I remember well, when I was learning my trade as an accountant in the eighties, how useful form 64-8 “Authorising your agent” was.

Back then, it was the key to being able to have friendly (usually), informed and time-saving telephone conversations with HMRC regarding a particular client. It meant you could talk directly with the Tax Inspector dealing with that client’s affairs at your local tax office; someone you knew by name and, in most cases, had met face to face.

It therefore made perfect sense to get all clients to sign a 64-8. It was in everyone’s interest and all parties (the client, the accountant and the tax office) benefited.

Now, fast forward to 2010. Times have changed. Things are much, much different. If I was starting a new practice now, I would make it a rule that we did NOT allow ourselves to be authorised under forms 64-8.

The form has become a poised chalice for accountants. The client still benefits from the arrangement, and HMRC certainly do, but the accountant? Absolutely not. For the accountant, being the authorised agent now just means lots of extra hassle, wasted chargeable time and paper handling.

The 2010 version of the 64-8 arrangement for the accountant means fighting your way through call centres (who might never actually pick up your call), remote HMRC administrative offices and revenue staff who have little idea what you are talking about. The client gets frustrated with you, thinking that you are not doing your job properly, or making excuses. Of course, they don’t want to pay you for all this wasted time.

Then there’s the paper mountain that a modern form 64-8 brings to your office. Huge piles of client statements of account are just one example. You process all of this paper, soaking up more staff time and then spend even more time because you find errors that need to be corrected. Back to the call centre merry go round again.

So, I say let the clients deal with HMRC direct. Let them understand how much time this takes and let them call you in (for a fee) when they either can’t cope, or put a higher value their time. And let the revenue take the flak from the client when they prove to be inept on a regular basis.

Barclaycard are piloting allowing businesses using the their merchant services to raise invoices and collect payments using an “e-invoicing” service provided by KashFlow.

This posting on TechCrunch, prompted the above tweet from Duane Jackson, which Dennis Howlett picked up on immediately and wrote about here.

My initial reaction to reading the TechCrunch article was that this seemed like a significant development but, here’s my problem, the more I think about it the less important it seems to me. It may be a big deal for the two companies involved (great exposure for KashFlow particularly) but I can’t see where the importance to business owners might be.

I am running a small business and find the idea of printing and posting paper invoices plain ridiculous in 2010, so I use accounting software that makes it easy for me to create PDF invoices and email them to customers. I want to make it as easy as possible for my customer to pay me, and improve my cashflow, so I include a link in my PDF invoices which directs to my PayPal account, which can accept all major credit and debit cards. If I was a Barclaycard merchant, I assume that I could just as easy link to that account on my invoices.

If I didn’t have my accounting system already setup, I might well decide to use KashFlow, and in that case why would I be interested in a cut-down, badged version of that software provided by Barclaycard?

Maybe another scenario is that I have an accounting system that I am happy with but I can’t produce PDF invoices and collect payment electronically. Am I really likely to keep that accounting system and also run a parallel invoicing system (and presumably sales ledger) in a completely separate service and have all the hassle of keeping the two in sync? No, of course not. I will either struggle on without the benefits of “e-invoicing” or, perhaps more likely, decide that it’s time to change my accounting system. In which case, again, I have no interest in what Barclaycard are offering.

My conclusion is that this is another example of one of the banks trying to use an alternative means to market their financial services by cloaking them in some pseudo “added-value” solution involving software. Barclays have form on this, with their Clearly Bookkeeping promotion some years back.

I can’t see any downside for Duane Jackson, unless they are spending a lot on the “badging” exercise for Barclaycard and, indeed, it is already providing his company with great publicity.

Unfortunately, I can’t see much upside for the small business community. That’s why I am thinking this is no big deal.

Update

Duane Jackson responded to my final comment on this posting, via Twitter, as follows – enough (not) said:

I have just been reading this interview with Sage MD Paul Walker on the City AM website and thought I would share a few facts that jumped out at me.

• Sage is valued at £3.4bn and sells accounting software and services to 6.1m small and medium-sized businesses worldwide
• It has bought over 110 rivals since it was founded in 1981
• 70% of revenue comes from support and maintenance services
• Online software sales currently account for two to three per cent of revenue
• The pay of one in four working people in the UK is processed using Sage software

Clearly the subject of online (cloud) services had to come up in the interview and Mr Walker’s response is quoted as being:

“This will suit younger people who start businesses and who are used to working this way. But a lot of other businesses like the security of knowing their accounts and sales information is stored on their desktops.”

Apparently, he also expects revenue from online products to still account for less that half of the group’s revenue in 5 years’ time.

So, what do I think?

• Either Sage are dismissive of the threat to their core business from online accounting services, or Mr Walker is being careful to appear so – while the company buys itself time to re-engineer its offerings
• For a business to make almost three quarters of its money from supporting and fixing its own products seems immoral.
• For most small to medium sized businesses nothing is more mission critical than making sure its employees are paid accurately and on time.  By producing the payslips for one in four UK employees, Sage has ensured that a massive chunk of the market will think twice, or three times before switching to a competitor.

Does the interview leave me with the feeling that Sage is an agile, innovative force?  No.  Does it make me think that Paul Walker is taking his bow before the difficult times ahead?  Maybe.

What I do strongly suspect though, is that customer loyalty will be tested severely as small business owners start to look at the new online alternatives and wonder why they are paying Sage “between £500 and £1,200 a year” for help with the software they have already paid good money to purchase.

The bottle of red wine on my table just provoked a realisation for me – it seems that Kiwis are behind many of the new web-based services on the market.  I wonder what it is that makes our friends from New Zealand so good at this stuff?

Here’s a list of some of the products I know of that are the result of Kiwi brain power:

Xero – online accounting

PlanHq – online business strategy

Minutedock – online time recording

PocketSmith – online personal finances

Sharesight – online portfolio management

ProWorkflow – online project management

These are the first names that came into my head and, of course, there will be many more.

I think this struck a chord for me because the developer I am working with on my Ledgerscope project is, yes you guessed it, a Kiwi.  And bloody good he is too.

You may be thinking this is unremarkable and that there are thousands of services out there, developed by clever people from all over the globe.  However, New Zealand is a relatively small country with a relatively small population and it just happens to be on what most of us would describe as “the other side of the world”.  So, I think it is notable.

It seems that technology and, particularly, the Internet has indeed made the world flat – and this is great news for all of us.