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Accounting: Putting Accountants Back in Control

Business owners making accounting errors end up paying accountants much more to fix errors.

For many accountants, one of the core components of their accounting practice is the support of small businesses.  This might include write-up work, end of year tax preparation, the preparation of financial statements, payroll, and ongoing advisory services.  As clients use off-the-shelf accounting systems, over time the center of gravity for accounting has shifted from accountants to the client.  Accountants have to use “workarounds” to perform their work using a system that wasn’t created for professional work. Not only does this make performing client engagements more difficult, but it weakens the relationship of the trusted business advisor.  Fortunately, the technology landscape has evolved to the point where it is now easier than it has been for years to shift this center of gravity back to accountants.

The Problem is Accountants Need to Be Proactive.

A generation of business owners has grown up with the desktop computer and simplified accounting software designed to run on it.  Accounting products from Intuit, Sage, and others are marketed to small business owners with no accounting backgrounds to maintain their own books. By removing the need for technical knowledge of double-entry bookkeeping, these accounting programs give small businesses the impression that now they can handle bookkeeping themselves. But in reality, this false impression results in small business owners making errors, and accountants end up spending a significant amount of their time fixing those errors.  In this scenario, accountants are unable to play any proactive role in helping their clients manage their business finances effectively.  This reduces the accountant to the role of providing commodity compliance services or acting as a troubleshooter and retroactively fixing mistakes.

Instead, accountants should be proactively focused on providing greater value to the business owner.  This could include removing the burden of doing tasks that are not part of the small business owner’s core competency . . . like accounting!  If you ask most small business owners why they are in business, the answers will usually center on a love of what they do.  Regardless of their individual talents, from roofers to restaurateurs, people go into business because they know, enjoy, and are motivated by that line of work.  Almost never will someone tell you then went into business because they enjoy doing accounting!  So one way in which accountants can strengthen the relationship with such a business owner is to reduce or at least simplify the amount of accounting that the business owner must deal with.

Another aspect of being proactive instead of reactive is to spend more time advising the business owner on what his or her numbers mean rather than focusing on fixing errors.  Fortunately, as we will see, this is easier to do today than it has been in the recent past.  Shifting this focus will allow you, the accountant, to provide the kinds of service that the client truly values and will be willing to pay for!

The vast majority of client accounting software in use, regardless of brand or vendor, shares one common feature:  it resides on client-owned computers or networks and is both physically and virtually remote from the professional accountant.  This situation creates obstacles to secure and efficient access to that accounting data by the accountant who must eventually interact with it.  Some of these challenges include but are not limited to:

Fixing Client Errors. Off-the-shelf small business accounting systems give clients free rein to do whatever they wish and clients seem to relish this privilege. They make mistakes.  Accountants have no control over what clients do. This is like giving the car keys to a 14-year old who doesn’t know how to drive. The bookkeeping errors clients make are undoubtedly the biggest time-waster for accountants.

Size of Files.  It’s not uncommon for desktop accounting files to reach hundreds of megabytes in size.  Passing files of this magnitude back and forth from client to accountant (and doing it securely!) create headaches for firms and businesses everywhere!  Probably the worst solution is to try to send these files as email attachments.  Not only is this a security risk, but most mail systems have limitations on file attachment size that are normally much smaller than these giant files.  Getting assistance from IT staff to work around these limitations is time-consuming, cumbersome, and in the end completely unnecessary.  Many firms have adopted secure document transfer utilities or portals which might be associated with their document management software or come from a third-party vendor.  These typically solve security problems but still require special handling to implement.  Most importantly, however, these file exchanges create disruptions for the client.  Either there must be a lock-out period where no new or changed data can be entered at the client end while the accountant has possession of the file, or there is a one-way flow from the client to the accountant.  In this case, the accountant makes adjustments in his or her copy which aren’t reflected in the client’s version, resulting in two versions of the file with different data included.  This creates a disconnect between what the client sees and what the accountant sees.

Regardless of which software vendor the client uses, there will be periodic updates and revisions to that software.  An accounting firm with many small business clients will inevitably face the problem of dealing with multiple releases and must be prepared to deal with whichever version a particular client is using.  Typically that will mean maintaining a copy of each version on at least one computer in the accounting firm and using that instance of the software to make adjustments when the client file is brought in.  Compounding this problem is the difficulty of maintaining license compatibility with each vendor’s software.  While license terms vary from vendor to vendor, firms frequently find these to be cumbersome and a challenge to comply with.

Compounding of Errors.  When accountants only have periodic access to the client’s data file, there is the real opportunity for transaction errors to be repeated and to compound their effect.  The result, of course, is that it takes longer to adjust these errors and adds to the time spent by the accountant on reactive rather than proactive tasks.

The Cost to the Accountant

The financial results of using this client-centric accounting software are that it costs the accounting firm money!  They begin with the time spent reviewing and adjusting client transaction entries, but at least this time is billable.  What is more difficult to capture is some of the overhead.  The time spent in transferring large files back and forth is a necessary but non-productive task.  So is maintaining the necessary arrays of software versions and licensing packages.

Perhaps more importantly, with only periodic insight into the client’s accounts, the firm has less visibility of what is going on in the business and thus less opportunity to provide analysis and advice.  Remember that fixing bookkeeping errors is a commodity service.  Perhaps it must be done but it’s not the kind of thing that endears an accountant to his or her client.  What the client will truly value is help with making better business decisions, and that requires visibility into the client’s records.

The solution to this problem is to put accountants back in control of the process.  What’s needed is an accounting package of software and workflow which will give the accountant easy visibility into the client’s records without all the cumbersome file transfer overhead described above, and which will thus facilitate prompt and timely advice to the owner.  Fortunately, that solution is available today at a reasonable cost and effort! Put the Accountant in Control Taking control of the client support and the advisory process begins at the transaction level.  If the accountant can limit client access only to the functions they can perform, then many time-consuming errors can be eliminated.  Adjustments can be made in a more timely fashion and thus enable more accurate reviews and suggestions to the owner.  Taking control of the transaction process simultaneously allows the accountant to take on a more valuable advisory role.  For many business clients, the accountant can become a Virtual CFO and remove a major non-productive task from the business owner, allowing him or her to devote more time to the core needs of developing the business.

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