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.

I recently participated in a discussion on AccountingWeb where I questioned the value of including detailed technical and tax resources on accountants’ websites.  My long-held view is that such resources are a waste of money.  If I were a client, I would want to pick up the phone and get the answers I need.  I would not expect to find them for myself, “on the website”.

However, since there are many providers of technical content and many accountants including their services on their sites, I wondered if I was alone in my view – so I created an online survey and asked for responses.

With only limited public awareness of the existence of the survey, I am pleased to have received 32 responses.  I promised to publish the results and here they are (pdf format).

I believe that the results support my view including technical content on an accountancy firm’s website is not good use of the marketing budget.  Some 24% of firms had no idea if clients or prospects ever used it and less than half (47%) thought that the cost of technical content represented value for money.

Looking at all respondents, including those who did not include technical content, only 16% of firms reported receiving more than “one or two” enquiries per month from their website.  This, despite the fact that the overwhelming majority (85%) had refreshed the look and feel of their site recently (less than three years ago).

So, I stick to my view.  Accountants need a professional web presence but only something that a prospect can use to “kick the tyres” before making contact to initiate a discussion.  Existing clients will likely never visit the site, because they have no need to – and if you think tools, guides and calculators on your site will make them come you are deluding yourself.

Accountants, think for a minute – you are a supplier in your clients’ eyes.  Now, thinking about yourself, when was the last time you checked out the website of the firm’s PI insurer or stationery supplier?

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:

1. the client is clearly not interested in maintaining accurate, up to date accounting records, so there is no need for real-time reporting
2. 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
3. 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.

I met up with Hamish Edwards and Darren Glanville from Xero online accounting software yesterday, when they dropped in to the Pearson & Associates offices.

It was good to meet Hamish for the first time, after previous telephone and cyberspace conversations.  Most of the talk was about how Xero could help us with the process of converting clients from other systems, such as Sage and QuickBooks but we also discussed Xero’s broad development roadmap.  Hamish revealed that one of the things they were working towards is what he described as a “One Ledger” concept.

Now, I must admit that I didn’t grasp the significance at the time but now, having had chance to think it through, it strikes me that One Ledger could have profound implications for most small accountancy practices.

So what are we talking about here?  Well, the big idea (and it’s not rocket science) is to use the same data set (the client’s) for the production of year-end “final” accounts rather than what currently happens – which is that the accountant takes the client’s accounting data and transfers it into his own software for further processing and final accounts production.  Using the One Ledger approach, the need for the accountant to produce separate working papers is eliminated, as is the chore of revisiting the client’s data after the final accounts are produced to make adjustments to correct the opening balances for the new financial year.  The client’s accounting data IS the working papers and IS the lead schedules.

One significant development that will make this possible is what Hamish described as an intermediary coding structure which will allow individual general ledger account codes in a Xero (client’s) chart of accounts to be mapped to the appropriate code in the Xero statutory chart of accounts.  It’s my understanding that, by default, this functionality will only be visible to users with the “Financial Adviser” role in Xero.  Accountants typically reserve this role for themselves, where they have setup the client initially, but there is nothing in principle to stop a client using the extra functionality if they wish to.  This means that, for instance, abbreviated accounts for Companies House can be generated without the intervention of the accountant.  Now tell me that is not a fundamental shift in the balance of power of the client / accountant relationship.

I see this as a positive change, it allows the accountant to distance himself from the traditional compliance service and, instead, demonstrate how he can add value to the process, DURING the process – not just at the end by facilitating filing with the authorities.

Of course, the One Ledger principle cannot realistically work for desktop accounting systems such as Sage or QuickBooks, simply because the client cannot run their business without access to their accounting data during the time it takes their accountant to “do the books”.  This is therefore a way of working that only web-based providers, like Xero, can offer.

I can see some potential problems – such as how to get the tax provision into a set of limited company accounts without first importing accounts information into the practice’s corporation tax software – but I can also see big benefits for both the client and the accountant.  The accountant’s role will change though, to one of reviewing and correcting the client’s data before the client files the accounts, instead of owning the whole process – and charging accordingly.