The Advance of Digital Accounting

Technology is changing the face of business in many ways and one of those ways is in the advance of digital accounting. For many accounting businesses around the country, a major change to how they do business has rapidly developed over the last couple of years and accounting firms now face serious problems if they fail to catch up and get involved with these new advances because customers now expect to be served with a good balance of experience along with modern accounting technology.

According to figures from the 2016 State of Accounts by Xero, some 59% of small businesses have the impression that they won’t need an accountant for their business in a decade’s time. A further 56% believe they will only use accountants for specialist help with tasks outside of normal accounting practices in the near future. And only 42% of small businesses expect to need to talk face to face with their accountant in person.

So how can long established accounting teams take these changes into their practices and apply them appropriately?

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Strategy

There’s no time like the present to create a winning strategy for your practice, but this needs to be something that is taken seriously, with full attention rather than piecemeal between customer interactions. Take a step back to properly study your business – do you have the right client base that will be able to use digital accounting software? Have you got the right people working for you who understand how to access and use the data being submitted by your clients and the right workflows and processes in place? Can you realistically cope with adopting major digital changes over the next 5 to 10 years?

Vision

A big part of your strategy planning is defining your vision for the company and with it, the practice’s goals. Are there areas of your service that you want to improve? Look closely at your stats and metrics to identify a defining vision for a digital practice that you can start instituting from now on. And look back to see what has been working well for you and what is likely to continue to work well to factor this into your future vision.

Service offerings

According to Xero’s UK Partner Benchmarking Report, their partners are growing revenue at around 12% a year which compares well to the average 3% growth each year. This shows the impact that digital accounting is already having on revenue growth. This means businesses that haven’t already adopted these approaches should consider doing so quickly to allow them to offer a broader range of more flexible and profitable services. It also moves accountants into the position of valued advisory, rather than simply for compliance roles.

The right technology

In order to make progressive changes, the right technology is key and choosing the right software can be make or break for the changes you want to make. There are a number of considerations when making a selection including:

  • The size of your company
  • The company’s expertise
  • The sector that your clients are mostly in
  • Any niche requirements

Changing your company software for something completely new can seem a little intimidating at first, and you can expect interruptions and hurdles to overcome, but if you plan for these in advance and lay out clear expectations with clients and staff, then you can successfully make the switch. If you can really try to highlight the potential benefits for your clients and give them plenty of support with showing how to use the new technology, then they will be very patient and accepting, generally.

Assessing the team

Having the right staff in place is a major key to making a shift to digital accounting and you may find that you need to add a few specialist team members to cover all of the avenues you now require. It may also be a case of training some existing staff members already within the business who are open and willing to shift their focus and adapt to using new technology. Digital savviness is one thing that should be fostered in all staff members to help them adapt better to the many digital changes on the horizon.

Segment your clients

Not everyone within your client database will be ready or capable for the switch to digital. To find out who is and who isn’t, a segmentation exercise is a good step to take to define those clients that will need more help and support. Start with the ‘low hanging fruit’ to teach your staff about segmenting and how to find the clients that will be more open changes and willing to adopt them. Whilst doing this your staff will be gaining familiarity with the software. Moving your easiest clients over to a digital system will give you a good foundation to build your other client segments on.

By starting with internal clients who can make efficiency savings from your new approach without needing to change their own processes, you can free up more of your time to focus on those clients who may need a bit more long term support to help them make a change to their practices. Those clients who already work on their own bookkeeping would be good first candidates to switch over as they will already be primed for your new approach and may already be using similar software themselves. Leave until last those clients who don’t have a digital approach to their bookkeeping and accounts, but will see a real benefit from it once they learn how to use it.

Client education

The final step of your process is client education – not only educating them about what you are doing and what changes you are making. but why these changes will benefit their business. Change is always off-putting for some business owners who have become set in their ways, but by giving them the right tools and information and building their confidence in what you are planning, the transition doesn’t need to be a traumatic one for either of you. And in the long run, the changes are worth it both for your business as well as theirs.

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