Lately there has been a lot of press and commentary (some would say hype) about cloud accounting systems.
So what is reality and what is hype?
First of all some facts:
- The cloud accounting (or the original term is SaaS – ‘software as a service’) has been around for a long time. The technology has been available for at least 10 years.
- Cloud accounting is where your (or your clients) data is stored on the internet (instead of a PC or server) so they can access it easily and efficiently.
- As of today there are approximately 3-4% of small / medium sized businesses who use an internet (cloud) based accounting system.
- The early adopters (the cool ones) have jumped on it and enjoy the simplicity and innovative approach to it.
- Many of the late majority users will be currently concerned about security issues. They are the same ones that were concerned about internet banking security concerns and now they probably use some form of internet banking.
- Every single accounting software maker (who started as a CD/Server/Hard drive system) are spending bongo bucks (technical term) to get ‘cloud ready’. In fact I know (from the horse’s mouth) that one prominent supplier is spending in the vicinity of $100M to get ready.
- Around the world there are gazillions of dollars being poured into any sort of internet based computing systems. The venture capitalists and financial markets are backing this space.
- Cloud accounting systems will not fix every issue you have with your clients ‘cleanliness of data’ – if they input incorrectly then you’ll get a mess like you do now. Muck in – muck out.
- It is reported by the software vendors that at the accountants end you will have an efficiency gain of anything from 10% – 40% when your clients are using an internet based accounting systems. That means 10% – 40% less time on the same job.
- When a client has their data on the internet it is easier to transport the data from one accounting firm or accounting software supplier to another. Click of a button.
- Every week we are hearing of clients who have switched accounting firms because the other firm did not offer an internet based accounting system.
And the final fact.
12. This is going to happen whether you like it or not!
This is a revolution going on in the accounting space. And you are in the box seat to capitalise on it – or possibly be wiped out. You need to be like a surfer and ride the wave. As one supplier told me 2 weeks ago – we’re only 5 minutes into the 90 minute game.
So here is what I see as the future of all of this.
This revolution is like internet banking was 10-12 years ago. The early adopters got onto it (internet banking), the banks made it easier to use, increased security and now it’s just the way we transact.
I see this wave coming where clients will demand you set them up on an internet system and they will switch firms because of it. You might say the strength of your relationship will stop that. I question the strength of that relationship when you only see your client 1 or 2 times per year. What would happen if you only saw someone you loved 1 or 2 times per year? Ok, some of you might say that would improve things!
I believe that compliance will become a commodity with internet accounting. The technology will simplify everything. The technology will link to government agencies, other portals of interest and it will feed content down to the end user. If compliance becomes commoditized then where is the accountants ‘mystique’?
There is no formal connection between accountants and client. There is a history/relationship/mystique connection – but you are not ‘connected’ formally. I see that internet accounting will diminish the loyalty accountants currently enjoy – unless you connect with them formally.
I truly believe that these new systems will make it easier and faster to process compliance. That means that run of the mill annual compliance will become a commodity. When products/services become a commodity then inevitably price pressure starts. If you are charging an agreed fee and you can take out 10% – 40% of the time, and the service is a commodity, then what is the ethical thing to do? My view is you need to reduce your price and price based on your value you provide.
There will be a new breed of ‘price cutting’ accountants start to appear. Internet based accountants. No relationship with the client. All delivered via the internet. Online support if needed. The work is done ‘wherever’. Who knows where? And for some who cares.
I think these new systems have the power to wipe out traditional/tired/stuck in their ways/yesterday based accounting firms. If your clients want it and you’re not delivering it then they will fill find someone who will. Are you going to pull down your shingle, sell out or get with it and ride the wave?
My view all this change equates to massive opportunity for savvy accounting firms who are truly interested in making a difference with their clients.
You see, when your clients are ‘internet accounting enabled’ the data is real time and more accessible. Your clients can see what is going on every day on any mobile or fixed device. It is a bit like what the late, great Steve Jobs said when he launched the Apple iPod® he said this device will allow you to have “1,000 songs in your pocket”.
I am going to say something similar – your business data in your pocket™. Your clients have their data in their pocket at any time – in real time.
Is cloud accounting your friend or your foe? Depends how you look at it. It’s your friend if you ride the wave and capitalise on it. It’s your foe if you do nothing.
Let’s say you want to make it your friend.
Imagine you have helped your clients get onto any one of the major internet based accounting systems. You guided them which one to choose and helped them get set up on it. You got on the front foot and promoted it to your clients before another accounting firm did.
Your clients accounting is now in the cloud. Once you get the hang of it you now have excess capacity and you now have some choices to make. You can either downsize your team, buy some fees or you could do what most have wanted to do for years – add value in a positive way to your clients with that new found excess capacity.
Imagine if you are now formally connected to your clients via the internet and you can see what is going on in their business in real time. With this data you can then become more relevant and more useful.
Imagine if you could see a consolidated view of your clients’ data, in real time, on your mobile device or PC. You don’t have to wait for next year to see this year’s balance sheet/P&L and financial situation. That is looking in the rear view mirror at history. It’s bordering on useless. We’re a real time society and you as the accountant need real time data. Real time on your phone, tablet or any PC.
And it didn’t matter what accounting system your client used. Your consolidated view would be with all clients and all accounting systems.
Imagine if the system would alert you if something untoward is happening – debtors up, payables up, cash down etc. The system sent you a text message or email when your clients go in the ‘red’ or it gave you a health check of all clients – no matter if they are in the ‘red’ or the ‘black’. If the system told you this you could then simply react to your clients’ situation and either alert them to the issue (good customer service) or you might have a meeting with them to help them solve the issue on the spot or have them buy a higher level service from you if need be.
Imagine if that same system fed up content to you and gave you help on what to say, how to say it and how to fix business issues. Imagine if that same system coached you and your team members on what to do, how to act and how to be better advisers to your clients.
Imagine if the system did real time benchmarking with the same industries that your client is in.
Imagine if the system enabled you to do a business performance review – on the spot. It enabled you to be more meaningful at your annual meeting with your client.
Imagine if it showed you how to plan the next 12 months with your client and with a click of a few buttons it prepared a budget & cashflow statement that was robust and ‘financier ready’. And then with the live data feed it helped you and your client monitor their daily, weekly, monthly, quarterly and annual results.
Imagine if you had ….
“Your clients’ business data in your pocket – anytime, anywhere…real time™”
That’s the future.
Available very soon for Proactive Accountants around the world.