Tag: accounting practice growth

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Trends Impacting Every Business | Forbes.com

Trends Impacting Every Business | Forbes.com

You think good accounting isn’t a big factor in getting business credit?  Consider this tidbit from Intuit’s CEO Brad Smith, from a recent article on Forbes.com:

Two-thirds of Intuit’s QuickBooks customers were declined a loan due to poor FICO scores and other credit measurements. In the Loan Finder trial, a business could opt-in to allow banks to use QuickBooks data to evaluate if a prospect was a credit risk. As a result of this additional data, the banks provided several hundred new loans with an average of $10 million dollars.

Accounting professionals… isn’t this something you could be helping your clients with?

Read more about helping make small businesses bankable 

Make Sense?

J

  • Read more about how accountants need business intelligence, too
  • Read more about how there’s no fear and loathing in accounting
  • Read more about the pressure on accountants to deliver more value and intelligence to their clients
  • Read more about Data Warriors: accounting in the cloud
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Dashboard Reporting Tools: Gauging Accounting Relevance

Dashboard Reporting Tools: Gauging Accounting Relevance

Dashboard reporting tools can be of great assistance when accounting professionals want to help their clients understand how the business is performing.  In most cases, these tools do a good job of showing owners the details of the profit and loss or cash flow reports, presenting the information in a way that non-accountants can understand.  Many accounting professionals have turned to these reporting solutions to increase the value of the accounting work performed.  After all, if the client can’t really understand the P&L and the Balance Sheet, then the reports won’t do them much good.

While simplified graphical reporting solutions are beneficial to the business, providing more insight into historical business performance, they don’t do much for the client on a daily basis if the accounting data isn’t up to date.  Accounting professionals should recognize that these dynamic reporting solutions, tools which can provide business owners with real-time information on business activities and performance, can go a long way towards increasing the relevance of the accountant’s involvement in the client business.

Accounting professionals today are fighting battles on several fronts, and remaining relevant to the client is one of them.   This isn’t too surprising, given that many accounting professionals see their clients only at year-end when the tax return needs to be prepared.  In some cases, the business owner doesn’t even remember the name of their accountant – they just know they went there last year at tax time.  This arm’s length relationship between the accounting professional and the business clients leaves a lot of opportunity on the table for both parties.

When accounting professionals aren’t closely involved with their clients, they risk losing the client to a more attentive, consultative professional.  Many firms believe that the low profitability of bookkeeping and processing daily work for clients means that they should focus only on “higher level” opportunities, yet business owners will tend to seek advice from those who work with them on a regular basis, and who understand the issues that challenge growth and profitability.

Accounting professionals who recognize the value of providing regular bookkeeping services to their clients also recognize the value of working closer with the client, providing useful and actionable information rather than historic data long after-the-fact.  These professionals are more likely to reap the rewards of “higher level” engagement opportunities from the client, because they help to identify the need and are able to support it with real data and insight earned through regular involvement with the business.

Make Sense?

J

  • Read more about how accountants need business intelligence, too
  • Read more about how there’s no fear and loathing in accounting
  • Read more about Data Warriors: accounting in the cloud
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Business Owners to Accountants – Tell Me in Real Time

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.

Make Sense?

J

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Accounting Professionals: Is Your Value Tied Up in The Accounting Software?

Accounting Professionals: Is Your Value Tied Up in The Accounting Software?

Subtitle: when all you have is a hammer…

There was a time, not so many years ago, when it made sense for an accounting firm to take the position that all clients must use the firm’s preferred accounting software product or they would not be clients.  For these firms, the concept of standardizing transaction entry and data processing across the client base made sense, and provided a means to create maximum efficiency in handling the bookkeeping and accounting processes.  Typically, firms handling small business clients would select Intuit QuickBooks for client use, and offered QuickBooks training, QuickBooks transaction processing, and use of QuickBooks add-ons to support the model.  With Intuit QuickBooks “owning” the small business market for accounting software, it made sense for accounting professionals to leverage the popularity of the solution to the benefit of the practice.

As cloud-based solutions and online application services have emerged (including QuickBooks Online Edition and Intuit Partner Platform – IPP – integrations), many accounting professionals have simply continued with the philosophy of applying QuickBooks (the hammer) to every client engagement.  These firms focus on the software as a basis for delivering what they believe is value in the engagement.  In short, these professionals focus their value in the use of the product (licensing, installation, training and support), and in their data entry skills (efficiency in entering and reviewing transactions in the product), rather than in the greater value of business intelligence, insight and actionable advice.

The new challenge facing many professionals – the reality of the current market – is that there are myriad solutions and approaches available to address client bookkeeping and process needs which work really well, and it is not always a good idea to try to turn a client using one of them into a “nail” just so you can hit it with your favorite hammer – QuickBooks.   With Freshbooks, Wave Accounting, Xero and other solutions which handle various business accounting or bookkeeping requirements quite well and for an attractive price, small business owners are more frequently electing to implement applications outside of the QuickBooks product line even as their accounting professionals are continuing to promote QuickBooks for everyone.  The reason business owners are electing to use these other tools is simple: they work for them.

