How to help clients efficiently harness the power of technology.
The use of technology in accountancy has escalated over the last five years – much as a consequence of Making Tax Digital and the increase in the use of cloud accounting software such as Xero and Quickbooks.
This has brought with it a number of significant benefits including easier access to data, time saving automations and the ability to provide new services and services to clients. However, other changes are the costs and charges associated with using these applications.
Not in all cases will these costs be new costs. Some of these solutions will replace the old, typically desktop, applications that were used before. However, the vast increase in the solutions and tools available and the new applications that allow accountancy firms to offer new services have resulted in a significant increase in technology costs in accountancy practices today.
However, should these costs be viewed as another overhead for the firm or are they in fact a chargeable asset for the business?
Technology in accountancy firms today
If we compare accountancy now to five years ago, there have been huge changes in the use of technology. Now everyone is using computers, sending emails, using online applications both for the management of the practice and for their services to clients.
There has been a massive increase in the software solutions available for accountants. Now accountants can look beyond the core accounting software and can use add-on applications (the apps) and provide a much wider solution to clients.
There is now a huge choice of apps available and many have direct integrations with core accounting software like Xero and Quickbooks. This, in turn, allows accountants to quickly deliver solutions to clients which will save them time through automations, improve workflows and controls, and provide insightful data to allow the business owner to see how their business is performing.
With all these apps available, it is very easy to lose focus – the Xero app marketplace is full of lots of new and exciting apps to tempt us! These apps allow us to offer new and exciting solutions and services to our clients and it is easy to feel like a child in a toy shop tempted by everything in there! However, it is very easy for these app subscription costs to build up and become a significant overhead for the business, eroding the financial benefits they may bring.
Bundled deals and discounts
It is not uncommon for apps to offer discounted prices for a period of time. This allows the accountants to try the application with their data and with their clients and then decide if the app is something they want to continue with in the future.
However, it is easy to sign up to these discounted offers and then not have the time to try the app out properly as work commitments take over. Then when the discount period ends, you just leave it there and decide you will get round to trying it in time – but you rarely do and the costs are incurred month after month.
Some apps also offer firms bundles of their apps for a reduced fee so the cost per licence is significantly less than the cost of one. This is very tempting, but it is not uncommon to find that all these licences are not filled, and these ‘empty licences’ are an overhead the firm then suffers each month.
So how can we stop this from happening? Is technology not a cost but actually a chargeable asset for the firm?
Technology as an asset
When we are using the technology to deliver a service to a client, this should not be seen as an overhead that the accountant has to suffer. This technology is allowing the accountancy firm to deliver a service to meet their client’s needs and so they are adding value. This is therefore a chargeable service that the app facilitates and is therefore chargeable.
As a result, the costs of the technology used to deliver the service should be included within the fee – just like any other business asset – and not split out separately.
These should be fully recoverable so it is important not to over-commit yourself to a vast array of expensive subscriptions if these will not be recharged and a targeted recovery achieved for the work overall.
Strategy and focus
The first thing is to have a clear strategy for where you are going with your business, what you want to do for your clients and what you want to achieve. Then build your app stack around this and avoid losing focus and subscribing to apps that will take you away from this goal.
Start with the core and build up from there. For example, migrate clients to the cloud software and then add an app for invoice processing to remove the need for manual entry - a real time saver.
Also ensure that this is a service that many of your clients will benefit from having and will be willing to pay a little extra for. Start with the broad applications that work across many sectors and are ones you want to use with all your clients.
Having a clear focus will ensure that you work on one area at a time and deliver a solution to your clients that they need.
Slow and steady
It is tempting to quickly add different apps so that you can quickly offer a whole range of services. However, taking it slowly and ensuring that you get the maximum use and value out of the app before you add any more is a much more controlled approach.
This ensures that you (and your team) are confident with the app and that you have rolled it out to a number of clients before you look to add any new apps to the mix.
Control your costs
Do you know how much your subscriptions cost your firm per month? It may seem obvious, but it is very easy for payments to be made on credit cards and by direct debit each month without the total costs being monitored. Sometimes it can be a real shock when you assess the overall costs of subscriptions to the cloud software and apps.
Monitor your costs monthly and keep these costs under control. Look at the recoverability, look at where you have any unused licences and any underperforming services and take action to prevent it rolling on into future months – this may be cancelling subscriptions or focusing your marketing efforts on that service line.
Also, when deciding on the apps to use, look out for those which have a flat fee per firm regardless of the number of clients using the app. These are starting to become a little more popular and can offer significant cost savings if you use the one app for a number of your clients.
Decide on your pricing methodology
How are you going to price your services?
This is a key consideration and there are a number of options available including:
price per month based on transaction volume for that service
fixed price per month for that service
With service packages, the client buys a service that includes use of the relevant apps. An example could be a general bookkeeping and cashflow management service which would then include the apps for invoice processing, approvals, cashflow management and the core accounting software itself.
It is critical to ensure that you have the processes in place and the people to deliver this service first and then you set a price for the overall package which includes the costs of each of the apps.
In all cases, ensure that the fee includes the costs of the applications so that these are not an overhead that is borne by the firm. Also, remember that the subscription fees are often billed a month in advance so you should consider this when you are agreeing fees with the client and the payment profiles. If you do not bill in the same manner, you could then run into cashflow issues yourself.
Technology has become a central part of many accountancy firms today and with it has come the potential for large subscription fees. However, with a clear strategy, focus and billing structure, these costs become chargeable assets of the business which allow the firms to offer their clients a wide range of services that will, in turn, save them time and help them run their business in an efficient and effective manner.
Caroline Harridence – founder and director, Counting Clouds Cambridgeshire