New tools are for new services
I have just spent 10 minutes writing a comment to this posting over on Accounting Web, then thought that it would be better to set out my thoughts here.
There is a fundamental misunderstanding in the Accounting Web discussion, when contributors state (rightly to some extent) that transactions cannot be keyed into the online accounting services, like Xero, Kashflow and Free Agent as quickly as in desktop software, like Sage and QuickBooks. The problem is speed, many say.
If your practice is providing what I would term “binge bookkeeping” services, meaning processing client records in batches, perhaps monthly or quarterly, then there is little benefit from using online accounting systems for 3 reasons:
- the client is clearly not interested in maintaining accurate, up to date accounting records, so there is no need for real-time reporting
- because the client does not need real-time information, there is less downside in sending backup files to the accountant and back – indeed perhaps the data file is permanently with the accountant, with the client only having financial information provided in the form of reports produced by the accountant, and
- data in batches can be entered more quickly using the interface of desktop software compared with web-based software (with the exception of live bank feeds and bank statement upload files)
However, if you wish to provide a management accounting service, in collaboration with your clients, then online is the only way to go. The client would typically enter most of the transactions themselves, in very small numbers but very frequently – i.e. daily. No speed problems here then.
The accountant’s role is to monitor, review, correct and complete the records – then use the real-time numbers to help the client manage and grow their business. Doing the “clever bits”, like calculating and posting depreciation or making the stock adjustments at the month end, is high value but low transaction volume work. Again, speed is not therefore an issue.
So my argument is that web-based accounting systems are modern tools to enable delivery of modern services. Accountants can stick to traditional desktop tools if all they want to deliver is a traditional service. I know which horse I would rather have my money on in that particular distance race.
Totally agree with you, Adrian. Online Accounting is not for traditional accountants who adopt the mantra “If it ain’t broke”. And yes, my money’s on online real-time accounting solutions like Xero.
Great points, especially as they’re not from a software vendor. One of the main reasons why we haven’t seen a “gold rush” to the new online systems is that, for the foreseeable future, there will continue to be plenty of traditional clients who don’t want to do data entry, nor are they particularly interested in management reports. We vendors have done a poor job of showing that it’s possible to meet the needs of both the traditionalists and those who want new services. In fact it could be argued that most of the online systems are focused only on those who buy into the vision for new services. There is a big opportunity for any vendor who can combine an SME-focused front end with a back end that delivers accountants’ needs.
Thanks for your thoughts Mark. Regarding your final sentence, I have something in the works that will change the dynamics – see http://www.ledgerscope.com.
Ledgerscope is SME friendly in the sense that the small business owner can simply upload their accounting data to their accountant. Accountants’ needs are delivered because Ledgerscope will then do the analysing, reviewing and reconciling for the accountant and produce a final trial balance for import into accounts production systems.
Currently we are scheduled for a private beta launch at the end of May and full debut by the end of June. Fingers crossed.