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Accounting can be sexy

Attention Accountants: Feel free to use this article in your publications to help promote cloud Accounting. Please give credit to me as the author using the footer at the end.

Accounting can be sexy

The old system of accounting is really boring.

If you are like most small business owners each month you ‘transact’ (making it, buying it & selling it) through a manual system, a spreadsheet, a timesheet, a cash register and/or a receipt or quote book. Then progressively through the month (or at the end of the month) the data would be entered into a ‘hard drive’ accounting system – either by you or an external book keeper.

Sometime into the new month you may get an income or profit & loss statement which typically was wrong. You would monitor cash balances via internet banking or the check book. At the end of the year you would package up all of your receipts and a copy of the year end file from the accounting system and send it in to the external Accounting firm for processing & filing.

The external Accountant would get started on your file then stop, ask you questions, get started again, ask more questions and then sometime into the future (often months go by) they would finish your job and present you with a ‘set of financial statements.’

They have a meeting with you, do not explain things very well, get you to sign the documents, they then lodge/file the work with the government authorities and you’re done. The financial statements they present have old redundant data that reflect last year’s performance not yesterdays. How can you run a business on old redundant data?

Yawn…Stretch…Boring!

Along the way with this most typical process I am sure your most important questions / issues were not explained very well – if at all. I find there are 4 key questions every small business owner wants and needs answered:

  1. How much tax do I have to pay and why?
  2. Where did the cash go?
  3. Am I am making money and if so how much?
  4. How much free cash do I have this month?

You will never get an accurate ‘real time’ answer to those 4 questions while you have an archaic ‘desktop’ or ‘hard drive’ based accounting system that involves manual data entry.

These systems were developed last century and they are well past their use by date.

Accounting can be sexy if you change your systems to ‘cloud’ (fancy word for internet based) technology.

Imagine if…

Your accounting system ‘talked’ to your client management system which talked to your inventory system which talked to your distribution or point of sale system. All the technology was hosted on the internet and it synchronized with each other every day – or every minute if you wanted. They may be different providers for each component but they are linked together via the internet.

What you end up with is rich data, accurate data, less manual input and awesome reports to help you run your business in real time. Everything is super safe and easy to use.

In my business I get amazing dashboard reports automatically sent to my email every single day. I get client numbers, client frequency, most recent sales, forecast pipeline, cash balance and revenue & profit – yesterday, month and year to date. These reports give me a snapshot of the most important things going in my business every day. They enable me to run a better business because I have accurate information at my finger tips to make better management decisions.

I know how much money I am making. I know where the problematic areas are. I know how much cash I have to play with. I used to pay external advisers around $2,000 per month for ‘management reports’ that were late and not as accurate as what my systems generate for a fraction of the cost.

You cannot get this sort of data on multiple ‘hard drive’ or manual based systems. You just can’t. You can only get what I am talking about with cloud based technology.

It starts with the accounting system. When the data is in the cloud it can be seriously sexy!

© Rob Nixon

Rob Nixon is the global leader in helping Accounting & CPA firms become Real Time. He has been advising Accountants around the world since 1994. He is the founder & CEO of PANALITIX (www.panalitix.com) and the author of ‘Accounting Practices Don’t Add Up’ and his most recent book ‘Remaining Relevant’. You can follow him on twitter – @therobnixon – or via his blog – www.robnixon.com.

Latest book available today for Pre-order

Today is the day that my latest book goes on sale. You can pre-order as of today – shipped on march 27. It’s been 21 years in the making. I have piled all of my best ideas into a 198 page ‘manual’ that has rich content, loads of process visuals and practical help. Although for Accountants any business will get value from it. One Accountant already ordered 100 copies for his team. If you’re an Accountant buy it. If you’re not then why not buy a copy for your Accountant. I want to massively influence lives and create a wave of change with this book. You can pre-order here.

