How integrated accounting practices drive the fight against irrelevance

Over the last decade, the adoption of cloud bookkeeping software has threatened the value proposition of accountants. These tools are easy to use and require little knowledge of accounting concepts. This has led to the commodification of bookkeeping, with tools driving down the cost of services and an expectation of cheaper fees from clients.

However, more recently a quieter revolution has been brewing. The development of integrated cloud practice management tools has enabled accountants to manage and complete statutory compliance filings seamlessly, with tools taking advantage of automation to speed up service delivery.

These changes have made it easier than ever to start a new accounting practice and have widened the talent pool, with staff recruitment not being tied to a set geographical region and firms being able to attract new joiners from a variety of different backgrounds.

The pace of cloud adoption has been accelerated by the rollout of MTD, and the pandemic, with many SMEs digitizing their record-keeping for the first time.

Accountants are now finally in the position of being able to evolve and diversify their service offerings, to provide insights around advisory and niche down their offerings to specialize on a sector-specific basis or in areas driven by their experience or passions. Those who are willing to seize the opportunity will become even more embedded within their clients’ businesses by demonstrating their expertise and collective knowledge from serving their wider client base.

Market developments

Cloud accountancy software first came into being around fifteen years ago, with early adopter accounting firms tinkering with bookkeeping software for their clients. Then from around 2011, its use became more mainstream as accountants saw the benefits of automating previously manual core workflows associated with filing annual accounts and submitting tax returns.

The market has now evolved, so that core cloud bookkeeping tools are supported by a rich variety of add-ons and third parties filling in feature gaps such as receipt scanning and inventory management.

Efforts are underway by cloud bookkeeping vendors to fulfil a “closed loop” approach to compliance, with automation capabilities reusing transactional data when compliance filings are made. This is making it effortless to complete filings but is reducing the impact accountants have on their SME clients for everyday work.

The rise of the integrated practice

A more recent development is cloud accounting software designed specifically for accountants instead of their SME clients. This has led to the advent of a full suite of cloud-based practice management tools, fulfilling every facet of firmwide workflows, such as onboarding new clients and assigning staff to recurring tasks.

Reliance on integrated cloud software has become enhanced during the pandemic, with firms being forced to work remotely due to lockdown. Over 70% of IRIS firms are either fully in the cloud or are in the process of migrating from desktop.

IRIS has been supplying cloud software to accountants for many years now, and unlike other vendors, we view our accounting partners as our end customers, rather than just a channel to the SME market.

While it is imperative for firms to eventually move all their compliance and practice processes to the cloud, newer firms may choose to be fully cloud from day one, whereas more established practices with larger clients and legacy data can apply a hybrid approach to connect desktop and cloud software together. It’s important that no one gets left behind and vendors must show a willingness to allow firms to get started at their own pace.

Accountants should adopt integrated practice management and compliance software to maximize efficiency and meet the increasing demands of compliance-based activities. Similarly, it is in the interest of SMEs to only work with firms that adopt integrated practice management and compliance solutions as the connectedness and efficiency of these tools will put them in a position to benefit from insights and quality timely advice.

Reclaiming the title of most trusted business adviser

The use of integrated cloud practice software and the onset of the pandemic has led to businesses turning to their accountants for advice more frequently.

Streamlining processes through integrated practice management and compliance is a necessity for firms to reposition themselves as advisers but is not a differentiator in itself, since compliance work has become increasingly commodified due to automation.

Close to real-time data, powered by the cloud, has allowed accountants to metaphorically “look over the shoulder” of their clients and see what is happening in their businesses. This has increased the touchpoints between both parties, with accountants being able to give forward-looking advice rather than just completing year-end filings.

Accountants are now becoming more embedded within their clients’ businesses to offer them higher-value advisory services such as access to finance, cash flow forecasting, scenario planning, and advice around tech integrations. Additionally, they can provide aggregated insights from across their client base, leaning on the data and performance of businesses in the same sector.

Conclusion

We are at an exciting precipice, where the mainstream adoption of cloud accounting software, and specifically integrated practice tools, makes it the industry standard for firms to seamlessly fulfil their clients' compliance needs.

Over the coming years, any outstanding, repeatable manual processes which can become automated will become automated and put small firms in an even stronger position to move up the value chain to provide advisory services.

Firms cannot be complacent and should be warned that if they do not take advantage of an automation first mindset to connect to their clients more intimately and introduce advisory, they risk cloud bookkeeping software companies eating their lunch and filling this gap themselves.