When I was at the QuickBooks Connect conference earlier this year I sat in on the prep lecture given by Michelle Long on the QuickBooks Online Advanced Certification. Most of the QuickBooks Online Advanced Certification prep was what I expected and a fair amount of review for me as I know the product well.
Then something caught my attention. I am sure my mind had wandered about 1MM miles away. No reflection on Michelle – she was fantastic as always. That’s just me. As my mind returned to the room and as if the room were coming back into focus I realized something.
Michelle was talking ratio analysis! What on earth does this have to do with QBO? Was there a new ratio analysis feature I was not aware of? Nope. I checked. It took a few minutes and then it hit me. This is the future of accounting for bookkeepers.
As we move more and more to the cloud, we move more and more in the direction of near zero data entry. In the future of accounting There seems to be less and less for the bookkeeper to do. If you look up “bookkeeping,” depending on the source you should get some variation on the theme of “entering financial transactions” as the definition of what bookkeeping means. Of course this is broad and doesn’t nearly do it justice but insofar as it underscores the core function, what does this imply about the future of accounting for bookkeepers?
In the future of accounting, the role of the bookkeeper is changing, and with that we are going to see a new definition of “bookkeeping” come into play. Some bookkeepers will be on board with the change. They will embrace it, learn the new skills needed and be rocketed into the 4th dimension of bookkeeping as we know it. The rest will be looking for a new career.
This is why Michelle was talking about ratio analysis. In his Keynote at Solutions14, Doug Sleeter mentioned that in the future of accounting, accounting and bookkeeping professionals will want to specialize. You have to become a value enhancer. He also said that we were going to have to learn faster than the rate of change, and to really come out on top you will want to learn faster than your competition. Oh and by the way, the competition is increasing because the landscape is changing. It might be more accurate to say that the “landscape” is going away. With the very same cloud technology that is causing us to redefine the term “bookkeeping” we are also redefining whom we can work with and where they are. You might be living in (eg) Fla but you can easily work with a business here in Burbank, CA (my backyard) because the geographical boundaries have been dissolved by “The Cloud.”
The reason Michelle long was talking about ratio analysis is the same reason that Doug Sleeter mentioned that we have to specialize and become value enhancers. I was never previously a fan of specializing. In fact I have always felt strongly that with a few exceptions, once you understand the accounting fundamentals you can apply them to any industry and from there it’s a matter of figuring out the logistics and understanding the nomenclature for a particular industry.
In the future of accounting for bookkeepers we are going to need to know how to explain the numbers to our clients. What to do they mean? What can they tell us about how the company is performing. If you read my post on Change Leadership and The Future of Accounting Technology or if you heard Doug’s keynote, then you know that this is the #1 thing SMBs want from us as accounting professionals. The bookkeeper needs to know how to explain what the numbers (and ratios) mean, and the accountant, CPA, EA will want to be prepared to help clients analyze that information to help them use it to make strategic decisions. It will become more and more important to include this in our engagement letters. The fact that we will provide this value added service as well as the fact that we are only basing these services on what we know at the time, and actual results of operations can (and likely will) be very different than what we predict. In other words the landscape is even changing in terms of our “CYA” needs!
So why my change of heart about specialization? In the future of accounting, to provide this service adequately, especially where ratio analysis is concerned, you will need to know the industry that your client is in. This goes beyond understanding accounting fundamentals. You have to understand what is “normal” for your client’s industry in terms of ratios and more generally what the balance sheet of a company in that particular industry should look like. This will require specialization. Does it mean you can choose only one? Absolutely not. For some that will be true, but everyone has a different capacity for absorbing and retaining information. My advice is start with one and when you feel you are ready move on to the next one.
It’s not just a matter of understanding the industry. It amounts to a clear understanding of what is normal for companies of a certain size and in a certain geographic region within an industry. For example a property management company in the northern united states will have to deal with things that I don’t see here in southern California such as weather conditions. We have to start to understand these kinds of implications and how they impact our clients’ businesses, especially since our reach is potentially unlimited. The future of accounting points to a very different approach to bookkeeping. The transactions are entered for us. Now we have to guide them so that the financial picture is painted accurately. Then we have to interpret those financial statements with an eye towards industry standards so we have a proper gauge on whether or not our clients are doing well.
As I’ve mentioned before and I will keep mentioning it – this is not bad news. It should not be regarded as such in my opinion. The future of accounting holds an incredible opportunity for you. So many will drop out. All you have to do is decide not to be one of them, and of course (here comes the shameless plug) schoolofbookkeeping.com will be here to guide you through it.
Good Luck and as always please post your comments and questions below.
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