The other day, I was struck by an odd sight in my local Sainsbury’s. By the entrance, there was a rack of vinyl LPs for sale, something I thought I would never see again in supermarket chain. What was once regarded as archaic and obsolete has now come back into fashion, and I think this is a lesson for accountants in regards to their bookkeeping services.
Bookkeeping is a boring, mechanical task but someone has got to it. This is why many people outsource the process to a dedicated resource. Historically, accountants used to offer bookkeeping services but the attraction of doing so diminished when they realised that they could be spending their time a lot more profitably focusing on other services for their clients.
The looming prospect of HRMC’s Making Tax Digital initiative should give accountants pause for thought, however. As I have argued previously, Making Tax Digital poses a somewhat existential threat to current accounting practices. By moving recordkeeping to the digital domain so as to allow for quarterly reporting, HMRC is almost providing the informed, skilled individual the opportunity to bypass their accountants for core services.
The technological revolution will only make it easier for clients to resent passive accountants. No-one enjoys paying their fees to their accountant. If modern software packages and an intuitive online platform submission makes the accountant a costly, needless overhead, clients are going to look to move on.
So what are accountants to do in the face of such momentous changes? Go back to basics.
Business people outsource work when activities or tasks are too onerous or costly for them to do it themselves. This is not rocket science; if it is cheaper or more beneficial to get someone else to do something for you, you will pay them to do it. This is why accountants need to get a better understanding of their clients’ needs and business functions, for by being aware of those accountants will be able to sell themselves in a more positive, attractive light.
A quick Google search will produce numerous results for bookkeepers who are not attached to accountants. This cottage industry has come about, in part, due to accountants deliberately pricing themselves out of the bookkeeping market so they can focus on more profitable services. Nature abhors a vacuum, so non-accountants have filled the void. In other words, a service an accountancy firm could be profitably selling is being provided elsewhere.
Rather than being a threat to accountancy services, technology is in fact a boon to the innovative accountancy firm. Processes and procedures that were previously deemed commercially unviable or unattractive are feasible, intuitive and mesh well with accountants’ other processes and services.
Cloud accounting is one such technological innovation that can reinvigorate bookkeeping for the digital age. By ensuring real-time entry (or entry review) by the client or by a resource provided by an accountant (or a combination of both), accountants can maintain accurate books for their clients. This can be done quickly in a cost-effective manner, meaning that you can charge a margin on work that does not take more than five minutes a day but for which a client would probably want professional, independent overview.
But accountants should also think tangentially about what technology and online processes mean for their own clients. In the same manner that not everyone who runs a business is entirely financially adept, not everyone is technologically adept either. Training and education for the new digital age will be required by accountants’ clients, and not just the accountants themselves. This is service that accountants can provide, and charge for. New opportunities provide new revenue streams. Could your accountancy firm partner with accounting software provider for training or software reselling? What other services could an accountancy firm offer small businesses? Administration services and client (co-)management are obvious extensions to an accountancy firm’s portfolio.
Like dusting down your LPs from the attic, it is time for accountancy to go back to its roots so the sector can move on and flourish in uncharted territory. Strong professional relationships with their clients bases is the way in which accountancy firms can ensure they are not bypassed by the march of progress. I urge you all to seriously think more of the opportunities, rather than the threats, that Making Tax Digital poses and modern day bookkeeping is one such opportunity.