A survey commissioned by Xero, a global accounting software company, has found that more than half of UK accountants (55%) have either switched to online accounting or plan to do so soon. Gary Turner, Xero UK’s managing director, believes accounting is going online.
By Gary Turner
Modern accountancy is changing fast. In many cases this is a direct reaction to the immense pressures that practices are finding themselves under.
Today, clients not only want more but they also want to try new ways of working – using Skype, virtual CFOs, monthly reports and rolling forecasts, for instance. At the same time, accountants’ costs are creeping up and in many cases, profit per partner is down. For these reasons, practices that rely on compliance work and paying significant amounts of money for desktop software are particularly vulnerable to competition from their more agile counterparts.
Responding to both these challenges and the leaps which have occurred in modern technology, a Xero-commissioned Censuswide poll has shown that more than half of UK accountants (55%) have either switched to online accounting or plan to do so soon.
The biggest contributing factors to the sharp rise in take-up of cloud-based, online software include the opportunity to cut internal overheads such as travel and data input costs (48%), as well as improve service and increase client satisfaction (44%). Providing a point of competitive difference (30%) and demand from clients (23%) were also major drivers.
For clients, online accounting increases financial control by making it easier for firms to keep up-to-date with their invoicing. In turn, this positively affects the relationship business owners and directors have with their accountants because they are likely to receive more strategic tax and financial advice.
From the accountants’ point of view, when a client moves to online accounting technology it becomes far easier to boost their service levels and provide timely, strategic advice – without having to increase the number of hours spent serving clients and physically travelling around.
This is especially true for practices that deal with small and microbusinesses where, in many cases, small business clients often struggle to ensure that they are paid on time and tend to lack the time and visibility needed to manage their cash flow.
Rather than being supported by their accountant, the important task of maintaining credit control frequently falls to the owner/manager or other non-financial user as it is too expensive for the accountant to visit them individually to gain regular access to paper files, spreadsheets and software systems. However, if a practice’s client base moves to an online platform, the accountant can effectively service multiple firms’ credit control needs without even having to leave their desk.
With more time to act – and more data to act on – accountants are better able to advise clients on how they could improve financial performance. This may include, for instance, working out that the company can afford to recruit a new member of staff or helping them raise the finance to invest in a new piece of equipment.
Crucially for practices, the fact that data is stored in the cloud and can be accessed at any time also affords them the flexibility to offer new value-added services that would previously have been too costly to deliver. As such, the practice benefits from potential new revenue streams while the client has greater access to financial support they can trust.
Having made the switch from static, on-premise systems, 42% of accountants in practices that are already using online software identified the biggest benefit as being the opportunity to boost service standards and increase client satisfaction.
Other important advantages identified by the recent poll included the technology’s ability to help practices become more efficient (39%), as well as enabling them to modernise their service offering and open up new revenue streams (38%), increasing overall income.
As such, rather than playing it safe, in sticking with desktop software and back room servers, practices that are yet to embrace cloud technologies effectively risk getting left behind, especially the 28% surveyed who said they are waiting to see if online software takes off industry-wide before making the switch.
Not only are they missing out on the flexibility, efficiency and other key advantages that online accounting has proven to offer, they could also see their fees and client base being eroded by up-and-coming firms that are more responsive and better equipped to deliver strategic, timely advice.