The reason why your accounting practice is unsellable on paper
While avoiding new tech adoption might make sense to some accountants in the short term, it’s only hampering their chances at an exit in the long run.
The past few decades have brought seismic change to the business landscape, not the least of which impacts the way accountants do their work.
As new tax legislation and technology disrupt the way in which businesses manage their books, accountants have also been presented with myriad solutions for automating their work.
But recently it’s become clear there’s a two-speed approach when it comes to the uptake of new technology in accounting practices, and two clear groups are identified: those leading the charge by moving away from traditional pen-and-paper accounting, and those happy enough to fall behind by either ignoring new tech or by taking a piecemeal approach to its adoption.
Unfortunately for those falling behind, the gap is widening. And while that may not represent an insurmountable challenge today, it could cause big headaches when it comes time to sell up shop.
Banging The Connected Practice drum
Trevor Harrison, Director and CA for MRL Group, has been in the accounting space for 29 years and managed a practice for the past 14.
He’s also been at the forefront of technological change for most of that time, working closely with MYOB to trial, test and provide feedback on many of the online accounting software company’s products long before they’re released to the industry at large.
“The challenges we faced 10 years ago aren’t that different to those of 25 years ago,” said Harrison. “There wasn’t a lot of change – yes, we wanted to work more efficiently and economically, but the business conditions that shaped the industry were mostly static.
“But then we begin to see a vision for the future of accounting, one that MYOB foresaw a long time ago – a connected system.
“New technologies began pointing towards the possibility of maintaining a live, online ledger that a client could work on, one their bookkeeper and accountant could also work on, and one that could input directly into a tax return – all live and readily accessible to those key stakeholders in real-time.”
The system that Harrison describes is a collection of software that MYOB believes underpins The Connected Practice – a vision for the future of accounting businesses that has shaped everything the company does since it first came into being in 2016.
“We’ve already passed this crossroads,” said Harrison. “We have online accounting systems that allow direct, live access. We can do the end of financial year work while the client continues operating, allowing us to get the underlying paperwork and submit tax returns without missing a beat.
“We can produce all the documents we want and upload them to a portal, authorise and lodge compliance-related work, generating more efficiency gains along the way.
“From beginning to end, those adopting new tech solutions have been working towards a connected system that requires less manual input and ensures a more accurate result.”
Still working with paper? Time is running out
When Harrison began his career in accounting, things were done in a vastly different way to the paradigm described above. A client’s file was a static document that would require an enormous amount of input and handling from multiple people, including the generation of physical workpapers.
These files, or key documents within them, would often need to be physically ferried from the client’s offices to the accountant (and back again). Storage solutions for hundreds of clients would take up whole rooms. All of which added to the cost of doing business.
“Today workpaper software integrates into the client’s file and removes an entire, longwinded process of manual workpaper files so that hundreds of workpaper documents are now stored online,” said Harrison.
“This has removed the need to buy paper, stationery, postage stamps and storage archives. We barely need cupboards at all anymore.”
And while Harrison is clearly in the “leading the charge” camp when it comes to tech adoption, he’s keenly aware of the fact there are those who are falling behind.
“I love trying out this stuff,” he said. “We were one of the first to trial MYOB Portal and that’s because I see being an early adopter as a competitive advantage.
“But there are others in my age group and older that are so far behind it makes you wonder if a change would even be worth it to them – they’re probably thinking they can just limp along into retirement.”
Harrison identifies challenges around learning to use new technology and the initial investment cost as the main reason why some accountants are taking this approach. But, ultimately, this is a false economy.
First step on the road to salvation: Where does my future income lie?
Harrison suggests any accountant who’s still uncertain about whether or not to embrace The Connected Practice and its underlying components should ask themselves one question.
“What is the next generation of practice owners looking for?” he asks. “Compliance work is increasingly seen as having been commoditised by software automation, so there’s little value in any practice still predominantly geared towards it.
“Within that style of practice, there’s little loyalty among clients and no guarantee for an incoming business owner that the client base is sustainable.”
Instead, Harrison suggests anyone looking to one day sell their practice should focus on the services that generate loyalty, which tend to fall under the terms “value-added services” and “business advisory”.
“I think we’re moving into a zone where compliance remains a small part of the service, while we spend more time engaging with the client and partnering with them on their business journey,” said Harrison.
“The accountant is quickly becoming a relationship manager that goes beyond tracking and reporting finances.”
Whether it’s for your own retirement, or for a higher notion of loyalty to your own clients, integrating new technologies into your practice is a surefire way of guaranteeing your client base and, in turn, ensuring you’re able to sell the offering on to the next generation.
This article is the first in a series on the paperless practice. The next instalment will focus on the tactics accounting practices can employ to integrate new tech seamlessly and (relatively) pain-free.