YOU wouldn’t give the keys to your sports car to a stranger. So why would you give away control of your business to others who don’t have your best interests at heart?
But that is what thousands of accountants around the world are doing today, in a world where new cloud accounting software forces them to hand over the keys to their customers.
The business of marketing to, winning and keeping a relationship with clients used to be so simple. Accountants and bookkeepers would build awareness through local networking, cold calling and marketing to prospecting clients. Customers seeking services would search for and meet with a professional, discuss record-keeping, select a package, and so begins a long a fruitful relationship.
In this old world, the practice owner owned the relationship with his or her client, from start to finish. They were the first point of contact when a business owner needed help, the person in charge of systems and practices used.
It still happens this way today. Only last year, my own practice hired a client in the flooring business who had Googled for local accountants. But recent trends mean this pattern is also getting turned on its head.
The change agent is in the cloud. New accountancy software services like Xero and Kashflow are growing fast. This year, I am increasingly finding business owners, looking for an accountant, who have already been managing their own business finances effectively through these services; they just want some human sense-checking or professional filing.
That’s no problem, of course, and many accountants are consequently becoming conversant in these packages. What’s different, however, is the discovery path that clients now follow to find those professionals.
Many of these new services include lists of local accountants who use them, right there as part of the software itself. Clearbooks users can find accountants in their dashboard and Xero customers can search its directory. That is important for several reasons. But, foremost, it means practices are losing their independence, squandering their direct interface to customers.
To gain admission to Xero’s directory of accountants, practitioners must pass an annual test, place a Xero link and logo on their website and promote Xero in other ways. In effect, Xero is turning accountants in to marketers for its own service, when they should be spending time marketing their own practice.
Once you gain admission, the rules are not exactly equitable. Xero’s directory is segmented in to tiers of platinum, gold and silver accountants, decreed by the size of a practice. That is why, in many cities, KPMG Small Business – which, coincidentally, has also adopted Xero to be its main bookkeeping software – is always the first search result recommended to Xero users. For many smaller accountants who want to build a business, and who believe best service can be delivered with a personal touch, it seems like an unfair marketplace to operate in.
It’s not all bad. Whilst I estimate only about 20% of customers today are using cloud tools with professional quality control, this will only increase, and accountants need to be where the action is. Indeed, barely a day goes by when I don’t see some of the 3,000 accountants I follow on LinkedIn declare their accreditation with Xero.
But, as they join up, they fall at the mercy of these software houses. If we don’t jump through their hoops, we don’t get listed, we don’t reach customers.
This is where practitioners have tough choices to make. Swimming against the tide doesn’t make sense, but there is a real fear about betting on the wrong horse. If a practice goes all-in with Xero, puts 200 of its clients on that platform, but that provider later goes bust, they will find themselves up the creek without a paddle.
The system is beginning to spark the ire of some accountants. In a forum thread this month, one describes Xero’s requirements as “greasy” and like it is “somehow doing accountants a favour as opposed to the other way around”: “It reads like someone who has never met a small accountant in practice.”
What’s the answer? Not to go back to a cave and use paper or Excel spreadsheets, that’s for sure. Cloud accounting can transform clients’ finances and, if used correctly, accountants’, too.
But it is important practitioners don’t put all their eggs in one basket. Learn, use and gain accreditation with as many software suites as possible. This will put you on the path to not only gain business from the diversity of clients who will increasingly use a breadth of tools, but also ensure you spread your marketing dependencies.
Some very big changes are coming. HMRC’s Making Tax Digital initiative, plus the combined force of the European Payment Services Directive 2 and the Competition & Marketing Authority’s banking review, will conspire to let more cloud software tools gain access to customers’ business bank account data, plus to run tax calculations on it. That means more and more small businesses will begin doing their own books using software that carries built-in accountant recommendations.
Your job is to gain certification on as many of these as possible, but only if the terms ensure you can stay in control of your own destiny.
Lee Murphy is the owner of accountancy software Pandle