I just got back from visiting with my parents in Delray Beach, Fla. My plane landed late at night east coast time. Nothing was open for a bite to eat. We headed to my parents’ home and I had a lite snack. As I sat in the guest bedroom I was contemplating turning on the TV and then I remembered something Jamie Sutherland, US CEO of Xero said in his keynote at Solutions14 this year. Jamie mentioned that he had been traveling the week prior to solutions14 and that he couldn’t find anything to watch. Amazing right? More than 300 channels and it’s all garbage. There is a solution. He fired up his computer and logged into Netflix where he can watch exactly what he wants at the exact moment he wants it. I took a page out of his book this week and did not even bother with the TV. In fact I never turned it on during my whole vacation. Everything I needed was on Netflix – I am just starting season 3 of Sons of Anarchy. That is all I needed to watch. What does this have to do with the future of accounting?
Nothing really, except that it has everything to do with the future of accounting for small business. The point of the Netflix story is that our future is all about getting what we want “on demand.” We don’t like to wait for anything. We’re like a bunch of drug addicts who need a fix and need it now. When it comes to accounting data there is nothing wrong with this. We want dashboards and instant gratification when it comes to accessing and understanding accounting information and what it means.
I don’t want to spend time entering transactions. A customer makes a purchase online. That information flows to my accounting system. Someone just needs to review it to be sure it wound up in the right place. A supplier ships my inventory to me and sends me a bill electronically. That bill can be received in my system with a reference to my own item list. Better yet, when I place the order with the supplier I do it online with reference to my own item list. They generate the bill and send it into my system. The items I am being billed for are known. Does this mean no one checks? Of course not. The bill is received and goes into an “unapproved” state. Then my warehouse manager (or some such person) logs in and confirms whether or not we received everything we were billed. Once confirmed the bookkeeper can submit the bill for approval. Then one final approval and it goes into the queue for payment.
Some bills will still come in, in paper form. More and more programs out there are getting better at being able to scan these documents and feed the data right into the accounting system. Sure someone has to check it, but I can guarantee you the time spent will be far less than manual data entry. In fact with manual data entry there seems to be a great deal (probably too much) of reliance on the person who did the data entry. How many of our clients simply have someone entering the bill and then paying it? No one reviews it! With future technology there will be much better work flows and approvals.
Bill.com and BillQuick are two programs I use that serve as great examples of this. Vendors and employees can enter their time and expenses in BillQuick. That is the only data entry needed. The information is entered into BillQuick where a project manager and/or a billing manager can review and approve those time and expenses. Once approved it can be submitted for payment. Then payment can be scheduled electronically. No checks to print. No mistakes to be made as long as the approval process is implemented.
The future of accounting is here. Now. Jamie Sutherland asked, “Are you using cloud accounting software?” Then he showed some statistics provided by The Sleeter Group. Almost 70% of accountants said they were. Just south of 50% said they were using desktop software in a hosted solution. About 25% said they were using neither (ie they are still strictly desktop). If you plan on retiring in the next 5-10 years that’s probably fine.
“Computing power is increasing exponentially,” Jamie said. There was a time when every city had it’s own water well. Today, shared public utilities give us access to clean wated by simply turning on the tap.
Why shouldn’t we expect a comparable change in our accounting technology landscape? The cloud debate IS over. Are you in or are you out?
Jamie share this slide with us:
This is a great example of how technology has disrupted major industries. Can you add any to this list? Jamie uses watches to smartphones, but what about the PDA? Remember those? I had a SONY Clie.
Another huge market GONE. Lost to the Smartphone industry.
Software and mobile technology are eating the world. Everything that can be automated will be. Smartphone Shipments Dwarf PCs. Here’s another graphic from Jamie’s presentation that should light up your eyes:
Above I mentioned the example that Jamie gave in his presentation about water now being delivered from the tap. Jamie went on to point out that cloud computing services work in much the same way. They can be turned on or off quickly as needed and there is a team of professionals making sure the service provided is safe, secure, and available 24/7.
This technology is changing the landscape we work in. In the past our clients perceived us as a cost doing business. Now with these added services we are doing more than just keeping books and preparing tax returns. We are providing that strategic guidance that clients are desperately asking us for – without actually asking in some cases. The reason I bring this up is that often when clients come in my door, clients tell me the reason they want to leave their previous accountant is they aren’t getting enough strategic advice from them. Then Doug Sleeter confirmed this in his Keynote which I wrote about in Change Leadership and The Future of Accounting Technology.
Our clients want what they want when they want it! They’re telling us that they want more strategic advice. This is the number 3 reason why they leave their accounting professional and the number one criteria they’re looking for in their choice for a new accounting solution.
The majority of firm growth in the future is going to come from advisory services. This is based on a quote from Gary Boomer. Everyone NEEDS a tax return, and a set of books. What they WANT is intelligence so they can use the information they are already paying a fortune for, to strategically grow their business. As future minded accounting and bookkeeping services, we can help them get what they want. If you choose to do that you will likely keep more of your existing clients and you will get new ones. Lots of them.
Here’s a short video Jamie included in his presentation to make the point about a firm in Alabama who has been around for a long, long time. If I understand correctly, their secret is staying “ahead of the curve” in the accounting industry.
The Value Pricing Question
Should you bill by the hour? Value is not tied to hours, I agree. When you are less experienced, you may have to. With all of this technology helping us to build efficiencies you are cutting your limbs off when you charge by the hour. Why? Why would you charge by the hour when you can cut those hours by 1/3? The value is still the same.
Welcome to the future. It’s here, and its now.
Thank you Jamie Sutherland for a GREAT Keynote at Solutions14 this year.
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