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Navigating the Digital Shift

Let’s explore the double-edged sword of digital accounting and unveil the impact of software like Xero on the profession, and how to strike a balance in an automated world.

The accounting landscape has undergone a seismic shift with the advent of digital solutions. Recently, Xero, a leading name in online accounting software, announced a milestone of one million subscribers in the UK.

While these tools have revolutionised how we handle accounting, there’s a need for a deeper examination of our dependency on them. As an accountant with over 20 years of experience, I aim to dissect the pros and cons of this reliance, focusing on the intricate relationship between accountants, clients, and software vendors.

The Benefits of Digital Accounting Software

Hands down the number one reason I stayed in the profession was the shift to the ‘cloud’. In 2010 I was looking for a way out, burnt out and frustrated at not being able to provide small business owners with the service provision I desired, and they quite rightly deserved. If it didn’t take years to re-train as an electrician or plumber and a financial burden my family could not afford, I might not be writing this now.

I was spared when along came Kashflow, FreeAgent and Xero.

Here’s why Smart Accountancy Systems Ltd was born back in 2011.

Efficiency and Accessibility: Digital accounting tools like Xero streamlined processes that once consumed considerable time. Automation and cloud-based access meant tasks that took hours could be accomplished in minutes from anywhere. This drastically reduced internal costs like the requirement for an IT services contract, office space and costs, hardware and equipment, we could be more flexible around how, where and when we worked.

Automation of Routine Tasks: One of the greatest strengths of these platforms is their ability to automate mundane tasks. From data entry to generating complex financial reports, software has significantly reduced the manual workload, allowing accountants to focus on more strategic activities. If you have the right strategic thinkers in your business.

Real-Time Financial Insights: These tools provide up-to-date financial data at our fingertips. This real-time access to financial information is invaluable for making timely, informed decisions. We were able to answer client queries as we went through the year at the time, they needed not 4-6 weeks after the event.

The Downsides of Over-Reliance on Software

Misconceptions from Advertising: There’s a growing concern about how these software’s are marketed. Advertisements often oversimplify accounting, portraying it as a task that can be managed with a mere click. This not only underestimates the expertise of professional accountants and bookkeepers but also misguides clients about the complexity of accounting tasks.

“Accountants don’t need more software or to be sold another shiny new toy that “will make our life easier”. What a joke. Nothing has been made easier by any of our software it’s just raised expectations that we should be doing it faster and cheaper and to a level of perfection with more “value add” for free. It’s all being done by the software after all! It has commoditised our profession. Our life as accountants has NEVER been harder than it is right now. We earn less for doing more and for working non-stop while tolerating levels of stress and abuse that is inhumane.

Save yourself and get out and away from this profession totally. It’s only going to get worse as the small businesses we serve get more and more under pressure and therefore expect more support from us for free.”

Hard to read but these are the words of a Xero customer. This is just one example of many I could provide. It pains me that people feel this way – daily.

The expectations put on accountants and bookkeepers because of this are getting to an inflection point.

Those small business owners choosing to do it themselves with little to no training are making a hash that needs tidying up by someone. We can no longer ignore the client spreadsheets and start again from the source records. The software is the source records!

To detect and correct errors constantly is a demoralising job and not the best use of our time and client fees.

Loss of Personal Touch: The impersonal nature of automation can erode the personal interactions that form the bedrock of client-accountant relationships. While technology offers convenience, it cannot replace the nuanced advice and personalised service that experienced accountants provide.

Software should be used to enable and enhance our communication strategy with clients not replace it. Software should not be a shield from which to hide from client interaction. Software should be a platform to build deeper relationships with clients providing greater financial and emotional reward for both parties.

We need to stop hovering up clients like it is a land grab. That only serves the software vendors, and this should not be a master and servant relationship.

Dependency Risks: Over-reliance on a single software vendor can be risky. Issues like service disruptions, changes in software policies, changes in price (Dext I’m looking at you) or data security breaches can have far-reaching implications on both accountants and their clients.

The last 10 years has seen a sea of washed-up apps that just never quite made it. The client accountant relationship is one built on trust. Software vendors need to understand that relationship cannot be tarnished or put at risk for the promise of x% discount on subscriptions. We are not software resellers or at least we shouldn’t be.

Building your internal workflows, training programmes and marketing strategies around the fad of the latest shiny app can leave you with egg on your face.

The Complex Relationship Between Accountants, Clients, and Vendors

Software Vendors Playing Both Sides: A delicate yet potent issue is how software vendors partner with accountants while simultaneously marketing directly to our clients. This dual approach can create conflicts of interest and impact the trust between accountants and their clients.

Impact on Client-Accountant Relationships: The direct marketing strategies of software vendors can undermine the perceived value of professional accountants. This shift challenges us to redefine our roles and the unique value we bring to our clients.

Long-Term Implications for the Profession: This evolving dynamic prompts a critical question – how will the accounting profession look in the future? We must consider how to adapt and evolve to maintain our relevance in this digital age but what does that look like?

Who knows – I don’t.

Recommendations for a Balanced Approach

Finding the Right Balance: It’s crucial to find a middle ground where accountants can leverage the efficiency of software without losing their irreplaceable role in client relationships. We need to lead with the service and stop selling the software. It is not a USP or differentiator – you are. I find this quite bizarre behaviour.

Imagine a builder turning up to your house and trying to convince you to let him do your extension solely on the basis that he has the latest cement mixer – who cares?

Building Diverse Skills: To stay ahead, accountants should focus on developing skills that go beyond what software offers. Emphasising advisory roles, personalised financial planning, and strategic consulting can differentiate us from automated solutions.

Vendor Selection and Contingency Planning: Choosing software vendors should involve careful consideration of their policies, reliability, and alignment with our professional needs. Additionally, having contingency plans in place for potential disruptions is essential.

Speak to your peers to get a sense of what it is like to work with vendors and get the truth not the sales pitch. Most software vendors are start-ups and scaleups with their major purpose being to maximise shareholder wealth and their long-term goals may not align with yours. In fact, if they are offered enough money, the business goals go out of the window altogether.

There is no amount of cupcakes and vendor swag that offsets the potential damage done to your client relationships.

Conclusion

The digitalisation of accounting is a double-edged sword. While it brings efficiency and innovation, it also poses challenges to the traditional accountant-client relationship and the broader accounting profession. As we navigate this digital era, it’s imperative to maintain a critical perspective, balancing the benefits of technology with the indispensable human element of our profession.

Let’s engage in this ongoing conversation, share experiences, and collaboratively shape the future of accounting in the digital age. Let’s not allow our pursuit of achievement, recognition, and adulation from software vendors cloud our judgement on what is important – our clients.