowledge of the software itself. It’s a challenge for traditional accountants, and one that I believe they will need to rise to if they are to succeed long-term.

Communications

The way we communicate with our clients has also changed dramatically. We’ve thankfully moved on from the days where it was very formal relationship, characterised by official letters and an annual meeting. Today, clients are emailing their accountant, phoning them or even dropping into their office for a quick chat – shaking off that formal stereotype that surrounded the profession. We now use email, shared documents, instant messaging and, increasingly, Google hangouts, to communicate with our clients.

Clients today are looking for support in managing their finances, assistance in planning for future growth, and insights to help them make key decisions. This type of involvement would have been a common practice with big consultancies such as KPMG, but it was never witnessed at SME level. Today’s accountant has to be able to offer more than last year’s  profit and loss report; they have to be up to date with the client’s situation and ready to offer proactive business advice.

Anywhere, anytime

We all expect our lives to function ‘on the go’, and our accounts are no different. As everything becomes increasingly mobile, cloud accounting is booming. Systems such as Xero mean that clients can log in to their accounts from anywhere, on any kind of device. Team members can be assigned tasks, and efficiencies can be made by connecting to other business systems and tools. The accountant can also access the books at any time, so they’re up to date with what’s happening in the business, instead of only getting to see everything at the end of the year.

Online solutions (Software as a Service and Platform as a Service) are great for small businesses. Most of the time you pay for services on a monthly basis, and it’s also common for pricing to be staggered – so you only pay for what you need. Updates are automatic and ongoing, so you’re always using the best version of the product and backups are automatically done for you. Unlike classic desktop software, these solutions are always built with integration in mind, so most of the time you can pull information from one area of your business through to another and benefit from the insights that brings.

Paperless

The ‘paperless office’ has been in the pipeline for the past two decades, but it is finally looking like very a real option. More and more, invoices arrive by email and are stored online. If a paper invoice is received, it’s now simple to digitise with either a scanner or a smartphone using a tool such as Receipt Bank. The legal requirement to store records has changed – if a document was created in an electronic form, it can be stored in an electronic form (although if it’s a handwritten receipt, you are still supposed to keep the paper version). Once you have your records in an online system, they’re available anywhere, anytime… and of course they’re easy to search through if you ever need to track one down. With online banking now mainstream, it really is possible to run your business completely virtually.

Charging

Traditionally, accountancy practices charged by hour – according to the skill level of the person working on a task (Accountant, Semi-Senior, Junior, etc.). The accountant would keep timesheets and the client would be billed at the end of the period agreed (often at the end of the year) for the time spent on their accounts.

People understandably aren’t keen on open-ended billing anymore; for one thing, they expect to be able to budget for services in advance. Also, people work at different speeds, so an hourly rate is actually quite an arbitrary figure! With fixed-rate billing, you know how much it will cost to receive a particular service. You can budget for it and even pay monthly. It’s a much better system, which is going to become the standard way for people to charge for services in the future. It’s how we charge our clients at Beyond, and we expect to see more and more accountants go this way. It’s all about being transparent and offering value for money.

Accounting has changed and accountancy firms will have to change too if they’re to stay relevant. Client relationships are becoming more and more important – businesses want an accountant who understands what they do, the industry they’re in and the challenges they face. They expect a responsive service all year round, not just someone to do a yearly tidy-up before the annual return is due. They want an accountant who works in the same way they do and uses the same tools and systems they do. This is the approach we take at Beyond Accounting and we know it works for our clients. In time, all Irish accountancy practices will have to adopt this way of working too.

If you’d like to switch to an accountant with expertise in cloud accounting, don’t hesitate to call me on 01 639 2963.

Rory