Five ways to make your accountancy firm more productive
From cloud computing to outsourcing, Nick Huber examines ways for firms to streamline processes.
When was the last time you gave your practice a productivity MOT? Are billable work and charge-out rates rising, static or slipping? How’s the new business pipeline? Are costs under control or creeping up?
If your firm’s productivity is less than expected, there are more ways than ever to improve it, including cloud computing, reducing paperwork by automating tasks, remote working and outsourcing. We’ve analysed some of the main productivity hacks and tech trends and talked to suppliers and consultants who are helping accounting firms to “work smarter”.
1. Cloud computing
Cloud computing – storing and running software applications online rather than on customers’ premises – has become ubiquitous. Most of us use it in some form whether it’s an email system such as Google’s Gmail, business software including customer-relationship management and enterprise planning products, and document-sharing applications like Dropbox.
Benefits include more flexible pricing (paying only for IT used) and the ability to increase computing power rapidly.
It hasn’t taken off in the accountancy sector as fast as in other industries but it’s growing.
Kevin McCallum is business development director at FreeAgent, which makes online accounting software that helps business owners log their expenses, create and send invoices, forecast their tax bills and do self-assessment and VAT filing. “[Our software] does the day-to-day admin, which helps businesses stay on top of their books and manage their tax liabilities more effectively,” McCallum says. “It helps make them more confident about accounting.”
Accountants can log into their client’s FreeAgent accounts and receive “alerts” to flag potential problems or issues with clients. For example, it might show that a client has spent an unusually large amount on motor expenses.
Accountants tell McCallum that clients using FreeAgent get better at collecting important financial data and are less likely to hand over a bag of receipts to sift through when their annual accounts are due. “We get feedback that a lot of the day-to-day admin is handled more efficiently with FreeAgent, specifically invoicing, expenses, bank reconciliation and time tracking,” he says.
Philip Shohet, senior consultant with Foulger Underwood, which advises businesses including accounting firms on mergers and acquisitions and strategy, says: “You need to discipline the clients into giving you information in a timelier manner and in a better quality format.
“You can do consultancy work to help clients capture data in cloud computing rather than manually or on spreadsheets. When accounting firms get accounts at the last minute there’s not a hope in hell of any tax mitigation work for the tax returns to save the client money.”
2. Cut the paper trail
Using software to replace paper-based administrative tasks, such as expenses and invoicing, reduces errors and delays.
Concur makes software for managing expenses and invoices. It automatically populates expenses claims using electronic receipts from, say, airlines and hotels. The software integrates enterprise resource planning data and helps companies comply with VAT rules. According to research by IDC, commissioned by Concur, it speeds up processing expense claims by 70 per cent and invoices by 85 per cent.
“Say an employee goes on a business trip to Paris,” says Alistair Kent, Concur’s PR and social media manager. “They photograph receipts on their mobile phone. The information is transferred through automatic character recognition software to an expenses report in the cloud, on their personal profile.”
Finance directors can see employee expenses as they arise, helping them to monitor their company’s spending.
Paying another supplier to run back office services can help accounting firms cut costs. Cloud and mobile software make it easier to contract out some accounting services.
Outsourcing company Alcore carries out basic accounting tasks such as bookkeeping, tax returns and annual accounts on behalf of its accounting firm clients. “We looked at what was happening with outsourcing and accounting firms had two options,” says Rob Jackson, director at Alcore. “The first was to subcontract work to a local company. This can be quite expensive. Many firms we spoke to were worried about the possibility that their customers may be poached by the outsourcer [if an accounting firm] and about commercial confidentiality.”
The other option was offshore outsourcing, which is cheaper because salaries for skilled workers are lower than in Western countries. But dealing with a supplier in a different time zone can be tricky and firms said the quality of the accounting service was mixed, Jackson says.
Alcore has staff in Edinburgh and Delhi. Accounting firms scan documents and add them to a portal. The Edinburgh team check the files on the portal to ensure everything required is there before sending the files to “back office” staff in India. The team in India process the transactions, “essentially punching in the numbers and the [data] processing,” Jackson says.
Qualified accountants in the Edinburgh office do the analysis and review completed work before it is sent back to the accounting firm. They liaise between India staff and the accounting client. They don’t speak to the accounting firm’s customers whose work they are processing.
“Turnaround is the key thing,” Jackson says. “The accounting year has so many peaks and troughs and quite often accounting firms we come across have a backlog of 50 or 60 jobs they need to do in the year. Our turnaround is seven to 10 days. We have extra capacity.”
Cost savings are usually bigger for the larger firms we work with, Jackson says. “Smaller firms tend to be more focused on growth.”
Accounting firms are also outsourcing their IT. Lugo manages IT systems for accounting firms in Scotland. Its services include liaising with other software suppliers, IT support on the customer’s premises and remotely, IT security and disaster recovery. Prices per user range between £20 and £45 per month.
“We mainly provide IT for small and medium-sized accounting firms of up to 10 partners,” says Liz Smith, Lugo’s business development director. “’Firms like the option of passing full responsibility for their systems over to us as a one-stop shop for all their IT needs.”
Lugo also advises accounting firms on IT strategy. “We meet with the client a couple of times a year and act like a part-time IT director, sharing IT trends with them,” Smith says. “The responsibility of IT often ends up with one of the partners in the accounting firm, not necessarily through choice, and they’re often quite happy when we take the weight off their shoulders.”
4. Practice management software
Practice management software, from suppliers such as Practice Engine, Xero and Wolters Kluwer, can also help accounting firms work more effectively. For example, Practice Engine’s software includes a client database, billing and standardised fee notes that can be inserted into bills and tracking for jobs and projects.
Workflow software can also save accountants time by automating business tasks such as invoices, work scheduling and managing projects that were previously done manually. It can speed up filing documents with Companies House and HMRC by linking to online portals for exchanging documents between accounting firms and their clients.
“Once the manager [at an accounting firm] is ready to send a job to the client, workflow software can package up the relevant documents, send them securely to the client portal for approval, then on client approval automatically submit the documents online,” says Christa Spencer, UK practice segment manager, tax and accounting at Wolters Kluwer, which provides information and software to accountants, lawyers and other professionals. “This can save practices hours of administrative time, freeing up technical staff to focus on added value services.”
5. Mobile working
Mobile broadband and web/video conference calls have made it more feasible to work from home, on the move or at a client’s office.
Powwownow makes conference-call technology, including low-cost international dial-in numbers, web and video conferencing and web seminars. Its iMeet web and video conferencing product allows users to hold conferences and “share screens” of information with colleagues anywhere in the world. Its iMeetLive service can create webinars and webcasts for up to 10,000 people to be used for corporate communications.
Accounting software suppliers are offering customers mobile apps for accessing information about their clients and practices via their smartphones and other devices.
“Mobility is the hottest button for practices right now,” says Wolters Kluwer’s Spencer.
Improving productivity is about people, procedures and technology. Technology can help with the first two things by speeding up transactions, supporting more analytical work and making it easy to work outside the office. Outsourcing, too, can help firms reduce the cost of basic transactions.
With the Big Four accounting firms now offering services for small and medium-sized businesses and the move towards digital tax returns and a digital tax system, accounting firms that lag behind new technology may struggle to keep clients or win new ones.
Nick Huber is a journalist specialising in technology issues.
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