[IMGCAP(1)]Did you know that the “Father of Accounting and Bookkeeping” was good friends with Leonardo da Vinci?
Franciscan friar Luca Bartolomeo Pacioli, who published the first description of the double-entry accounting system used by Venetian merchants, not only tutored Leonardo in mathematics but also shared a patron and lived with him in Italy during the late 1490s.
The discipline of bookkeeping has thrived since Pacioli’s time. Today, the cloud steps in for paper. Sums are tracked and tallied electronically. But one thing remains: Many firms want to grow, and furthermore, they expect it to happen in the next couple of years.
According to Bill.com’s The State of Bookkeeping Practices 2016 Survey, a majority of bookkeeping and accounting professionals anticipate “significant” growth in the next one to two years. The survey, conducted from January to March of this year, includes the responses of 459 accounting professionals and tracks services offered, billing, technology and challenges.
Here’s one finding that caught my eye: Sixty-seven percent of respondents agreed or strongly agreed that their firms will grow significantly in the next one to two years.
That signifies a high level of optimism for growth—which is great news for those in bookkeeping. But one area I wanted to delve into was not just the desire to grow, but what traits these accounting and bookkeeping professionals share. Based on the survey findings, respondents who strongly anticipate significant growth in the next one to two years share similar characteristics.
1. 89 percent would like more bookkeeping clients.
This is, really, a no-brainer. To be confident that you will grow in the next one to two years, you have to increase your profit. That is traditionally accomplished by gaining more clients.
What’s important here is how to acquire these new clients. That means plans and processes must be put in place to actually win those clients.
2. 78 percent use multiple cloud-based technologies.
Traditionally, accountants have a handful of options when it comes to growth: Gain more clients, sell more services to existing clients or acquire a competitor. Cloud-based technology makes it easy to accomplish two of these items quite effectively.
First, the cloud banishes location-related obstacles. Since the main tool you need to use it is an internet connection (and you can get that anywhere these days), it supports virtual operations. Firms can now work with any companies, regardless of where they are headquartered. This opens the playing field substantially for any firm looking to grow. Got a referral for a client in Georgia but you operate in California? No problem. Plus, firms can hire from anywhere they like with this capacity to work virtually, which means they can cherry-pick the best talent to support new clients.
Second, cloud-based technology gives you a much higher level of efficiency for tasks that used to be very time-consuming or even mundane. It automates tasks (think workflows or reminders), provides an auditable trail, stores valuable documents and processes payments with a click of a button. More importantly, cloud-based technologies integrate among themselves. With the integrations, real-time information is easily synced between systems—meaning less manual labor. For example, an expense recorded in one solution will appear automatically in QuickBooks Online. There’s no waiting. There’s no downloading reports and uploading them into a different solution. The point of this is that by cutting bulky tasks out of the equation, cloud-based technology gives firms the time to introduce new services that may not have been on the table before.
Which leads me to this next point.
3. 58 percent handle client bill pay.
Client bill pay is, historically, a pain in the neck. The process is riddled with manual, paper-based workflows. Take the invoice. Review the invoice. Take it to the next person to review. Remind that next person. Remind them again. Then, after approval you still need to cut checks, get them signed, stuff them in envelopes, stamp and send them off. Many firms prefer not to offer it as a service due to not only the labor but also the potential risk of fraud.
But when you combine the above statistic—that a high percentage of these firms that anticipate growth use multiple cloud-based technologies—it speaks to the fact that technology has evolved enough to make what was once a high-labor and low-yield service into a productive and profitable one. Plus, cloud-based technology offers an additional level of protection for the bill pay process through permissions-based access and audit trails.
4. 39 percent offer value-based pricing.
With an increased level of efficiency, hourly billing doesn’t make a lot of sense. After all, firms focused on growth are completing tasks much more quickly. Hourly billing would result in less money for the same tasks, which would perpetuate the need to win an excessive number of clients to just break even. The goal is not to win an infinite number of clients, but to have profitable relationships with those clients.
If a firm is to continue to grow, value-based pricing makes the most sense. It turns away from a ticking clock that punishes efficiency and convenience and offers an entirely different model. Essentially, it asks, “How much are my services worth to your company?” From there, the firm can build out packages such as flat-rate options or monthly subscriptions. Firms can expect a stable influx of income potentially year-round while realizing greater profitability by evolving into more efficient practices.
5. 32 percent spend no time at their clients’ offices.
The days of hopping into a car, fighting traffic and going through a client’s documents on-site are numbered. To me, this statistic plays back to an emphasis on virtual operations—or at least the ability to collaborate effectively with your clients to the point that you can nix on-site visits. If you think of it, the reasons for on-site visits are usually to track down or process invoices, find documents, get check signatures or even grab answers from a slow-to-respond contact. Now, these processes can be absorbed into cloud-based technologies. I’m not saying that on-site visits will disappear altogether. After all, humans like to work with professionals they can connect with and trust. However, those on-site meetings may morph into monthly, quarterly or annual face-to-face visits to discuss big-picture accounting performance, trends and recommendations.
It’s clear from the survey results that growth-oriented firms share some common denominators. However, whether or not you anticipate growing your firm in the next year, these same factors are valuable characteristics that can be applied to create more efficient and profitable working environments.
The State of Bookkeeping Practices 2016 Survey is available for download at http://cashflow.bill.com/2016-State_of_Bookkeeping_Report.html.
Bob Lewis is senior director of channels and alliances for Bill.com, where he spearheads and manages relationships with strategic partners such as NetSuite, Intuit and Xero, and leads the accounting channel sales team. Follow him on Twitter @bob_lewis.
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