One of the hottest trends coming out of this year’s Practice Excellence Awards was that firms operating bookkeeping in-house are growing at an average of 50%.
Analysing over 200 entries to the 2017 Practice Excellence Awards (PEA17), AccountingWEB found in-house bookkeeping to be the most profitable thing firms are doing, with practices adopting this tactic displaying a growth rate of 51%.
This series of four articles, written in association with Receipt Bank, will discuss the benefits behind this move, beginning with exploring its practical advantages.
To watch our webcast on the benefits in-house bookkeeping, click here.
Proactive, process-driven approach
According to the PEA17 entry data, firms doing their own bookkeeping often have a proactive, process-driven approach to practice innovation because these firms can control the whole process, rather than rely on clients or external bookkeepers. As part of this ethos, firms align the bookkeeping process to practice workflows, measured marketing and social media activity and client on-boarding.
In-house bookkeeping also provides a platform for delivering management accounts and advice on cashflow and growth plans.
Will Farnell, founder and director of Norfolk firm Farnell Clarke, described his daily regime in a Practice Excellence Live webcast on future systems: each day team members check client feeds and bookkeeping apps, reconcile transactions and review daily figures for any anomalies.
Several PEA17 entrants were “compliance specialist” firms that deployed in-house bookkeeping to streamline services for microbusinesses and contractors. By taking away much of the friction and cost from the service they provide, these practices were able to build profitable business models.
Analyse large volumes of data
For newer firms like Barnes & Scott, when setting up there is always a temptation to outsource. However, as the firm’s director Tas Mustafa told an AccountingWEB webcast on in-house bookkeeping, having the tools at their disposal has allowed the practice to analyse large volumes of data quickly and accurately, and control outputs.
Alex Coombes, cloud technology manager at accounting firm Ad Valorem, added that taking control of the bookkeeping process completely changed the way his firm handles ‘box of receipts’ clients internally. In particular, the practice is able to have a closer relationship with clients and add more value.
“We offer half-day training sessions for client onboarding, drop in days, unlimited phone service and training videos available on our site. We’ve shot ourselves in the foot in the past by just fixing client errors rather than educating them not to make the same mistake again,” said Coombes.
Ad Valorem started adopting cloud bookkeeping in 2011, initially as a client-led initiative, but this rapidly snowballed as clients and accountants grew accustomed to the benefits. The firm now operates a specific department called AV Cloud, which offers cloud business services at a lower cost and pulls in several new client enquiries each day.
Not all about MTD
The past 12 months have seen a huge surge in the adoption of cloud-based tools such as Xero and Receipt Bank. While a proportion of this has been put down to businesses and accountants preparing for the launch of the government’s Making Tax Digital programme, Receipt Bank account manager Mike Philips points out it’s not all about MTD.
“We’ve seen a big uplift in the adoption of tools like Receipt Bank,” Philips told AccountingWEB. “There are obviously push and pull factors, but a lot of this has been driven by the growth and client referrals.
“We’re currently seeing massive growth in bookkeeping where previously it wasn’t perceived as profitable and was seen as an afterthought.”
According to Philips, 65% of small businesses still don’t use digital software to track their expenses: a potentially huge market waiting for digital accountants.
“Our advice is to take action before it’s mandated,” concluded Philips.
To find out how to make in-house bookkeeping work for your firm, click here to watch our webcast.
About Accounting WEB
Contributions from the AccountingWEB.co.uk editorial team.