data collection tools – Cooper Mann Consulting

There are many articles and papers available which discuss the rapidly increasing “volume and velocity” of electronic information moving through businesses these days. The focus of the discussion in most cases is on how businesses need to adopt tools and solutions to help them with the management of this electronic data flow. What isn’t being discussed at length is the visceral business intelligence which is lost due to less direct interaction with the raw data.

By manually working through each item, the person regularly processing the information would often develop somewhat of a picture of the business simply through a level of intuition, a gut reaction to the information. This is a rapidly declining model, thanks to intelligent technologies and direct system integrations.

With the plethora of electronic information sources, data collection tools, and transaction download facilities, many bookkeepers and business owners are finding that their gut instinct and business intuition is being lost in the shuffle of managing and matching up all this electronic data.

Focusing on small business bookkeeping, the processes are now being oriented more towards matching up electronic transaction data points than on entering the information from the raw source. Where bookkeepers were once perceived as “mechanics” in terms of performing the bookkeeping data entry, the activities of these professionals is becoming even more mechanical in nature as the primary requirement shifts from entering the information to importing it and then matching it to source documentation.

Even decisions regarding categorization of the transaction are often made by software solutions, eliminating more involvement by the bookkeeping or accounting pro. At the same time that bookkeepers and accountants find themselves having difficulties communicating the value of the service they deliver, technology trends in the industry are weighing even more heavily on that value proposition by providing users with do-it-yourself tools and self-service solutions.

The answer to the challenge of demonstrating value in the bookkeeping and accounting processes is for accountants, bookkeepers and business owners is to focus on the result of the work rather than focusing on the work directly.

Small business owners will challenge their accountants and bookkeepers to explain why processing a limited number of transactions per period would cost much, and the professional ends up fighting a battle which cannot be won; there is far more value in the work they perform than simply entering the data. It’s this explanation of WHY bookkeeping and accounting takes skill and has value which become arguable to the business owner, and is a discussion which the accountant or bookkeeper is more likely to win if they were to in a position to provide their client with proof of this value.

Too often, accounting and bookkeeping service providers attempt to prove their worth to the client by espousing the quality, accuracy, and timeliness of their services and say too little about the value of the result they will deliver. Additionally, many professionals introduce their clients directly to the accounting software and try to engage the client to work cooperatively with the bookkeeping, as there is a perception that the client may see more value in the work if they can a) see it being done in real time and b) see how complicated it could really be.

Unfortunately the accounting and bookkeeping solutions often implemented by small businesses actually look pretty easy to use and are intuitive, which serves to even further diminish the value proposition as the client perceives that they could likely operate the software just as well as the bookkeeper.

In order to deliver the proof to the client that the bookkeeping work has value, the result becomes the focus of the effort. Rather than providing balance sheets, profit and loss statements and bank reconciliations, those involved in the bookkeeping and accounting process for the small business should also focus on reports which demonstrate the value of PROPER bookkeeping and accurately reflecting business activities.

Would the client know the real difference between cost of goods sold and a regular business expense? Reflection of that single transaction with two different treatments could be the trigger to get the light bulb to light up. How best to demonstrate the variation? Not in pure written report form, that’s for sure. Numbers alone don’t generally trigger real understanding, but painting a picture might.

Today’s dashboard and reporting tools – solutions which use information from the accounting system to reflect visual trends and representations of business performance – can deliver far more meaning and easier understanding than a columnar report with numbers and percentages. Further, these tools can address the task of revealing critical insight into business value, demonstrating (for example) the difference between cash flow and profitability, or identifying trends which indicate patterns in how the business is causing or reacting to change.

As small business owners feel continued pressure to improve performance and profitability, and as lending sources for business credit remain difficult and costly to engage, the necessity for quality bookkeeping and accounting services does not diminish, it increases. The challenge is in finding ways to read the data and discover the insight and meaning it reveals.

The value of bookkeeping and processing accounting data for businesses is ever-increasing in these days of global markets and global competition, and the forward-thinking professional will recognize that deeper insight into the business – insight enabled through the use of realtime reporting and analysis tools – delivers an ongoing opportunity to work closer with the client in addressing challenges identified and presented, and allows the accounting professional, bookkeeper and business owner to be guided by real information rather than emotion or intuition.

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read the original posting at The Progressive Accountant.

Technology and Tools for Accounting Professionals

There was a time not so long ago when accounting professionals focused more on tabulation and summarizing of information than on analysis. Accounting for businesses, in particular, required collecting myriad papers and receipts and other transaction documents, summarizing the information, translating it into journal entries, and finally posting those numbers to the big bound book which represented the business general ledger. With the work required to gather and enter all of the information, professionals necessarily focused their efforts on making the process as efficient as possible by attempting to structure the workflow and manage the paper.

When those efforts are compared to today’s approach which involves digital documents, intelligent data collection tools, automated workflow solutions, online accounting and data analysis, it is clear that the processes for accounting for business activities have not really become simpler. In fact, much of the enabling technology has served to complicate certain processes, which drives users to find even more “solutions” to address these new problems. It (IT) is a bit like the Wonka Everlasting Gobstopper, which never gets finished and never gets smaller. IT simply changes things – regularly and often.

Back then – before the Internet and digital imaging, or even Personal Computers – high technology wasn’t the focus because it didn’t exist in the realm of business in general. I suppose you could call business solutions at that time “low” technology, where mainly mechanical solutions were introduced to address various business problems.

As an example, prior to the advent of digital imaging and electronic documents, one of the primary requirements of the business was to organize and store paper documents. Over time, a wide variety of filing, foldering and labeling solutions have been developed, all oriented towards making the storage and later retrieval of paper documents easier. For some businesses, letting go of the paper is a hard thing to do. Years and years of training in keeping paper files has left many business owners and managers wary of working without physical paper documents. Investments in office space, filing cabinets, storage folders and personnel to organize, file and retrieve all of the documents is only a partial measurement of the cost of managing paper, and large numbers of businesses continue to operate in this manner.

The technology applied to processing the work has also changed, in many ways even more dramatically than the technology applied to collecting and storing the information. Take the simple processes of tabulation (to arrange in tabular form; condense and list) and summing (adding up) information, for example. Previous generations didn’t have computers and spreadsheet software to perform the work. Rather, individuals would painstakingly handwrite each transaction entry into a ledger or on a columnar worksheet, and would then have to manually add each column and then cross check footer totals to ensure accuracy. Back then, the machines used to perform the addition/subtraction were mechanical devices and could not perform multiplication or division. These adding machines were first hand-cranked devices, later replaced with shiny new electrical ones (weighing approximately 20 lbs each).

Even voice communications have changed dramatically over the years. Many people don’t remember a time when having multiple phone lines in the business meant having multiple telephones, and the concept of a PBX (Private Branch eXchange) didn’t exist. Every phone would be hard-wired to an incoming line; if you wanted to answer a call, you had to use the right phone. This became difficult in an office with many people, so solutions such as the “fabulous extendo-phone” was invented to allow anyone in the office to access the phone from their desk.

The technology available to businesses today is astounding, and offers amazing potential and benefit. On the other hand, technology rarely (truly) makes things simple or easy – it more frequently serves to shelter certain users from the complexity while delivering new workloads and concerns to others. It’s rather like energy – it isn’t created or destroyed, it just changes form [law of conservation of energy]. Business is like that, particularly where information technology is involved. The underlying requirement doesn’t go away, just like a business’s requirement to account for financial transactions and activities, and the need for the business to capture and retain documents isn’t changed. How the process is managed, and which tools or mechanisms are applied to the task is what changes.

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