The profession of accounting has come a long way since Luca Pacioli (considered by many to be The Father of Accounting) published the first book on double-entry-bookkeeping in 1494, introducing a then-unknown system of debits, credits, journals and ledgers.
Technology and the internet have revolutionised all industries, maybe none more so than that of the small business accounting profession. Gone are the days of keeping stacks of physical ledgers in huge storage rooms in the back of the local accounting office, while accountants sit quietly at the front, crunching numbers on pocket calculators all day long.
Manual accounting was revolutionized by desktop accounting which, in turn, is giving way to cloud-based accounting.
It is estimated that by 2020, 78% of small businesses will host their IT environments in the cloud. A study by Compute economics also found that companies save on average 20% in IT spending as a percentage of revenue when migrating their systems to the cloud.
By now, many businesses will be aware of the basic benefits of moving to a cloud-based accounting solution.
However, a less subtle consequence of moving to a cloud accounting solution is how it is changing the relationship between client and accountant, and why this is good for growing businesses.
Less “grunt” work = More interaction
Mundane but time-intensive compliance accounting functions, such as bookkeeping and drafting management reports, have largely been automated by innovative cloud accounting software like Xero.
In addition, physically having to enter bank transactions, invoices and other primary transaction documentation into accounting software is fast becoming a thing of the past, with scanning technology and mobile applications such as ReceiptBank, enabling bookkeepers to perform these tasks with a simple push of a button.
Not only does it allow cost savings as a result of increased automation to be passed on to clients, but, because of the freed up time, instead of seeing their accountant once a year or once a quarter for a quick discussion around management accounts and financial statements, businesses can expect more real time advisory with their cloud accountants on a regular basis.
Modern technology also means that meetings don’t have to involve driving down to your local accountant’s office. Conferencing capabilities over the internet allow for face-to-face discussions while cloud accounting solutions mean all parties can look at the same, real-time data.
Why is this interaction good for a growing business?
Cloud accounting and evolving technologies mean cloud accountants spend less time on routine administration, giving them more time to focus on their clients.
As such, in a white paper released by Intuit (the company behind the QuickBooks software), 71% of accountants believe their role will evolve to that of a trusted advisor over the next five years, while 69% believe they will offer more consultancy services.
The paper also emphasized the changing needs of business owners:
• 96% of clients need business advice from their accountants or expect to in the future.
• 65% of small businesses would value a business consultancy service from their accountant.
• 95% would be willing to pay extra for business advice.
Through cloud-based accounting, cloud accountants can meet these client needs head-on by increasing the time spent actually interacting with customers. This will allow them to add extra value to businesses by:
• Interpreting data
• to give good financial advice and,
• suggest smart business decisions,
• while at the same time being more involved in the client’s business.
Time savings that new technologies provide will enable accountants to adapt to the changing environment, and allow them to evolve and grow with the clients they are serving.
They can move away from reactionary advice that focuses on past performance, to proactive analysis that will help guide businesses to future success.