The small business accounting industry is experiencing a rapid sea-change as a wave of technology continues to transform the way businesses manage their finances. How can you approach your practice’s successful transition to digital accounting?
The small business accounting industry is experiencing a rapid sea-change as a wave of technology continues to transform the way businesses manage their finances. And for accountancy practices across the UK, riding that wave is a must if you’re serious about your practice making it through the next decade.
According to Xero’s 2016 State of Accounts research report, just over half (59%) of small businesses don’t think they’ll need an accountant in 10 years’ time and 56% believe they’ll use accountants for help with tasks outside of accountancy in the future. What’s more, less than half (42%) of small businesses expect to talk face to face with their accountant in the future.
So, with a massive change underway, how can you approach your practice’s successful transition to digital accounting?
Thinking strategically about your practice isn’t something you can do in between day-to-day client management. It’s important to give your firm’s strategy the attention it needs and block out time to focus on it.
Take a step back and look at your practice objectively. Do you have the right clients, the right team, and the right workflows and processes to be successful over the next five to 10 years? If you didn’t already own your practice, would you buy it?
Before jumping head first into the cloud, it’s important to first outline your practice’s goals. What is it about your practice that you want to improve? Identifying your metrics for success and defining your vision of a digital practice from the beginning will help you to look back and see whether or not you’ve been successful.
Using digital accounting gives your practice the opportunity to offer a broader range of more profitable services. It allows you to step away from compliance services and into a more valuable advisory role. This could be your practice’s chance to broaden your services and add new revenue streams.
In fact, according to Xero’s UK Partner Benchmarking Report, Xero partners are growing revenue at an average of 12% a year, with some as high as 27%. That’s compared to the UK average of 3% fee growth, signalling the impact digital accounting is having on revenue growth.
Technology is central to any digital strategy, and choosing the right software for your practice could be the difference between surviving and thriving. How you use it is based on a number of factors, such as the size of your firm, your clients’ sector and niche requirements and your practice’s areas of expertise. Spend time weighing up the benefits and make sure you’re looking ahead to where your firm will be in the future.
And while changing software may cause disruption at the beginning, don’t be put off. Plan for interruption and some hurdles, and be sure to manage your team’s expectations by being clear and communicating the benefits the change will bring. It’s equally important for your clients, and that’s where being prepared and clear on your digital strategy will help.
Having the right people on the bus is key to a successful digital transformation. Whether you’ve already got a great team, or need to plug some gaps with qualified staff, hiring and retaining good people for your practice is a must.
As practices look towards more advisory roles and a greater use of technology, you might want to look for accounting or business advisory professionals with customer service experience and a higher degree of digital-savviness.
Once you’ve sorted the right people and software, it pays to spend time bringing your team up to speed. Most software products and platforms offer free online educational resources to get your people trained up and ready to offer your clients the best experience. Give your people the time to undertake the appropriate learning journeys for their role and monitor progress along the way.
While any small business will benefit from digital accounting, you can’t tackle all your clients at once. Segment your client base to make sure your practice and your clients are ready to go digital. Beginning with the “low-hanging fruit” gives your team a chance to get an initial segment of clients online and get familiar with using the new software.
Beginning with internal clients is a useful way to enjoy efficiency gains without requiring clients to change their own processes, followed by clients who do their own bookkeeping. These clients will be primed to take advantage of software that can streamline their way of working and give them more time to focus on running their business. That then gives you as their adviser the data at your fingertips to provide advice in real-time.
And with new software, transitioning clients from desktop software to online accounting is easy and those clients will really notice the difference that going digital can make.
As with any major change in the way someone works, moving a client’s accounts online can be met with resistance. But if you’re armed with the right information, you can easily allay any concerns. Prepare clients with a clear onboarding and training plan to ensure that they’re comfortable and supported.
If there’s one thing we’ve learned from our partners about going digital, it’s that it’s not an easy feat. That’s why starting with a clear strategy and planning ahead as much as possible for any hurdles and challenges is key. And once you’re over that initial hump, it’s smooth sailing and well worth the time.
Damon Anderson, director of partner at Xero UK & EMEA (@mrdamon99).
To find out more about how Xero can help your practice with its approach to digital accounting, get in touch at [email protected].