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The Future of Accounting is Online – Introduction

hamish-headblogOver 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.

The obstacles

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.

 

Read more about Accountants, Accounting

 

9 comments

John Birse
6 September 2009 #

Could I suggest a missing link in your relationship with the client is a Professional Bookkeeper who is able to assist with the data capture, coding, checking and verification of transactions on a regular basis so that the Accountant and Client are looking at information that can be relied upon. This releases the Client to focus on generating revenue for their business and the Accountant to offer financial advice based on accurate source documents and accounts.

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