[IMGCAP(1)] Comprised of a network of financial organizations sharing data, the financial web is rewiring the small business economy so that new forms of capital can flow to small businesses. With more small businesses using cloud accounting platforms, financial institutions are moving to meet them where they’re working — in the middle of their system of record. We’re seeing banks connect directly to accounting platforms, offering cost-effective financial services. At Xero, Bank Feeds open the gateway to two-way data flow — financial data comes in and accounting data goes back to the bank when necessary.

So just what does this mean for accountants and their small business clients? How does the increasing momentum of the financial web support accountants, and what do they need to know in order to be a successful participant of this network?

How does the financial web support small businesses?

While the small business market is large, it’s also highly fragmented, meaning that servicing it can be seemingly high-risk for financial institutions. Banks are now starting to view the financial web as a way to up their offerings to their small business customers. Because traditional processes have been improved by automation and machine learning, new business opportunities are created and compliance processes are streamlined. This means that, through a connection, the pace of loan approval speeds up and small business owners can start to access capital when they need it most. This removes lengthy, time-consuming processes like branch visits and the compilation of complex documents - with the click of a button the process can be completed.

How does the financial web support accountants?

With technology simplifying tasks like bookkeeping and tax, the financial web creates an opportunity for accountants to provide advisory services to their clients; services that are priced at a higher rate. Despite the level of automation that accounting technology provides today, there will always be a need for an accounting professional to review the numbers and ensure they are accurate before they go to the bank or the tax agency. And before this happens, we can advise clients as to how they can properly plan for any cashflow needs and present the financials properly. Because of this, the bank can better monitor risk in its loan portfolio and will have more confidence in the funds that they are loaning the business. This relationship between the bank, client and the advisor is critical to ensuring confidence in the small business and helping them to thrive. The financial web provides the ability to be the trusted advisor with our clients – assisting them in securing funding and then ensuring the client is utilizing it in the right way so the banking institution feels comfortable.

What information do accountants need to know in order to be a successful participant in the financial web?
Being a successful participant in the financial web means understanding cloud technology. The financial web is cloud-based in nature and does not allow for small businesses to be on desktop accounting software. Accounting professionals should do their due diligence and understand how their accounting ecosystem’s information flows through the various applications. How does a bank feed or information from an app partner enter the cloud accounting system? How does a point-of-sale system connect and ensure the information is properly coded? Part of your evolution becomes learning how to be an information systems manager; validating that everything is properly connected together so the accounting results make sense. In order to propel the financial web and free up funds for our small business clients, obtaining the education and the training we need is critical to the success of this service. There are resources to help you learn these advisory skills such as AICPA CGMA’s designation to provide an 18-month learning journey from compliance to consultancy.

By connecting the dots between financial institutions, accountants and small businesses, the financial web means that hopefully the future of funding from banking institutions frees up so more small businesses can thrive.

Amy Vetter is the global vice president of education and head of accounting, USA, for Xero.

 

  

 

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