Cloud Computing Is Transforming The Accounting Industry

Accounting Software

The accountancy market is in a state of flux – squeezed by the trend towards lower priced book-keeping services at one end and the push into the mid market by the Big Six at the other.

But as the UK’s SMEs brace once more for a tough 12 months, there is a massive opportunity for accountants to offer real value to clients, evolving from the annual client discussion towards a more interactive service that meets the needs of businesses struggling to assess the way forward.

Software-as-a-Service (SaaS) based financial software offers the chance to transform the industry – from streamlining processes to drive down costs to the adoption of subscription based added value services, such as daily or weekly cash flow forecasts, proactive advice on profitability or tax planning or real time access to scanned invoices.

I call on all accounting firms to become far more innovative and deliver the services required by SMEs today.

Time for Change

Despite the financial climate, pressure on clients and changing marketplace, accountants are, in the main, still making money. But they are being increasingly squeezed by a new breed of book-keepers leveraging cheap software to offer ‘shoe box’ services to UK SMEs; and they are seeing the Big Six reduce fees and extend their services into the mid market.

Yet despite this clear and growing trend, few accountants have woken up to the serious implications of a fundamental change in operating model and cost base.

How long can the midsized accountancy firm hold its share in this market? How long can they survive as margins are cut and profitability eroded? How can they compete with the Top Ten firms as they increasingly leverage technology to offer lower cost audits – often as loss leaders – in order to win customers and cross sell more profitable services?

Right now many companies are giving away services in an attempt to retain clients. Yet they have no idea how long it is taking to find the information required to answer client queries or manage client demands; indeed many do not even know whether or not a client is profitable.

Service Delivery

This is not a sustainable model. Rather than simply cut fees, accountants should be leveraging their expertise and becoming a key part of the client’s business. They need to provide more than an ‘after the fact’ overview of profitability – it is too late, and businesses know whether or not they have had a good year! And in this market, to be frank, the UK SMEs need far more insight in order to stay in business.

Accountants need to be able to offer real time insight into profitability by product or service line; they need to undertake analysis of the cost base and deliver advice on options for business change or expansion – these are the services increasingly demanded by clients looking to make tough decisions.

Such services can only be achieved with real time – or near real time – information from clients; the old model of an annual review is outdated and, increasingly, irrelevant. SaaS-based financial software offers the chance to transform the client relationship. The subscription based model minimises the investment required, removing the need for internal IT expertise or server infrastructure.

Furthermore, subscription costs are incredibly low and the monthly pay as you go approach enables accountants to embrace a new business model. Clients can sign up for a monthly subscription service which can range from basic book-keeping to other, more added value services.

Cash flow is improved with the regular monthly income, while IT costs diminish; and the fact that the information is online – and available 24×7 – means there is no need to be office based, allowing firms to embrace more flexible working practices.

Automating Processes

A key component of this solution is integrated document scanning. Purchase invoices can be scanned in and automatically posted into the accounting system, checked by the accountant, and confirmed. Scanning purchase invoices in this way and with the use of – either in bulk or by each client together with ‘self learning’ software – drives down the cost of processing, enabling firms to compete with book-keeping services.

More critically, by encouraging clients to scan purchase invoices on at least a daily basis, accountancy firms have access to the timely business information required to deliver these new, added value services.

At the most basic level, the ability to provide any business with near real time insight into performance is incredibly powerful. Simply accessing the accountant’s portal to discover how different parts of the business are performing, to track cash flow or assess the impact of currency fluctuations provides unprecedented confidence in decision making.

Building on this basic information provision, additional services can include cash flow forecasting or business analysis, providing a depth of financial expertise that will be essential to help SMEs maintain or even grow the business during this sustained economic downturn.

Cultural Change

There is a huge opportunity for accountants to step up to the mark and play a vital role in enabling a new level of business insight and understanding that could transform the performance of the UK’s SMEs. But, to achieve this critical role will require a significant shift in attitude and culture.

It will require accountants to adopt not only new technology but a new way of working that minimises repetitive administrative processes and frees up talented individuals to share their expertise and knowledge with the marketplace.

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Kevin McLoughlin is UK manager at Twinfield. He is a part qualified accountant and brings a wealth of accounting experience to this role having joined Twinfield from Infor, and before this he spent 17 years at CODA where he worked all over Europe, Middle East and Africa. Kevin started his career in a small accountancy practice before moving into the manufacturing industry as Assistant Financial accountant, followed by taking the job of accountant at a large construction firm where he fully computerised the whole accounting process. With his accounting and computer background, Kevin understands the processes and pain points that accounting practices and their clients face on a daily basis, allowing him to understand and advise from a first-hand perspective on how Twinfield can work to the benefit of accountants and their clients.