“The Clouds” impact on……. Accountants & Bookkeepers.
New technologies are constantly finding their way into our business’ daily affairs. One such technology is the wonderful world of the internet and what is now known as the “cloud’.
This is the first in a series of articles which will attempt to cover the impact the “cloud” is having on businesses at the micro level and also the impact on industries at the macro level. And the first industry I am going to cover is my own, the accounting and bookkeeping industry.
There has always been a heated debate about the role of accountants and bookkeepers for as long as I have been an accountant and the overriding opinion has been that there is a place for both.
Accountants generally haven’t seen value in providing these services to their clients at reduced ‘hourly rates’ and they also don’t want to be involved with this transactional work. And so bookkeepers have filled this void, being able to work closer with these clients to undertake this transactional work and provide it at an affordable cost to them.
But late in the last decade there was a blurring of the lines with respect to the traditional services that each professional provided. Accountants began to offer more bookkeeping services to clients. And bookkeepers started offering higher value consulting services to their clients. This was as a result of improvements in the accounting products on offer in the market.
In the past few years this blurring has been magnified by the emergence of cloud based accounting programs like Xero and Saasu which attempt to automate a number of the processes in these systems and streamline the accounting and bookkeeping processes.
This has allowed accountants to offer bookkeeping services to their clients in a profitable manner. And so the question has begun to be asked, ‘are these cloud based programs going to be the death of the traditional bookkeeping profession’.
At Xercon 2012 held in Melbourne recently Xero Co-Founder Hamish Edwards attempted to answer this question in a presentation he gave. He spoke about much of what I have covered above and explained what opportunities exist for both accountants and bookkeepers to co-exist and collaborate moving forward.
In summary Hamish and Xero believe that bookkeepers “own the transactions” and accountants “own the general ledger” and that this collaboration sees plenty of opportunities available for both sides.
But how is the cloud making this happen? As noted above programs like Xero automate a number of the processes contained in the accounting systems, like bank reconciliations and transaction allocations. They also offer the opportunity for accountants to work on the same live ‘ledger’ as their clients which has opened up a whole new world of possibilities by having access to this real time data.
This means that accountants can offer bookkeeping services to clients as part of a ‘value package’ covering all of their bookkeeping, compliance, payroll, advice and accounting needs because very little time is spent on the actual transactional work as it is now primarily automated. This controls the whole process for clients and provides economies of scale in this regard to both client and accountant.
But the same is also a benefit for the bookkeepers. The automation process means that bookkeepers also have more time on their hands and are able to provide regular management reports to their clients to help them run their businesses in the same way that accountants traditionally have. And because the bookkeeper is generally at their client’s offices more regularly than the accountants they are at the coalface and able to more effectively interpret the results of these reports for their clients and provide it in a more timely manner.
So it is clear to see that the cloud has disrupted the industry and for proactive accountants and bookkeepers has provided them with great opportunities to work closer with their clients and provide better value for money services across the board. But it has also allowed some clients to begin to look after their own bookkeeping for the first time!
As a firm which provides a full service approach to clients (including bookkeeping and payroll) as well as dealing with a number of bookkeepers that look after our client’s affairs we are of the opinion that there still remains a very active place for bookkeepers. Whilst we are happy to provide these services to our clients if asked, we do prefer to leave this to the bookkeepers. We believe our expertise is in providing higher level strategic planning and tax advice to our clients and not processing transactions for them.
As an industry, the changes will continue as the ‘cloud’ becomes more common place in the daily operations of businesses the world over. But one thing is for sure, it is the end users, the clients, who are going to benefit the most from this new technology as they will continue to receive better value for money services and advice as a result. And for me as a professional services adviser this is the most important thing.
Throughout my series of articles I will dive deeper into the benefits and pitfalls that the cloud presents for both businesses and their advisers and how to decide what parts of the cloud you should adopt and what parts you should leave out. And I will also look at, in more detail the products now available in the cloud which are allowing all of this to happen.