In reality, this issue has existed in some form for a very long time, and was perceived to be primarily in markets where technology adoption and use is low for various reasons.  The truth is that a lot of small business owners find ways to accommodate their information management and record keeping needs, and they use whatever approach works for them and what they want to accomplish.  Sometimes the approach involves Internet solutions and online applications, and sometimes it does not (Excel spreadsheets with stapled piles of receipts are still quite popular and in widespread use by SMBs and Entrepreneurs).  When that small business elects to engage the help of an accounting professional, the last thing they want to be told is that they have to make a big change to how they get things done.  It’s fine for the accountant to provide guidelines for when information will be made available to support getting the accounting work processed, but it is not necessarily okay to dictate immediate changes in software and systems supporting the business daily operations.  In a lot of cases, the accounting professional simply has no real basis for the requirement to change, other than to support their own efficiency (which is the wrong basis for making a client change their systems).   It’s that silly cost-benefit thing. If it costs the client a lot (change always = cost), and the client does not perceive or experience an expected benefit, then it makes no sense for them to make the change.

Consider a professional accounting firm in Los Angeles, California.  This firm serves small businesses, and has a pretty significant market available to sell to.  LA is a market where technology adoption is high and broadband Internet is cheap and reliable, so this firm has elected to use a product-based focus (e.g., the QuickBooks approach) in qualifying clients and crafting engagements.  Clients must conform to the solution set and the workflow in order to participate with the firm.

Now, consider a professional accounting firm in Elkton, Oregon.  This firm serves just about every business in town (population 195) as well as businesses from a few nearby towns.  Broadband Internet service is sketchy at times, and provider options are few.  This rural area of Oregon is not known for being particularly “high tech”, and computers and software and online application services are not among the things many of these business owners focus on or even care about.  The accounting firm serving this market is not focused on what accounting solution the client uses (or not), and they aren’t pushing to have all their clients purchase and install the same accounting software so that the firm’s processes can be more efficient.  Interestingly enough, this firm is likely doing better work and probably developed a closer and more intimate relationship with their client than those who have fully “standardized” the client base.  The reason is that the firm, whether out of necessity or out of desire, recognizes that each of their clients may have unique needs, and it is up to the firm alone to create maximum efficiency in meeting them.  Further, delivering personal service and useful insight instead of simply providing the work product has allowed the professional to more fully reveal their value to the client.

The truth of the small business accounting market is that there are more businesses like those in Elkton than in LA. Accounting professionals should consider whether they are in a position to “filter” their client opportunities based on use of certain software products and online solutions, or if they will accept that business clients come in all sizes and shapes – with various needs and wants and self-developed methods of getting things done – and that the firm is willing to embrace them as they are and work with them.

Make Sense?

J

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Being Proactive, Not Reactive – Accountants Need to Increase the Speed of Service Delivery

Being Proactive, Not Reactive – Accountants Need to Increase the Speed of Service Delivery

infoTechnology models are changing dramatically, with cloud services and mobile computing being the focus of the IT community and the customers they serve, and those technology changes are driving equally dramatic changes in how businesses and the accounting professionals who support them work together.

As the cloud enables an “anytime, anywhere” model for access to business applications and information, it is also driving accounting professionals to embrace those solutions in order to meet the demands of the business client  who wants their information anytime, anywhere… accurate and up-to-date.  For most accounting professionals, this means being more proactive in working with the client rather than taking the traditionally reactive, after-the-fact approach to providing service.  More frequently, accounting professionals will be judged by their prospective (and current) clients as to their ability to meet the demands of these savvy clients who know that having accurate real time information is critical to managing a business.

Cash management is one of the biggest challenges for a business owner, and this is an area where the accountant or bookkeeper is an essential player, making sure that bank accounts are reconciled frequently and reporting accurately on outstanding receivables and payables.  Business owners need to know where they stand financially, yet many accounting professionals only provide reconciliation and reporting at period ends.  The result is often a client who watches the bank balance and works from that, not realizing that there were outstanding checks or undeposited funds waiting to clear.  Clearly, this owner is not working from current and accurate information, and they will eventually realize it if they haven’t already.

The cloud is increasing the speed of business at all levels, and accounting professionals must also increase their speed of service delivery in order to retain relevance in the changing market.  While there will be hold-outs and businesses that elect to take the more traditional approaches, those clients will start to become fewer and the opportunities they represent more limited in scope.

For a little while, accounting professionals may rely upon traditional approaches to client service delivery, and continue with their position as the last person to know what’s going on in the client business.  But only for a little while.

Make Sense?

J