Real Time Cash-flow forecasting – a reality

On January 17 2015 I posted (in part) the post below.  This Thursday we are running a webinar on how you can make cash-flow (profit, loss, balance sheet and cash-flow) forecasting easy and seriously valuable for your clients.

Details of the cash-flow webinar

Thursday February 19th, 1100-1200 – Brisbane time, free of charge.

If you want to see how you can offer real time cash-flow forecasting and monitoring then register here.

>>>>

January 17 blog post.

We all know that cashflow (lack thereof) is the main reason businesses fail. The number one issue in businesses around the world right now is cashflow management.

We all know it and the Accounting profession is uniquely placed to help improve it.

Your clients want it as well. Well, not all clients want it. In our survey 29% said they did not. However, 71% said that if the service was reasonably priced and they could see value in it then they would be interested in exploring the idea.

Survey - cashflow

It’s a no brainer. I ask Accountants what’s the most valuable service they can offer to their business clients. No surprises. It is cashflow monitoring and forecasting. So if it’s the most valuable then how many of your business clients have a live, working, accurate and real time cashflow forecast? Very few is always the answer. Yet this is the most valuable thing you can do. Here’s what we (the business community) want when it comes to cashflow. We want to know how much free cash we have each month to spend on whatever we want to spend it on. We want to know how we are tracking and what we can do to improve it. Your clients are not financial analysts like you. You can help us in this area.

The service you provide is a cashflow forecasting and monitoring service. In your definition you call it a ‘3 way rolling cashflow.’ It covers the cash flow forecast, the profit & loss and the balance sheet. If your client is borrowing money from a bank then the bank wants it. Even if your client is not borrowing money then it is a good thing to have. The problem with ‘hard drive’ based systems (or heaven forbid spreadsheets) is that once they are created they are out of date. By using old technology you cannot monitor the cashflow unless it is manually entered.

With cloud accounting and ‘add on’ partners like PANALITIX you can do this automatically. You can prepare the forecast based on historical data plus some planning. You can ‘normalize’ the numbers month to month with the client. You can consolidate the data as it is transacted at the client’s end and because the accounting data is linked to the ‘bank feeds,’ the cashflow, the forecast and the balance sheet is kept up to date every single day. Now that’s Real Time Accounting!

If the bank needs an update then you can provide it quickly. If your client wants it then you can provide it quickly. If you have got your client on a monitoring service then you can be immensely valuable.

Offshoring to change the supply chain

Australian Financial Review

11th February 2015

Learn more about off-shoring and disruption in the accounting profession, Check out my new book – “Remaining Relevant”

Australian-Financial-Review-small

 

Early (interesting) praise for my new book

My new book is coming out on March 27. I have sent it to a number of industry leaders around the world for comment and (if they like it) a testimonial. This one was received. When you read it you’ll realize that I cannot exactly publish the entire thing on the jacket of the book. But I will publish a sanitized version. Here it is in it’s entirety.

>>>>

Rob Nixon is up to it again. His latest book ‘Remaining Relevant’ is full of shit.

And boy is this good shit!

If you believe that the public accounting profession is immune from change, you have a rude awakening coming.

There is a huge movement to the cloud that’s happening here and now which is further commoditizing what used to be our bread and butter. Bookkeeping is becoming automated. H & R Block are accelerating the problem with their $9.99 tax return service, now you can’t get much more commoditized than that!

Outsourcing and the ‘virtual office’ is becoming a way of life for accountants in the know. We have to change what we do and how we think in order to survive. If we want to grow and flourish, we have to get into value added services and break away from time-based billing.

We have to be more selective in which clients we work with, what we do for them and how we bill them. We have to embrace the changes technology offers us as practitioners and fight back!

This book offers a roadmap to success for the entrepreneurial accountant, backed up by some pretty thorough and impressive research. If you’re running an accounting firm and still want to be in business in five years time, then you need to read this book.

It’s as simple as that.

Steve McIntyre-Smith – Consultant to the public accounting profession – www.stevemcintyresmith.com

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