Searching for the holy grail brings other opportunities By David Smith from Smithink on Jun 7, 2018
The dream of every accounting firm is to have a client base that supplies perfect information on a timely basis. Achieving this dream is akin to searching for the elusive holy grail. You’re sure it exists but it’s almost impossible to find.
Enter the cloud and the promise gets a whole lot closer to reality.
Data feeds, combined with machine learning (remembering how transactions are coded), significantly improve bookkeeping efficiency and accuracy. Technology such as those provided by Receipt Bank, Squirrel Street (formerly Shoeboxed) and others also automate the processing of expenses and supplier invoices. Machine learning works here too so that the more transactions that are processed, the more accurate is the coding.
So perhaps we are moving towards Shangri-La with more accurate ledgers becoming the reality.
However, a major remaining roadblock is the client. Machine learning can be a disaster if clients consistently miscode transactions and the machine will then happy learn these errors and replicate them. So the logical conclusion is to replace the client.
Accordingly, many firms are creating bookkeeping divisions. These divisions leverage to the max the data feeds, machine learning and other automation technologies to reduce labour costs so that work can be done cost effectively for the client. By having skilled staff they reduce costs further by eliminating coding errors that could have been made by the client. So a win-win is created. Better, cost-effective bookkeeping for the client leading to more efficient year-end compliance work from fewer bookkeeping errors. A new revenue stream is created for the firm from bookkeeping and further profits are generated from improved efficiency of compliance work.
While these are great outcomes, it is only the beginning. Proactive firms are now thinking – “If we’re doing the bookkeeping can this be leveraged into other client services?”
Managing payments is one example. Products like PayVu provide an opportunity to leverage the bookkeeping service to provide a connection between the bookkeeping service and the client to make fast, simple and secure business payments.
These services enable bookkeepers to quickly recommend to clients payments of bills, wages, superannuation payments etc. from just a few clicks. The system looks at the data in the accounting system and displays all outstanding payments to be recommended to the client.
The client merely approves or rejects the payments. Approved payments are automatically sent to internet banking (with sophisticated security) for processing while rejected payments are re-set to unpaid.
So here is one example of an additional service that adds little to the bookkeeping cost but creates significant value for the client in eliminating even more time administering their business so that they can focus more on servicing customers. Not only does this create an additional revenue opportunity for the accounting firm, it also deepens the relationship with the client.
With not much thought, the list of additional services can be expanded into payroll processing, assisting clients set-up front of house applications such as point of sale systems or other add-on applications to the accounting system which would enable them to manage their business better.
All of this leads to the opportunity to leverage this more accurate bookkeeping data which is being maintained in almost real time. Many firms are expanding business advisory services by producing quality management reports, reporting against performance measures and preparation of more accurate budgets and cash flow reports.
So perhaps for 2019, you need to develop your “bookkeeping strategy”. What would be the services you would provide, what tools will you use to ensure high levels of automation, what tools will you use to broaden your service offering. Work out how will you staff the business – what skills are needed and how would you charge. Try to find that passionate and motivated individual to drive it. Someone with a bent for technology is ideal as automation is key.
So as the second decade of the 21st century nears its end we’re seeing a new world of automation. For the accounting profession, this provides opportunities for new profits and services and getting closer to that holy grail. Invest some time in exploring the opportunities.