Accounting has changed dramatically since I first studied it in the late 1990’s. I term it Modern Accounting. What went before is Traditional Accounting. If you thought of a Traditional Accountant you might think of the stereotypes – dull, boring, conservative, risk averse, inaccessible. In essence, many people still see a Traditional Accountant as a necessary pain – someone they have to use to get tax returns, payroll and accounts completed but not really otherwise offering any value to their business. And there are still Accountants operating like this today.
So what is Modern Accounting?
It is best to explain Modern Accounting by what it means versus Traditional Accounting. In short it is:
- Virtually delivered services versus hard to arrange Face to Face meetings
- Focus on data systems and integrations you can actually access rather than non systemised data the Accountant can only see
- Embracing process Automation and Efficiency rather than time consuming and repetitive data entry
- Looks forward to the future rather than focussing solely on long gone historical results
- Has data available in real time rather than only being up to date to the previous month, quarter or even year
- Is accessible anywhere in the world when you need it versus being available only if someone at the Accountants can provide you it during work hours
- Is simple and clear to understand versus jargon heavy reporting
What is driving Modern Accounting?
- Technology: Xero and Quickbooks and others are creating fantastically easy to use cloud based technology that mean your accounting data is accessible anywhere in the world when you need it. Not on an Accountants desktop in his or her office and available only when they are at that desk. Furthermore, there is a massive eco-system of complementary cloud apps that allow customised app stacks to be created the wider business bringing integrated and automated data flows incorporating your accounting function.
- HMRC and Making Tax Digital: there is a push from HMRC to make accounting data via tax returns more real time via mandatory online filing. This means businesses must have the software to deliver it and Accountants need to modernise their approach to account for the new requirements. Some simple replicate the old school business model with technology, to no benefit to their clients, but most are changing their businesses to move to less compliance based and more advisory based services.
- The World is now Real Time: Faster decisions are needed: think of how often opportunities now present themselves in your business. The wealth of data and analytics mean strategies can be developed and implemented in shorter and shorter periods. This means your accounting data must be capable of giving real time positions on cash, profitability and business strength, not simply a once a year update 6-7 months after the financial year has finished.
- Customer Service Levels: believe it or not Accountants now focus on valuing and growing their clients with fantastic proactive customer service. This is because they are actually running their business like all service businesses should be, unlike Traditional Accountants have in the past. Being understanding of their clients needs and demands, being proactive in their deliverty of that service and being a genuine business partner helping them grow profitably and safely.
Modern Accounting will bring and end to Traditional Accounting
An Accountant now needs to be more than a just someone who generates your tax return, sends it to you and submits a bill for their time. Those days are over. They are in the history books. And if your Accountant is still providing this restricted service you have to have words, today, or have your business consigned to the history books with them.
Does that sound harsh? Ok let me put a scenario to you. Your car needs a service ahead of its MOT. The MOT is a mandatory, regulatory requirement you have to comply with. If you don’t you will face penalties or worse. So you go to someone who performs car services, a little reluctantly, feeling that you only have to pay for this because you have to and you feel no real value is provided to you. The mechanic takes your car in, services it, you get it back and pay their bill. This is akin to Traditional Accounting.
Now what if this happened instead?
- What if the mechanic contacted you proactively before the car needed serviced, reminded you of this and invited you in for a catch up during which the car could get its annual service as part of a wider suite of services;
- What if he continued to stay in contact monthly, sending you data on your car, benchmarking its performance against other cars he worked with and being really supportive in any issues you were having with the car?
- What if he suggested new tires that had just come on to the market or a new model of your car with efficiency features he knows you will value?
- What if he understood your wider goals in having the car such as space needed for family, a belief in electric, green efficiency etc.?
- What if he attended industry conferences hosted by your car manufacturer and passed on his wealth of knowledge gained to you?
- What if he spoke proactively about this knowledge and you recognised him accordingly as a thought leader and expert in this space?
- What if he didn’t work with all cars and instead specialised in your car manufacturer only, further increasing his specialist knowledge that you could gain from?
- What if his continual support and service throughout the year meant the cost of the service was covered by the value he had delivered and savings you had made as a result?
Sound goods doesn’t it? Would you still use the first mechanic? Then why use an accountant that holds all your figures in a system you can’t access and only tells you how you’ve done months afterwards when it is too late to do anything to correct it. Technology is generating massive efficiencies in how accounting data can be collated and analysed, but these need to be enjoyed by the client. We are aware of traditional accountants slowly embracing cloud technology, but effectively only using it to make their own processes more efficient and maximise their own margins. You need to be using cloud technology to make your business more efficient across all functions and inviting your external accountancy into those processes.
This leads to a beneficial squeeze on the time PREPARING the data and leverages much more time for proactive ANALYSIS of the data. You want an Accountant that understands you and your business and is in complete alignment with helping you generate success i.e. no longer paying by the hour and instead paying a clear cost for the value delivered.
Modern Accountants take on a Partners role in your Business
A successful Modern Accountant will be a Partner for you and your business. This means:
- Being proactive and accessible for you
- Having a strong network they can leverage to generate you quick effective solutions when required
- Tech savvy and aware – embracing innovation and understanding how to apply it to your business
- Finding you partners and service providers for solutions coming out of accounting work e.g. strategy development, funding needs
- Understanding and explaining the KPIs that are most important for YOUR business
- Be Industry specialised and not operating as a one size fits all solution.
Is your accountant doing this?
Modern Accountants also focus on having empathy with the Owner
A successful Modern Accountant will take time to understand you and your WHY. Why did you go into business, what is your bigger picture and what are the ultimate goals (professionally, personally). They will help them help you create a wider impact and legacy.
Most importantly they will be living this mantra too and demonstrate a clear vision of where they and their business are going. As an illustration, I had a dream to make Nuvem9 completely digital and virtual and run it from anywhere in the world allowing my family and I the flexibility to live in new countries and cultures. I am today writing this from my current home in Portugal. This move has delivered a massive personal life goal for me and is why we at Nuvem9 take such time and focus to determine what is driving our clients at that core personal level.
This is Modern Accounting and businesses across the world are embracing it. Rather than operating blind in how their business is performing and not being to speak to their accountant they should now have real time access to their core data and KPIs and the support of a genuine partner in their business. This partner should be knowledgeable and motivated to make your business succeed and take on a clear semi-mentoring role in helping you as a person achieve your ultimate life goals.
Are you getting that Accounting service? If not you deserve it and we would be happy to arrange a free video consultation to explain more about how we can deliver it for you. Contact us today for more information and we would be delighted to show you our enthusiasm for Modern Accounting techniques and services!