The Future of Accounting is Online – Introduction
Over the next few weeks I’ll be posting excerpts from my whitepaper which looks at the key elements, I, as a Chartered Accountant, wanted from an accounting system so I could grow my practice. In essence this is what drove me to co-found Xero.
I loved working with small business clients. My firm, Openside, was built to provide next generation accounting services for fast growth entrepreneurs. In about 2002, I did an offsite strategy day and took a good look at my practice. I realised the practice I wanted was not what I had. My practice was 85% compliance-based, I was working huge hours, I had high write offs and often had disputes with clients over fees. I was getting tired fast. So I decided to change my business and in doing so, I looked for the tools that I needed to do the job.
Rod Drury, a technology entrepreneur, became my client and he and I discussed how great an online accounting system would be. So we resolved to build the accounting tools we had both always wanted.
This is what I didn’t like about the old model:
- Being disconnected from my clients’ accounting system.
- Doing only compliance and having arguments with my clients over fees.
- Being an agent of the government tax authority that my clients paid for.
This is what I wanted:
- My clients to see value in what I did and to build valuable relationships with them.
- To help my clients. I knew as an accountant I could help almost any small business become more successful, but in order to do that the client had to see the value.
- To provide next generation accounting services to my clients, being their virtual finance director and becoming mission critical to the growth and success of their business.
- Higher touch points with my clients, providing the ability to find opportunities to pro-actively add value.
- Bill my clients monthly with service level agreements and bundled service offerings.
What I did not realise then, but I know now, is the old model of accounting software, where the customer manages their own version of their data and sends me a copy periodically, dictated how I worked.
The time it took to get a copy of my customer’s data into a location format, was time my customers weren’t happy to pay for. Any changes I made were out of sync with their business copy. This forced my firm to provide retrospective advice – sometimes after year-end. It stopped me adding value on a more regular basis, such as monthly.
The key elements of an online accounting system
- Access to the clients’ accounting systems and the ability to collaborate.
- Help my client understand the financial side of their business.
- Easy to use and keep up-to-date.
- Different user functions for: my client, their employees, the bookkeepers, my staff, and of course myself (the accounting partner).
- No risk model to my clients. I wanted to tell them, “try this”.
- Reduce IT costs to my clients’ business.
The online accounting system is not the final solution – you need to change the way you think about your clients and your practice. But it is a huge part of the solution.