IMGCAP(1)]What does the firm of the future actually look like? Is it really 100 percent cloud-based? How do I even get started?
These are questions I am asked regularly when talking with accountants. I recently caught up with Gary Boomer. As many of us in the industry know, he pays close attention to the common sentiment among accountants. He said something that has stuck with me. He said, "Jamie, I think accountants are in the fog when it comes to the cloud.”
What he meant is that many accounting firms feel like an unclear path is preventing them from moving to the cloud. They know they have to get there but it's tough to see through the fog to the other side.
I’ve spoken with hundreds of firms that have successfully transitioned to the cloud, or are in the process of doing so, and they overwhelming offer the same advice. Just get started. You don’t have to jump in with two feet. Instead, make small changes to your firm here and there. But get started, nonetheless.
Growthwise, a firm based out of Newcastle, Australia, heeded this advice and took off from there. They formed in 2009 when the founders became fed up with the tedious and time-consuming process of desktop software. They started to do part-time accounting for clients after heading home from their day jobs and decided to roll out the cloud-based software they were using to five clients. Their intention was to test and hone the new application for a full year before adding more clients. That plan quickly went out the door. Three weeks later, those five clients told all their small business friends about how the cloud was saving them time and money. A bunch of new clients came knocking and Growthwise officially came to be. Today, the firm has over 325 clients and 10 employees. They are a thriving practice, operating 100 percent in the cloud.
Steph Hinds, a Growthwise founder, is happy to lend a helping hand to other accounting firms. She’s not worried about competition. The opportunity is massive around the globe. She did observe that it appears the U.S is at that stage Australia was at four or five years ago, when Growthwise formed.
The idea that the U.S. finance and accounting industry is behind the rest of the modern world is hard for her to comprehend. But take the check, for example. It’s still a very common form of payment in the U.S., but Steph notes that Growthwise sees maybe five checks a year, usually from their much older clients. There are fundamental problems with checks. The time must be taken to go to the bank, deposit the check and wait for it to clear. There is nothing automatic, instant or modern about a check. Steph does believe the U.S. will pick up on the cloud trend and be far more advanced than other countries five years from now.
Steph sees the admin and compliance side of her business becoming less valuable as the cloud continues to progress. Tools like Shoeboxed, Receipt Bank and Xero’s bank reconciliation feature have already replaced much of the administrative side of tax prep. It’s becoming a commodity services that small businesses eventually won’t be willing to pay for.
Steph envisions accounting software providers introducing a feature that will send tax returns to the appropriate governing body with a click of a button. As these tasks become automated, revenue will shift from compliance-driven to advise-driven. Steph goes as far as to predict that all future revenue for accounting firm will come from consulting and advisory services. And she is excited by this prospect. Instead of doing compliance, tax and bills, her firm will be helping shape small businesses and driving results throughout the year.
While Growthwise currently offers compliance services, their focus has been mostly on the business advisory services over the last two years. They are now evolving an IT consulting arm to help clients get up and running on cloud applications—a tech CPA firm. We are certainly seeing this trend start to take hold in the US as well. Going a step further, Steph suggests the accounting industry will develop a closer relationship with IT consultants and the merging of IT and accounting firms will become common. She even anticipates that accounting could actually become secondary to IT.
It is certainly an interesting time in the accounting world and the crossover with technology is apparent. While many firms may be in the fog, the viewpoint is that taking those first steps is the best way to start. Sign up and get one of your clients on board. Break through the fog and into the cloud.
Jamie Sutherland is the president of Xero US.
