I’m conscious that this article could read like an obituary, and in many ways that’s exactly what it is. The world of accounting has changed profoundly in the last 25 years. But many accountants are yet to embrace that change, and whilst the old ways of working may have been prosperous for them, their lack of foresight in adapting to the change will ultimately be their undoing.
Accounting was one of the first professions to benefit from the advent of the Personal Computer. Spreadsheets and desktop accounting software enabled us to do things faster and at a lower cost than ever before.
However, somewhere along the way the accounting profession stagnated. The market during this period was primarily made up of compliance work. Unless you were a big firm, or you had clients with foresight and a budget to pay for advisory support, then the majority of work your firm did would be compliance – helping clients to prepare and file their annual accounts and tax returns.
Sure, you might have had a nice little sideline in setting up Sage and training people how to use it, but most accounting firms did little more than that and still made a very nice living. There was no requirement or reason to innovate.
Then the internet arrived in the late 90s. Businesses embraced email—a new way of communicating (although my old accountants never quite understood the importance of responding to my messages!), but the slow speeds of the early internet years meant that doing any actual work online wasn’t feasible. Some of you reading this will remember the days of dial-up modems and the frustrations of waiting for browsers to load…
Then around 2006 the speed of internet connections reached a level where it became possible for software to be hosted online, and a whole new industry was born. Known as SaaS (Software as a Service), this meant that instead of charging chunky annual fees for desktop software that needed updated with a disk that was sent to you periodically, providers could now host their software online and rent access to customers.
The early SaaS pioneers in the UK accountancy market were Kashflow, which was founded by the enigmatic Duane Jackson, and Edinburgh-based FreeAgent. These were very different applications—Kashflow felt like using Sage, meaning you had to have a knowledge of accounting, whereas FreeeAgent had been designed to be easy for non-accountants to use.
Suddenly a new way of delivering services to clients opened up. At the time, I was running one of the largest contractor accountants in the UK and we partnered with both Kashflow & FreeAgent. Now we could provide our clients with real-time online reporting on their business performance, instead of just preparing the historic accounts.
We developed new services, changed our business and pricing models, and re-imagined how accounting could be delivered as a service. We described this as a client-centric approach – our services were designed around the needs of our clients rather than our needs, which was a ground-breaking approach for the accounting profession at the time.
Ours was a very competitive market, which meant that we had to innovate to avoid competing on price. So in 2011 we partnered with RGU, one of the two universities in Aberdeen, to develop new software tools that would make our business more efficient and our clients lives easier. This partnership created one of the first client portals, where all of our clients business documentation including management accounts, vat returns, vat certificates, payroll and so on were stored, and were easily accessible.
We also built a system that enabled clients to digitally sign their accounts & tax returns. This alone saved our business almost £50,000 in paper, envelopes, stamps & ink! Today, any accountant worth their salt will be using these technologies, but in 2011 this wasn’t at all how the majority of the profession worked or thought.
The advent of SaaS fundamentally changed the game for accountants. Innovators have used the model to develop new applications that enable us to be more efficient, to drive the cost of compliance work down, and enable us to focus more of our time on how we can help our clients grow their businesses.
However, many small businesses have an online accounting system that hasn’t been setup for them, and that they haven’t been shown how to use properly. They connect their bank account, then start coding transactions where they think they should go. Sadly they’re often not right, which means that the financial information they’re using to make decisions is wrong. This can end up causing huge problems, and be a real headache to sort out.
Clients should expect more from their accountants. The modern accountant needs to be a business coach or mentor – helping their clients plan for the future rather than simply reporting on the past. We need to make sure that clients have the right software for their needs, not for ours, and that it’s setup correctly for them. We then need to make sure they know how to use it.
Products like Xero & FreeAgent allow accountants to keep an eye on their clients accounts. One of our first tasks each day at Ashton McGill is to logon to our dashboards and check for issues with any of our clients. If we spot something, then we contact them. It might be nothing, but we know it provides peace of mind that we’re looking out for them.
The days of the accountant meeting with their client once a year are long gone. The contact needs to be frequent and proactive. Not all meetings need to be face to face – we use Zoom to host online meetings with clients, and run a Slack Group to provide 24/7 support. Of course people can still email or call us if they want.
You might be reading this and thinking that this is pretty basic stuff, that’s how many other businesses function, and you’d be right. However despite being described as a ‘Professional Service’, many accountants still need to realize that they are in the service business.