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25 Feb 2010
Franchises are big business. The franchise industry is booming in the UK, with the number of franchise units increasing by 44% over the last decade. Franchising accounts for £10.8bn annually in sales. But they are quite a different operational set-up compared with the average SME. They may operate as small businesses, but have to report information to another organisation. Typically, most accountancy practices have not specifically targeted franchises and, if they have come across them, have found it difficult to explore the potential of this niche market any further.
However, the changing world of technology is enabling accountants to target such groups more effectively, including franchises. In particular, online, or cloud accounting means that it becomes more feasible to support a franchise and its franchisees, however geographically dispersed.
In the cloud
For the non-technical, let’s quickly remind ourselves what cloud computing actually means. Rather than software applications and data residing on your PC’s hard disk, they are stored remotely and accessed over the internet. Updates are carried out by the software provider and, because the applications and data are securely stored ‘in the cloud’, there is no risk of them being lost if your PC, server or hard disk crashes. Payment is usually a flat monthly fee and there are no software licenses or upgrade costs to worry about. Moreover, even the smallest SME can now have access to the kind of technology previously only available to big firms with deep pockets.
Supporting franchises
Cost saving is not the long-term driver for cloud computing and, when it comes to franchises, it provides the foundation for a whole new way of working with niche client groups. For example, by having virtual online accounting, you could offer franchise owners a centralised service that provides a standardised template of all franchisees’ books, rather than having to interpret different record-keeping methods. This makes it easier and quicker to spot any anomalies or problems, then help the franchisee to deal with them. Also, if franchisees are using the same online accounting tools, then inconsistencies in reporting are substantially reduced. The economies of scale that this approach provides can mean that online accounting becomes even more cost-effective.
Franchisors can choose to include online accounting as part of the franchisee package and, in turn, the franchisor’s chosen accountant can offer their clients an all-in-one package, including online accounting. This is already happening and, not surprisingly since most SMEs have to be very cost-conscious, this is an appealing offer.
Online accounting can also help to overcome the geographic barriers that have made addressing client communities such as franchises traditionally difficult. The client and the accountant can have access to the books anytime and anywhere, so gone are the days of needing to put a USB stick or a bunch of files in the back of a taxi and goodbye to site visits to the client’s premises. Online accounting can even be accessed on a Blackberry or an iPhone – and that’s not just theory: we’re aware of plenty of users who do just that.
Downsides
Too good to be true? Let’s look at the possible downsides. Security is the elephant in the room here. Many are still too worried about crucial financial data being hosted away from their own premises and the accessibility that cloud computing offers also leads to fears that data can be easily stolen.
But, in my opinion, it’s a concern that has had its day. Security technology has come on in leaps and bounds in recent years and, although I cannot speak for other vendors, Xero has certainly never had any security scares. Is a CD, USB stick or a box full of paper any more secure? The latter isn’t even backed up.
Some clients may be wary of their accountants having real-time access to their financial data and yes, this will mean that some SMEs will want to remain offline, but this visibility of online accounting is one way in which accountants can add value to their client relationships; for instance spotting problems before the year end, meaning that they can be dealt with more quickly.
A final possible negative is cloud computing may feel very new to some people. There are going to be pockets of franchisees (and other clients) who aren’t ready for the online world but, equally, I’d estimate that an even greater number are very familiar with the internet. Most of us use the web and online services all the time, without being aware of what we are doing. Online accounting will be a natural evolution for many.
Whether it is to meet the specific needs of franchises or other clients, online accounting has the ability to help accountants to not only more effectively address the needs of niche groups, but target these potential revenue sources, providing new areas of future business.
Gary Turner is UK managing director at Xero
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Briefings
By looking at the reasons supplier statements became unfashionable, and the reasons why it is different today, this paper delves into the many benefits that can be obtained by automating the process.
Having a real and true view of your organisation’s current financial position, and having the right systems and processes in place, will ensure that you can make strong choices and are ready to capitalise on opportunities
AccountancyAgeInsight is a frequently updated resource centre for finance professionals, offering a free and easy-to-use digital library of briefings, white papers and other information resources. 
Visitor comments Add your comment
Thank Heavens
Gary, thanks for such a good item - should be required bed-time reading for everyone in the profession.
I work with E-conomic so of course have a vested interest too.
However my feeling is I want to see as many practices online as possible whatever their original system of choice.
My conviction's that once they're on the cloud bandwagon they can always change carriers if their current system doesn't suit as it should. Main priority is convincing the die hards that the bandwagon's the right and only place to be.
No longer is the cloud a concept, it's a reality, it's here to stay and closing your eyes and saying 'I don't see it' - just won't wash any more and completely baffles the clients who think they should be getting cutting edge service!
Posted by: Marilyn Messik, 26 Feb 2010 | 00:00
Why not offline?
I see value in online systems but why can't an accountant do a great job with offline software?
We at Crunchers help accountants fine with offline software.
Posted by: Bob Harper, 27 Feb 2010 | 00:00
A new age of real-time accounting
Cloud computing has the potential to offer accountancy firms of all sizes a broad range of benefits not least the ability to help them more effectively address the needs of niche groups such as franchises. It can do this both by providing shared access to a centralised online accounts service and by helping to overcome the geographic barriers that have made addressing this kind of client community so difficult in the past.
Now, real-time applications for business collaboration are available, allowing even the smallest accountancy firms to build on these cloud computing benefits to drive further operational efficiencies.
These can provide team members within the firm with immediate updates on relevant people, documents and applications, enabling them to have all the key project information at their fingertips at all times. Senior staff working on the project can stay continuously in touch even when they are on the move and achieve more effective decision-making as a result.
Using real-time collaboration tools allows accountancy firms to streamline the whole process of auditing clients. Instead of having to pull together an audit team in an ad-hoc and haphazard fashion close to the project start date, team leaders can access profile information well in advance to see which employees will be most suitable for a particular project and review status updates to check availability.
This avoids the need for the firms themselves to visit the client premises, particularly difficult in the case of franchisors and franchisees (the latter are typically small in size and geographically dispersed). With these new tools, the process of auditing and/or drawing up a set of management accounts can be carried out remotely and individual team members can even work at different locations with no ?drop-off? in efficiency.
These tools now also enable team members to keep up-to-date with all relevant documents at any one time. Practice partners can review the status of key documents as the project is proceeding and intervene as and when appropriate.
The ability to use such tools to link with social networking sites like Facebook and Twitter enables firms to listen in on the conversation outside the practice itself and allow the client ? in this case the franchisor and its franchisees ? to fully participate in an ongoing, collaborative dialog.
The potential stumbling block in all of this is security. Today?s real-time collaboration tools, however, are sophisticated enough to provide the necessary levels of reassurance. Firms can configure specific groups and assign levels of permission to access certain documents. They can effectively ensure that people see only what they want them to see.
So, in summary, with the emergence of a powerful combination of cloud computing and real-time business collaboration tools, the days of accountancy teams decamping en masse to the backroom of a client?s premises are numbered. And a new age of collaborative, real-time accounting looks set to begin.
Posted by: Steve Garrett, Chairman EMEA, salesforce.com, 08 Mar 2010 | 00:00
QuickBooks Solution
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-- Bob Babcock | Director of Sales & Business Development | Uni-Data & Communications, Inc. | bbabcock@unidatait.com | 718.445.5600 x3180 | www.unidatait.com | Intuit Authorized QuickBooks Host
Posted by: Bob Babcock, 23 Apr 2010 | 00:00