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Accountants warned not to be cost ‘outliers’

12th Jan 2011
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Irish Cloud entrepreneur Joe Drumgoole warned accountants this week that the tumbling cost of online technology could undermine their fee income.

Drumgoole has founded a series of start-ups during the past decade and explained that he used to have to budget up to €500,000 to get a company up and running. The cost of Microsoft software licences alone might run to €25,000.

But with the advent of Cloud infrastructure services, the costs of running the IT side of the business have fallen dramatically, they no longer figure so significantly on his overheads budget.

The Cloud has changed the economic picture and paved the way for what Drumgoole calls “the asset-free” business where the only real asset is the brainpower of employees, he told accountants at an ICAI IT Services seminar in Belfast on 11 January.

“It costs pennies to set up a business infrastructure with Google apps, Gmail and DropBox for office applications and programs like SugarCRM for contact management and FreeAgent Central and AccountsIQ for the books,” he said.

But while technology costs have fallen. Accountancy costs have not. “When I first started out 10 years ago, I used to pay my accountant €2,000-3,000 a year. It still costs about the same, while all my IT costs have dropped,” he said.

“Accountancy costs are becoming more significant. You don’t want to be an outlier – if you start to be the item that stands out on a budget spreadsheet people start to wonder if they can outsource that to Poland.”

The next day at a follow-up session with a larger audience in Dublin, Drumgoole moderated his warning. “There are still good reasons to hire an accountant. I would far rather deal with someone local who knows my circumstances than in India.”

The cost pressure on fees was not the world ending, he added, “but accountants need to be aware of it”.


Replies (4)

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By Bob Harper
12th Jan 2011 19:41


The issue isn't the size of the fee but the perception of value and it is here where accountants need to get their clients to focus. Make clients value what you do and get them to ensure they think of what they get rather than what they pay for it.

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Nigel Harris
By Nigel Harris
12th Jan 2011 21:33

It ain't happening

We have been hearing for years from the likes of 2020 Group that compliance work was going to dry up and we'd all have to become consultants. Over that period we have taken on more and more compliance work. I have more demand for bookkeeping now that I have ever had.

Why? Because we're all running around like headless chickens trying to survive. People in business simply have no time and are happy to pay other people to do the chores they don't like/have time for. All these neat time saving and low-cost software solutions are all very well, but the bottom line is that they enable YOU to do more - if you want to. My impression is that most people don't want to, even if they could.

Having said that, there will always be those who want to do everything themselves and save money in the short term. Good luck to them, I say. I keep a handy list of local bookkeepers and sole practitioners who are only too pleased to take on new clients if mine start jibing about fee levels. Likewise, I am always happy to help them get started if they want to do their own accounts or tax return. Someone who thinks they can do it themselves is never going to appreciate the value of paying someone else to do it.

Very often, it only needs a short time of trying to do it themselves to realise that it was good value after all to pay us to do it!

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By Bob Harper
13th Jan 2011 07:29

Busy or profit

@Nigel - I am aware that bookkeeping is a growing service line but this is not about being busy but being profitable. 

The profit from bookkeeping in terms of effective recovery rate is much higher when you roll in management accounting services line interim accounts and quarterly consultations with business advice and coaching.
A firm has fixed resources so it becomes a question of profits being driven from the choice of clients and service mix.

I do not see compliance disappearing any time soon but I think there will continue to be price pressure. My mantra is for firms to view compliance as the basis of the relationship rather than the reason for it. And, if it is the reason o focus on the service experience to ensure margins are maximized.

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Sarah Douglas - HouseTree Business Ltd
By sarah douglas
14th Jan 2011 16:37

Has he taken into account the amount of time the HMRC and The Re


I am only going from my experience , but I am not sure my clients would pay for an accountant or bookkeeper who used google apps to produce their accounts. I not sure if he has heard of the IXBRL format that we all expected to use in  the future and rising employment costs , running office costs.  I am wondering if anyone knows why he moderated his comments.

 If accountants fees are still the same as 10 years ago then they have changed.  10 years ago the HMRC  used to be  better and actually employed people who knew what they were doing.  Their computer system is a mess and most of the staff are just call centre staff with a script in front of them,    there did not seem to be so much red tape and I certainly did not have to answer letters every month for clients for HMRC payments all ready made .  

If accountants fees are the same ,then they have actually gone down in price.  I am very concerned about the time I spend writing and calling the HM and now keep a separate folder which for each client  to record the time on skype for the times they do not answer or how log it takes and a copy of all letters .  Once they wrote to my client to say they made no effort to contact them , even though we had  we rang them 5 times a day and wrote letters.  My  client was happy to pay me for this work as they were  losing the will to live.

 I have always been open that I spend a lot on software and I have always gained business by doing  so  , but I am not sure I would still have a business if I had not .

-- Kind Regards Sarah@ Douglas Accountancy & Bookkeeping Services, Glasgow

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