Perhaps like Indiana Jones after hundreds of years accountants are within reach of their holy grail.
For eons accountants have struggled with client’s data that is out of date and required significant manipulation to produce the end of year compliance reporting required. In most instances accountants have created a second parallel ledger to the client’s books. This duplication of effort adds little value but has been necessary to achieve a quality outcome for clients. Furthermore, the lack of up to date accounting information has restricted the ability for accountants to provide proactive advice to assist clients’ in the management of their businesses – something that would create increased value for clients.
The Holy Grail is of course for the client to be maintaining an error free ledger that the accountant can access real time. This has to potential to streamline year end compliance processes in the accounting firm. Access to the data real time would also allow accountants to interrogate clients’ data and provide advisory services aimed at improving business performance. Fortunately, it seems that a number of innovations are converging to bring this dream close to reality.
Firstly, cloud computing is enabling the small business owner and their accountant to share a common ledger. In a cloud computing environment, the accounting data is stored in a secure data centre and is accessed (shared) by the small business owner and the accountant via the internet. This eliminates the cost of moving data backwards and forwards between accountants and their clients and the challenge of keeping the different ledgers synchronised. Accountants can make their adjusting entries directly in the client’s ledger which eliminates the chance of client’s failing to process the adjustments correctly.
Secondly, as a consequence of cloud computing, many accounting applications are now receiving automatic data feeds from banks and other sources that are fed directly into the application and are automatically posted. This should substantially reduce errors and the time and cost for the accountant to correct them.
Thirdly, applications in the accounting firm are undergoing a revolution. When I’m advising firms on process improvement a mantra that I ask them to adopt is to “Touch the data once only”. This has not been the history. Often the client’s data is rekeyed into the accountant own ledger system, partially rekeyed into accounting workpapers and often again into tax preparation systems. This duplication of effort creates a layer of unnecessary cost and time. New applications for accountants are now enabling financial statements and workpapers to be produced directly from the client’s accounting system. In the blink of an eye unnecessary waste is eliminated.
The combined effect of these three innovations should enable greater efficiency in assisting clients with their year end compliance obligations. Perhaps more interesting, however, is the opportunity for new services that cloud computing in particular can enable.
Access to real time data could enable the accountant to provide bookkeeping support services for clients where the client’s maintain their own books but the accountant could be on hand to process the more difficult transactions. This access to real time data could also enable accountants to interrogate client’s data for issues and to proactively success to the client actions to deal with them. For example, an accountant may notice that a client’s debtors are blowing out and could then suggest debt collection activities that could be implemented. This has the potential to transform the relationship between accountants and their clients and overcome the criticism made by many clients that accountants do not help them in the management of their business.
So are you going to unlock the Indiana Jones within and grasp the holy grail?