As discussed previously, there are increasingly cases where Management Accounts are not as useful to Businesses’ as they once were. When lining this up with the fact many different software packages are available to automatically produce these accounts it is my opinion the time where accountants can charge separate fees for the production of financial management accounts or Board Packs should be coming to an end.
Reports can easily be accessed online via a browser at any moment. If you want to press print you can but it shouldn’t really be necessary. However, if performing the bookkeeping and accounting adjustment is also quicker and easily done automatically what would an accounting practice then be charging for and where is the future of their fees as an outsourced accounting function?
I would imagine in some ways these technological advances are extremely worrying for many accounting practices. Why would they want to adopt technology that would make it more difficult for them to charge fees as businesses that historically charge based on time? There is the concept of Value pricing, and there are also savings to be made by them in being able to deliver the same product with fewer resources, as well as providing speedier turnarounds that benefit the client. However, this alone will not compensate for not being able to charge historic fee levels for a job that has been made easier. Clients are too smart to accept that. Also, accounting practices are not software companies/technology experts – so going into this as a revenue stream is difficult, given the requisite knowledge and the very different volume-based business model.
If you listen to most speakers, they will create an image of a holy grail of “advisory” services, which results in the accountant providing more value add services beyond their more ‘traditional’ bookkeeping and accounting offerings. But how would this look and work in reality?
I guess that is a subjective question but in my opinion, this idea revolves around actually understanding a customer’s business and focusing on the operational performance as well as the financial performance, so business owners get more useful reports and insights. To do this will require a true understanding of a business to actually deliver value that can be charged for. The challenge for accountants is to be able to deliver this from technology and advisory perspective.
Doing this across a range of industries is going to be rather difficult in my view. To be truly successful will require a great understanding of the business and for the accountant to be deeply ingrained/involved in the wider businesses’ team. It will also require accountants to have skills in financial analysis and what metrics actually matter to business owners. The easiest way to achieve this will be by specialising in a particular industry and working with a specific set of tools that lend themselves well to a particular industry. Only then can you have the data, analysis, product and basis to provide valuable and specific advice to your clients and business owners. Effectively the accounting practice and/or business needs to invest in setting up their software packages to work from end to end, to deliver key information automatically in a format that is tailored for the industry. I believe it is only at this level of detail and have built something unique that solves a problem in an industry, which you can then use commercially in other companies within that industry, that you are likely to be truly successful. There isn’t necessarily a ‘one-size fits all’ approach, but as I have found most businesses in the same sectors will experience very similar problems so only a few tweaks would be necessary.
This effectively means that a firm needs to niche in expertise and product in order to scale quickly. Do you agree that this will be the best way moving forward?
