The Death of an Industry (& it's great for clients)
Wednesday, June 29, 2011 at 1:01PM My profession is undergoing cataclismic change just like many other other knowledge based businesses that have traditionally been heavilly data dependent. There's a mouthful in that sentence and I think Jason Blumer is exactly on the mark with his recent post The Accountancy Revolution. Jason tackles the issue from the side of the CPA. I'm going to take a stab at what this means for the client.
In the past clients were drowning in accounting data. They had to gather it, record it, reconcile it and report it. This was great news for CPA's and bookkeepers. The world of "write up" (i.e. producing monthly financial statements) was a great source of recurring revenue.
Here's the problem. Any business owner can now go out and buy or subscribe to a very capable software or web-based accounting system for under $400/year. Once setup properly and integrated into their workflow this system CREATES the accounting data in the form of purchase orders, estimates, sales orders, packing slips, invoices and checks. GONE are the days of gathering accounting data.
These same systems when interfaced properly with banking and credit card web sites pull down any missing data, reconcile existing transactions and leave the operater with a bit of coding to do on the new transactions. Over time the system learns to do this coding automatically further reducing the workload on the operator.
The final mile is covered when vendors are setup on autopay, paper statements are ceased and all payables can be handled through semi-automated services like bill.com.
This is bookkeeping nirvanna for a small business owner and it represents the death of an industry to accountants. I'm pretty happy about it, but those who have been in the business much longer than I have may not be so upbeat. Still, for the client this is phenomenal news. Here's what you should be doing about it.
- Automate. Find out how much of your current accounting and record keeping system can be automated. I sat down with a son getting ready to take over dad's business last week and by the time we were finished we had re-engineered the work flow so that after a new customer was setup ZERO data entry was required in quickbooks. To quote Home Depot "You can do this, your CPA can help!"
- Redesign. Ask your CPA to help you redesign any processes that create bottlenecks or high error rates. One business we helped had high error rates on invoices. We moved all the work that went into invoices right to the front of the order and had the client sign a "sales order" instead of a contract. Now when the order is complete an accurate invoice is created with ZERO errors with one click of the mouse.
- Embrace the technology. This is the hardest part for most clients, but realize one thing. Reluctance to use technology is about YOU, not some realistic concern that the bank is going to steal all your money or that every customer is going to receive incorrect invoices. Nothing your CPA is going to recommend should be risky or unproven. It's all as safe as online banking. It's all secure and it all works. I tell clients, "Give it 90 days and it will change your life."
- Decide to standardize. The most variable element in any business is the owner. We worked for a very short time with a business that had four or five different ways of invoicing customers. I appreciate the desire for great customer service, but this business was so focused on accomodating special invoice formatting requests that their actual service was slipping. When it comes to business processes you must decide how things will get done and then do them that way...EVERY TIME. Unless you do this automated systems won't work.
The small business accounting industry is changing, for both you and your CPA. Embrace it, use it to advance your business and don't get left behind your more open minded competitors. Once the basics are covered you and your CPA will have the time and accurate numbers to plan strategically for your future, and evaluate whether current plans are operating as expected. You can tackle exciting new initiatives like Open Book Management that catapult your business to a new level.
The role of the small business CPA is changing from that of a doctor who fixes things when they're broken to something more akin to a personal trainer. You need to have your CPA come alongside to give your bookkeeping system a good physical and possibly a rehab. Then you will be ready to get in the best business shape of your life. More on that in the next post.
Reader Comments (10)
A great post, Joey! It's already made the rounds around our office :)
Thanks Kasey. We're excited about the role Freshbooks is playing in this upheaval. For a lot of clients hands on invoicing was something they couldn't find a way to do without and Freshbooks is so slick everyone "gets it." It's part of our road map for getting more clients automated.
Hey Joey. Good write up and you couldn't be more on point. Times are changing and it is a very exciting time for entrepreneurs and CPAs. Cheers my friend.
Thanks Michael. You guys eat, sleep and breath this stuff. I keep learning from you. Glad we're on the journey together.
Great insights and communication of these exciting changes. Love the metaphor of a personal trainer!
Dude, you've already inspired me in the Community Call. I've got some changes I've got to make in my own firm because of some of your leadership.
But this post hits the nail on the head... the change we see isn't something to fear. I have to admit, if I were older, I may fear the unknown. But the faith to embrace what we see as inevitable (your point # 3) "will change your life in 90 days."
I'm so excited how all of the cataclismic changes will make the CPA's job more fun, more useful, more valuable and more life changing for the client. The ones that stand to benefit the most are our clients - the ones we seek to serve and care about so much. If we fail to embrace and remake ourselves then our clients are the ones that stand to loose the most!
That would be unfortunate! Great summary of the changes we see. Truly, "Change is coming..."
Thanks Scott. I'm always looking for ways to educate clients about what we do and how we are different. The personal trainer bit seems to resonate with a lot of them. Can't wait to share it.
Jason, you are infectious brother! I love your attitude, your passion and your care for clients. That comment is so Thriveal it's epic.
I was just having a conversation with a good friend/business partner who is a CPA. We were discussing how professional industries have changed drastically in the past decade alone. The internet is so mainstream that all of his clients are now seeking out ways to minimize costs by using the various methods you discussed above. As someone who works in the technology field and also deals with business owners, I can say that accounting technology is evolving, yet most business owners still don't want to be responsible for it. They are more inclined to ask me ways to integrate their financial bookkeeping directly with their account. The next stage of the internet, "the cloud" has enabled that to become a very simple yet valuable task.
Thanks for the insight,
Marcus
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