Business Owners to Accountants – Tell Me in Real Time
Business accounting is defined as the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results. It sounds pretty dull, and to most small business owners it is the last thing they want to think about. “Accounting” is what happens at the end of the month, quarter or year – or when any type of taxes are due. What matters to the small business owner is their cash flow and cash availability to meet immediate operational demands, and how they will get past today’s problems to reach their future goal of comfortable retirement, leaving a legacy for the kids, or selling the business at a high value. It may even be that, during periodic visits to deliver the monthly paperwork to the accountant, business owners express interest in discussing their ability to meet future business goals, yet these conversations often take a back-burner to simply getting the work processed and reports and returns completed.
Accounting has traditionally been approached as an after-the-fact activity, recording transactions for things that were already done in the business. While this may be a handy approach to getting an annual tax return completed, it really does nothing for the small business owner in terms of providing them with information to run the business. Further, it does nothing toward helping the business owner get to where they want to go with the business, reaching whatever goals they had in mind when they first got started.
Cloud solutions and Internet-based applications have emerged which provide a high level of capability and information to small business owners, much like the E*Trade tools which enabled any user to “take control of their financial futures by providing the products, tools and services they need to meet their near- and long-term investing goals”. Where E*Trade delivered simplicity, insight, and guidance for investors in real-time, so do many of the new business analysis and financial dashboard solutions, but in a business financial context.
Individuals who are focused on meeting their financial or investment goals are very interested in monitoring their progress toward reaching those goals, and guidance often suggests that making adjustments in strategy or approach at certain points along the way may be required. Similarly, business owners have a great interest in monitoring the progress and status of their businesses, and many are taking steps to gain that insight and obtain guidance through the use of online banking solutions and other real-time reporting tools.
By simply connecting financial systems to some of these online reporting tools, business owners are able to gain a significant level of insight into their business operations, including bank balances, cash coming in and going out, and other information which supports making daily business decisions. Unlike a static financial statement or annual report, these dynamic tools can provide business owners with real-time information about their businesses, which is what the business owner is looking for. But guess what? It’s not happening like it ought to.
Business owners are becoming increasingly impatient with their accounting professionals, and are demanding higher levels of service at more competitive rates than ever. Further, many business clients of accounting professionals are gaining a belief that the value their accountant delivers is diminishing as do-it-yourself tools are gaining in popularity due to ease of use and well-stated value propositions. If accounting professionals would only take a proactive, rather than a reactive, approach to working with their clients, this question of value would be much less of a question.
The biggest problem facing these accounting professionals is that they rely upon the client to deliver the work. Waiting around for clients to bring in information for processing, or traveling around to client offices to pick up materials when they say it’s ready, is creating a divide between the client and the accountant which is difficult to overcome. This divide – the lag in time between when business things happen and when they are accounted for – eliminates any possibility for the business owner to operate with all the information they need.
Accounting professionals must become proactive in their relationships with business clients, establishing the initial groundwork for how each will perform in order to achieve the desired result – real-time information for real time decision support. The accountant has a responsibility to not only ensure that the information is processed appropriately and accurately, but also to ensure that it is obtained and processed in a regular, timely manner. Increasing the frequency of capturing and processing data is necessary in order to provide information when it is most useful. This means that accountants must not only organize their workflows to adjust to the new frequency and timeframe for processing, but that they must also be far more proactive in obtaining the source information from clients on a regular and recurring basis.
It has always been a problem to get information from client businesses so that it can be processed and reported on. Now, with the demand for more timely data and “instant insight”, business owners are expecting faster returns on the processing of accounting information even as they continue to be the bottleneck in providing the source data. Accounting professionals and the tools they use will have to adjust to this reality, creating a stronger focus on the organization of work and turning notification and exception handling processes around so that they drive the workflow rather than simply result from it.