Why process and efficiency are crucial elements of a digital firm
Will Farnell recaps earlier articles on transitioning to a digital firm and digs deeper into two key elements.
We are now at month five of eight so probably time for a recap of months 1-4 before we continue to look at the topic of process that we introduced last month.
The series of articles is based around my Digital Firm Wheel that formed the basis of much of my book entitled The Digital Firm.
We started the series by looking at the need to change the way we run our accounting firms, the shifting expectations clients have based on the way they buy services generally. A generational shift running alongside the ability for technology to disrupt any industry means as firm owners we have to regularly think about what we do and how we do it. This really is all about strategy and the decision we make about where we take our firms to remain competitive.
The second article looked at my favourite topic, pricing. I enjoy talking about pricing as it’s the area I got most wrong and as such learned some great lessons that I am able to share. The article discussed why we need to focus on the outputs we deliver rather than the inputs we make associated with that output. Our clients don’t care about input just the outcome. It is imperative we are able to price consistently and openly, not forgetting we live in a subscription world and clients like certainty.
We then moved onto the single most important element of digitalisation. Client experience. Technology for technology's sake is pointless. Why would we want to make any changes that don’t enhance the experience we deliver to clients? Anyone who works in an accounting firm cares about the client - therefore, delivering more and better for the client is the catalyst for any change you might make.
That brings us up to date. Last month I introduced the topic of process and the closing statement was that ‘you as the accountant have to own the process’. We talked generally about why process is important and how we needed to educate clients on the process they needed to follow. In this month’s article I want to focus on a specific example of how the right process, people and technology can affect your firm for the better.
The role of daily bookkeeping
I’m sure at some point you shared a viewpoint that I held back in 2008. Prior to my firm using cloud accounting tools I didn’t really do bookkeeping. Part of me thought, I’m an accountant not a bookkeeper. Besides that, it's low value work and I can’t deliver it profitably. As well as this the data was locked on a computer at the client’s office, challenges with version control and so on.
In late 2008 I partnered with KashFlow and by the middle of 2009 we were their largest partner firm and by the end of 2009 every client I had used KashFlow and continued to do so until about 2015 when we moved our clients to Xero. Suddenly the opportunity of bookkeeping became more viable and in 2011 when we partnered with Receipt Bank the penny dropped. We were able to design processes that meant we could get data from clients daily and in turn deliver them better access to data to run their business.
Over the next few years and more so once we moved every client to Xero in 2015 we started to play with team structures and processes that allowed us to effectively deliver regular bookkeeping services to clients in a way that was efficient, valuable to the client and, most importantly, profitable: we were after all accountants!
We finally got this right in about 2017. It was trial and error to get the perfect blend of the client doing the bit they needed to do, us using the right level of team members to do the work and the right mix of technology. A perfect balance of people, process and technology. The result of this is that we now deliver daily bookkeeping for around 60% of our clients and we average four minutes per day per client.
I mentioned in previous articles the importance of the client experience. Getting this people, process and tech triangle right leads to our clients having reliable data to make better business decisions. More importantly it means we are talking to many of our clients at least once a week. Given our efficiency we can deliver this cost-effectively for the client and it's one of the reasons that our biggest growth areas as a firm right now is in outsourced finance function work.
The key point here is that the bookkeeping work we do becomes a means to an end rather than an end in itself. It enables us to engage with clients weekly, it gives us a reason to get to know our clients better. It also gives our clients data they would not usually have. The process we have developed enables us to deliver a level of client experience beyond anything we could get operating in a more traditional monthly, quarterly or annual engagement.
Take a moment though. How much impact does client’s current failure in providing you with information have on the turnaround time of accounts in your practice? Can you imagine a situation where you don’t have to ask clients for year-end or VAT quarter information? Our clients send it to us regularly throughout the year, in most cases daily! Your quarter 4 VAT return means you can run the year-end accounts straight away. Year-end becomes month 13. Once again this is about delivering world class client experiences for your clients.
Making it happen
As with anything, making it happen starts with a plan.
What do you want to achieve?
Map out the current process: where are the duplicate steps, what can you take out? Disruption to an industry occurs when you remove the friction. What friction can you remove from your current processes?
Educate your team on your vision, share what you are trying to achieve and involve them in the process. They know what will work and what won’t but focus on the driver for change – better client experience. Everyone cares about the client.
Educate the client!
Most importantly remember ‘you, as the accountant, have to own the process and ideally the end to end process’.
In next month’s article we will discuss the much discussed topic of advisory (other services). If you have great data and great relationships with clients as you talk to them every week you are better placed than anyone to help your clients achieve their own personal and business objectives.
Ahead of next month do revisit the earlier articles to refresh yourself with the themes we have discussed as they will all be relevant for next month’s article as we explore the new role accountants need to play, extending themselves beyond pure compliance.