We live in an ever-changing digital world. Technology has increased the rate of innovation, causing new trends to shape industries more rapidly than ever. One industry that is going through that type of change, and that is near and dear to our heart, is accounting. Cloud accounting and accounting automation are pushing the industry in new and exciting directions.
Many accountants and bookkeepers have identified this change and are working hard to reshape their business. Cloud technology is bringing automation. With it comes a number of trends advisors should be paying attention to. Without further ado, let’s take a look at a few of these trends that are changing the accounting industry:
1) Advisors are moving up the value chain
Advisors adopting the cloud have more control over their time. They have outsourced the work most accountants dread. Instead of spending their time dealing with manual work, like data entry of bills or driving to their clients to pick up documents, they have “hired” software to do this work for them.
This has an immediate impact on advisors who have not yet made the jump into the cloud. Since software does this work more cost effectively than a human, it becomes increasingly challenging to rely on it as a revenue generator.
As this trend continues, all advisors will leverage software to take greater control of their time. This enables them to move into more of a coach-like role and create increased value for their clients by interpreting financials and advising on ways to grow faster or reduce costs. The other option is to use this available to support more clients and generate more revenue.
Gone will be the days of time-consuming data entry, traveling to offices and rummaging through boxes of financial documents hoping your client hasn’t accidentally missed a bank statement or invoice. It will be a better world for you and your clients.
2) Outsourced accounting is growing rapidly
It has always been commonplace for businesses to outsource their accounting. What is new is that businesses from all over the world can outsource their accounting to firms halfway across the world.
Office walls and distance no longer hold accountants and bookkeepers back from prospective clients. There’s no longer a need to travel to a client’s business or work from an office. Wall-covering, stuffed filing cabinets can be left in the past. So can the regularly scheduled task of sitting down at a client’s desk to look through piles of paper. That day spent going through a shoebox of receipts doesn’t have to happen.
It’s because of the cloud and this technology empowering firms to work from anywhere, with clients around the country (or even the world!). It’s no longer necessary to be in close proximity to your clients to fulfill your role as their advisor. On the contrary, it’s possible to not only cater to clients across the globe but to also bring more value to your clients than ever before. Scott and Patti Scharf remark on this flexibility in an interview with Bill.com. It “lets you run your business from any beach in the world,” Patti says.
The net of this is that the accounting industry is going to become more competitive and delivering an amazing customer experience will be increasingly important.
3) Client relationships are taking centre stage
With this trend, the major shift is from a transactional style advisor-client relationship, where a significant portion of the interaction was based on what documents were still needed. The trend is moving advisor-client relationships to value-driven interactions.
This is in large part thanks to the new generation of client collaboration tools as well as the efficiencies afforded by the cloud. As this trend takes hold, most advisors will focus on engaging with clients to share the best way to approach business decisions or simply to report on changes occurring in their client’s business. This is a significantly more positive interaction for clients and will drastically change how they perceive their accountants and bookkeepers.
4) Value-based pricing is becoming the norm
Accounting and bookkeeping businesses are making the move from hourly pricing to fixed pricing or value-based pricing. Charging by the hour made sense when there were hours and hours of time-consuming data entry to do. Software can take that job now. You don’t have to devote the time to that work anymore. Now hourly pricing is not giving accountants the revenue they need or deserve.
Advisors will have more control over their time while not losing out on revenue. Businesses will be more efficient and will grow more than they could before.
Cindy Magner, owner and founder of Beyond Bookkeeping, recently did an interview with Hubdoc. She discussed cloud technology, bookkeeping workflows, and her firm’s switch to flat rate pricing.
“[Moving to the cloud] created a lot of efficiency with our current staff. It forced us to start billing our clients on a flat rate. Because of increased efficiency, we would have cut ourselves out of a ton of revenue. Our time may be less because of the automation but the value and the output of what we’re providing is better.”
5) The millennial generation is on the horizon
For the most part, advisors have been working with a generation that did not grow up with technology. For the millennial generation, cloud technology is an integral part of their daily life. For example, Netflix has become a household amenity and they expect the same ease of use from their accounting software.
Advisors embracing the cloud will be more efficient and marketable to this new generation. In 5 years, Millennials will make up half the working population. Right now, in the US, more than 1 in 3 workers are Millennials, surpassing both Gen X and Baby Boomers.
The accounting industry is currently seeing a number of trends. These are just a few of them, but they’re game changers. Essentially, manual work is being automated away through software. The focus is changing even more towards improving the client experience.
Which trends do you see as being the most significant to your practice?