Accounting in the digital age: dive deeper into advisory
Since the rise of digital, the accounting industry has gone through a quantum shift. New and emerging technologies like cloud computing, artificial intelligence (AI), automation and big data have created a new kind of accounting. Suddenly the focus is on ‘business advisory services’ rather than the standard compliance areas of accounts and tax.
But why has this change happened so quickly? And how can you keep up with this evolving accounting landscape?
With Xerocon, Xero’s annual tech conference, coming up soon on the calendar, let’s take a look at the growing need to explore the world of advisory.
Modern business owners are a tech-savvy bunch. The average startup uses three to five apps to get operational, adding business and fintech solutions as the company grows. Owners are likely to be very familiar with cloud as well as Software as a Service (Saas) and will happily run their business online.
45% of small businesses use cloud accounting and 57% of midsize companies use online accounting as a core part of their SaaS setup. In short, businesses are streamlining and automating much of their low-level bookkeeping and accounting work in-house. So, why do they need an accountant?
In essence, what business owners need more than anything is a trusted adviser. Someone who understands their business and who will:
- Help them create an effective cloud-based financial system
- Review and analyse their management information
- Provide sound, impartial advice on their business strategy
- Look for opportunities to improve performance and profitability
These changing client expectations mean that accountants need to become trusted, multi-skilled business advisers. But where do you start? If your core business model has always revolved around compliance services, you’re going to need a new strategy.
Advisory services focus on enhancing performance and growth for your clients. To do this well, you need a great client/accountant relationship. When you know your clients well, you understand their financial goals. You can also spot the pinch points and know when a guiding hand is needed to keep them on track.
Offering the right scope and breadth of services is vital for your long-term success as a firm. So it’s important that you’re able to support your clients across the whole business journey. Xero defines the three core areas of accounting services as:
- Compliance – basic bookkeeping, accounting and tax tasks
- Advisory performance – cash flow management and financial performance
- Advisory strategic – future-facing strategic and business planning advice
A lot of the compliance is now taken care of automatically by solutions like Receipt Bank and HubDoc. Firms can then focus their revenue-generation on upselling services that sit within the performance and strategic advisory streams.
Only 44.1% of UK businesses survive for five years or more, according to the latest figures from the Office for National Statistics. The biggest cause of these failures is generally a lack of cash, making cash flow and funding advice key areas to target as an adviser.
Businesses need to be in a positive cash flow position if they’re going to stabilise, expand and scale up. Helping clients to achieve this positive position – and to access the right additional funding – is central to your advisory performance offering
Clients will expect you to:
- Provide clear cash flow reporting and analysis
- Help them access funding and maintain working capital
- Give solid advice on improving revenue and boosting cash performance
You’ll need the right cash reporting tools to do this. Glance through the exhibitors list for Xerocon and you’ll see that there’s no shortage of Xero-integrated reporting apps that fit the bill. Apps like Fluidly, Futrli, Spotlight Reporting, Float, Fathom and Clarity connect to clients’ accounting data, making it easy to run cash statements, forecasts and detailed financial projections.
When cash and working capital do take a dip, fast access to additional finance is another important tool in your advisory toolkit. MarketFinance’s choice of finance solutions can be accessed quickly, with all the required financial data quickly ported over from Xero.
Embracing change can be a challenge, but transitioning over to an advisory-led strategy is fast becoming a necessity. With businesses demanding more value-driven support and insight, it’s the firms that can offer this advice that will grow, evolve and succeed.
Xerocon is only a few weeks away and could be the ideal introduction to the new world of advisory. Take in the keynote speakers, get involved in the advisory discussions and talk face-to-face with the many exhibitors and reporting app providers.
As a Gold Sponsor of this year’s London event, we’d love to see you at the MarketInvoice stand. Small business is a team sport and you’re a key player in your clients’ success. Let’s work together to provide them with more choice than ever before for how they fund their businesses.