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Which path are you taking to the cloud?

25th Jun 2015
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According to industry analyst Gartner, there is a common pattern that governs the evolution of technologies. Since the days of the telegraph, radio and telephone disruptive tech has repeatedly followed what Gartner calls the “hype cycle”. After a period of initial excitement and inflated expectations, the tools eventually come down in price and enter a phase of steady, mainstream adoption.

This is what we have seen with accounting in the cloud. A few years ago, the profession was rife with arguments about software as a service (now rebranded as “cloud”). Could accountants trust it with sensitive client data? Would it catch on? Now the fuss has died down, AccountingWEB’s figures indicate that a majority of member firms are deploying at least one cloud bookkeeping application within the practice.

The pace of change can make it harder for practitioners to keep their bearings as the business and social sands shift beneath their feet. If they continue doing the same things they have always done in this environment, their most valuable clients are likely to drift away.

Having reached this tipping point, AccountingWEB has joined forces with Receipt Bank to introduce a series of articles and content designed to explain what these underlying changes will mean for practices over the next few years.

The changing professional landscape

Before embarking on this strategic review, it may help accountants to consider some of the key trends affecting the profession in the 21st century:

  • Regulatory change - While dressed up in the rhetoric of reducing administrative burdens for small business, the anti-red tape movement is ironically increasing complexity for small businesses while simultaneously undermining the regular statutory work on which many firms depend for their survival.
  • Social and demographic trends - Clear generational divisions are emerging between Baby Boomer accountants (born 1945-65) who want to retire, but can’t afford to; Generation X (1965-1980) accountants who can’t or don’t want to meet senior partners’ equity expectations and look elsewhere for career development; and the “digital native” generations who have grown up in the instant-gratification internet era and haven’t got the patience to pursue the career paths their elders expect them to.
  • Technology - Mobile information, cloud computing and social networking have transformed the professional environment, creating client expectations for 24/7 service and instant answers. These tools have also lowered the costs of entry for practitioners planning to set up on their own and given accountants an infinite variety of ways to cater for clients’ needs. Younger accountants like Alex Falcon-Huerta don’t shy away from technology. They’ve grown up with it and are picking up clients among their generational peers who feel the same way. “If a client has issues you’ve got to support them,” she says.

The connected accountant

The message is simple: compliance work is not going away, but the margins on providing it are eroding rapidly as companies take advantage of relaxed rules for statutory reporting and audit.

Accountants cannot hold back change, but they can adapt to it, advises Receipt Bank UK country manager Nelson da Silva.

“Don’t just take your existing business model and try to put in cloud… get a new business model,” he says.

As more of the compliance workload goes online, accountants need to move with it and shift from a batch-mode compliance mindset to a more continuous, relationship-based advisory approach.

Online applications don’t just affect the economics of accountancy, they change its nature too. Without having to go through the labour-intensive cycle of monthly closes, reconciliations and adjustments, cloud apps deliver a real-time view of financial data.

By creating a platform for instant collaboration, cloud tools can become the bedrock for business advisory services. The accountant’s role in this interactive environment should be to package information and present it back to clients in a way that lets them see what’s happening in their businesses.

Accounting is about capturing and organising financial data and then making decisions based on that information. Better information will help you and your clients prioritise the most profitable products, minimise waste and streamline operations.  If you start talking to clients like this, what you say will become a lot more interesting and relevant to them and put you in a position where you can help steer the business where they want.

This series is designed to help accountancy firms figure out where they are on the cloud adoption curve to make informed decisions about how they will approach online accounting and client service. To help explore your firm’s strengths and likely direction, try the What kind of firm are you? quiz and find out more about the possibilities ahead.


Replies (4)

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Alex Falcon Huerta
By Alex Falcon Huerta FCCA
25th Jun 2015 22:06

This is exactly the direction I wanted to head in with my new firm. I can provide my clients with real time financials 24/7. 

Products like Receipt Bank enables firms to carry out a processes in a much quicker time, therefore being more profitable. 

As an accountant, if you can be at the front of this change, rather than your client asking you about these products, you are putting your self in a much better position.

Not only do I talk about taxes and accounts, but I assist clients in streamlining and revolutionising their back offices.



Thanks (1)
By chatman
26th Jun 2015 15:41

What an amazing article!

Wow, what a fascinating article. These amazing insights will definitely change the way I work, and probably the way I view life itself.

By the way, is there any justification for the statement "While dressed up in the rhetoric of reducing administrative burdens for small business, the anti-red tape movement is ironically increasing complexity for small businesses while simultaneously undermining the regular statutory work on which many firms depend for their survival"?

Thanks (1)
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
26th Jun 2015 16:54

Red tape argument

When's the last time you tried to explain the small companies reporting regime to a client? Pros and cons of the microcompany reporting exemption? The new simplified expenses regime? The ever-expanding/contracting annual investment allowance? Cash accounting for tax purposes? VAT flat rate scheme versus full quarterly reporting. And we can all look forward to whatever is going to happen to personal tax filing.

We only write about this stuff on AccountingWEB, but so many initiatives have come down the pipeline in recent years to reduce the administrative burden on small business that we're running to keep up. I can only imagine what it's like communicating the changes to clients and helping them to make the best decisions.

The basic point is that more change means more complexity coping with transitional arrangements. When the dust settles from the government's red tape crusade, I think we will see that the government will have made progress at taking a lot of small businesses out of the traditional limited company accounting, audit and tax regimes.

The government's estimate of the potential savings of raising the audit threshold back in 2013 was £400m representing a pretty significant chunk of fees for accountancy firms. Sorry if the article didn't quite make those arguments more clearly, but I would hope the background pressures - seen most recently in figures suggesting that 62-63% of AccountingWEB member firms are suffering from a squeeze on fees - would be pretty evident to practitioners reading the piece.




Thanks (2)
Man of Kent
By Kent accountant
29th Jun 2015 17:13

Which path?

The easy one.

Let's be honest there is a large dose of 'smoke and mirrors' associated with all this so called cloud stuff.

The path/route/journey or whatever you want to call it is straight forward, you can either:

 - ignore it (the type of practice John is referring to)

 - buy into everything, use every app, Xero add on, social media platform etc available and lose track of what you're supposed to be doing

 - or select the products best suited to you, your practice and your clients and go with that.

As Gary Turner pointed out recently the vast majority of small businesses don't and won't (any time soon) show any interest in 'cloud accounting'. So rather than ram it down their throats and force them to use the brand(s) of software your practice uses, choose the solution that is best fit for them.

With almost 40 clients using Xero I'm close to the upper bracket of accountants using Xero with their clients (using Gary's stats again) but the majority of my clients don't use cloud software. For most of them its not suitable and I won't try and force feed them cloud 'stuff' because its not right form them.

I've taken several calls recently (and received dozens of emails) from new Xero add-on partners. When I get to the detail I find their offerings are largely not relevant for me or my clients. Yes there are several I and clients use, but most of them are not relevant or don't offer much in the way of benefit for my clients.

Management stats/dashboards which bolt on to Xero? No benefit for most small owner managed business where they know the value and cost of pretty much everything in their business and know how to best source work.  

So to summarise - take the most straight forward path and don't believe (all of) the hype. 


Thanks (3)