how about 75% lower costs?
by hitendra patil
the definitive success guide to client accounting services
in the desktop days, write-up, bookkeeping and accounting processes were perceived more as data entry work. the price clients were willing to pay for data entry put so much pressure on fees that many firms found it was not worth the hassle.
more: how to become an outsourced/virtual cfo | which of your existing clients are cas-fit? | the services that cas clients need | who’s afraid of client accounting services? | the right mindset for client accounting services
exclusively for pro members. log in here or 2022世界杯足球排名 today.
other services such as tax preparation, financial statements preparation, etc. brought in higher per-hour dollars than write-up, bookkeeping and accounting work could. such work got more and more “outsourced” by accounting firms to bookkeeping firms, freelancer bookkeepers and “processing” firms operated by non-cpas/non-accountants.
the perception that such work is “low-value-low-profit” got stronger and stronger, despite some practitioners vouching that “if you control the books, you control the clients.” it was practically inconvenient – and expensive – for accountants to travel to clients’ offices to “do the accounting.” that led to people at businesses who were not professionally trained as accountants to do the data entry into accounting software and believe that they did the “accounting.”
it was (and it still is) a collective experience of professional accountants to find the books to be messy, which required significant effort to “clean the mess” to make the books accurate and compliant. clients thought that by doing the data entry themselves, they saved money. but having accountants fix the messy books cost them money in any case.
such routine, mundane work more often than not disillusioned staff doing that work, and they would leave looking for more meaningful work that could give them satisfactory progress in their careers. accountants faced a typical, recurring challenge of lack of consistency and continuity in the accounting work because books continued to be messy. all of this further accentuated the perception among professional accountants that there was less money to be earned by doing such work. reviewing client-prepared books, after the fact, for corrections and for preparing financial statements left little time and opportunity for offering any worthwhile, timely advice.
it all turned into a professionwide belief that data-intensive work was better not to be done by professional accountants. in any case, clients could buy off-the-shelf accounting software (and use it as a business software to run their businesses).
cloud, integration, automation, years of accounting transactions knowledge and rules programmed by accounting software companies change all of that. but the belief ingrained for years is not easy to change. over the last five to seven years, aicpa, the thought leaders in the profession and even technology companies catering to the accounting profession have invested significant resources to make accountants aware of the immense opportunities cas brings to them. technological advances have infused considerable profit margins by automating many of the “low-value-low-profit” data-intensive processes that are the necessary part of the accounting work.
someone has to do that work. earlier, it was done more by people and hence more costly to do. now a lot of that work gets done by intelligent technology – at literally a fraction of the costs that clients paid in the desktop years.
once the leadership at your firm crunches the numbers to relate to this opportunity to profit from cas, it is still an arduous task to attempt to change the perceptions around such services.
cas is not just write-up and bookkeeping. it is much more than that.
some firms in the $3 million to $10 million annual revenue segment that i spoke with believed that cas is more of a bookkeeping game, and their resources are more costly than the fees it can bring in. so very challenging to change the belief!
at the same time, i spoke with many firms of similar sizes, smaller and bigger, who have recognized the cas opportunity. almost all such firms that understand cas are technology-savvy firms that have embraced the cloud.
it is not just about cloud, though.
cloud technology is just a facilitator, a catalyst, a platform – based upon which you enhance your firm’s processes.
remember when i told you about my client? he was putting to work his specialist, niche-specific accounting processes to good work, for his clients and for his firm’s revenue and profit growth. and he wasn’t allowing clients to lead the accounting processes. he was not willing to follow clients’ procedures – which he knew couldn’t be professional accounting processes as his clients were not professional accountants.
cas is a lot about your firm’s specialist, professional accounting processes.
i created a “profitability growth calculator” to identify the effect of just one technology integration and automation feature – bank feeds integrated with the accounting software – to compute the impact on the profitability of accounting firms. i got multiple accountants to share with me the time they were taking to process the client’s write-up work manually – and the total cost thereof. after implementing bank feeds, the processing cost came down by as much as 75 percent. not only did it add to the profitability of each assignment, but it freed up the time of existing staff to review the work and correct when needed.
the firms that implement such technological features can handle two to three times more clients within their existing resources. the overall combined impact of just one technological feature that was not available in the desktop era on the firm’s revenue and profitability is simply mind-boggling.