The future of bookkeeping has been a hot topic since cloud accounting became mainstream, but those on the ground know what it takes to remain relevant, agile and competitive in this evolving profession.
Truth serum for the business of bookkeeping
Technology has played a vital role in the bookkeeping industry for as long as I can remember. When I first became an MYOB Certified Consultant, knowing how to use the software and process data wasn’t enough. In fact it was just the beginning. I was expected to know the basics of network computing with some of our clients requiring their software to be installed on servers, network peers, and local computers and please don't get me started on corrupt files. I found myself not just providing a high-level bookkeeping service, we were providing consulting services on installation and use of their software.
With the inception of GST in Australia, the business of bookkeeping became a real business for many people who were doing books on the side for friends and family. Bookkeepers suddenly were in high demand and highly valued.
The industry encountered tremendous growth that saw the ATO set up a Tax Practitioners Board to regulate bookkeepers providing BAS services. As a result, the BAS Agent was born and so was cloud accounting.
Cloud accounting software companies tactically positioned their product to be plug and play for any small business owner who knew how to turn on a computer.
Many small business owners bought into that marketing hype and forged their way in setting up their accounting files.
The fall from grace was emerging for some bookkeepers. The rapid change in our industry was well and truly happening before our eyes.
Not everyone feared this changed.
Some took the opportunity to leverage off new-found technology and morphed themselves and their business into the world of cloud accounting and the eco-system. Today these firms are reaping the benefits of being early adopters.
So the question remains are all the skills and experience we bookkeepers have acquired over the years working in what is now known as a dinosaur environment gone to waste? I don't think so!
More so than ever, today’s bookkeeper needs to draw from those strengths and experiences to serve the client of today.
Industry peers consistently tell us that for us to be relevant today, we need to be providing 'trusted advisory services.' Every time I read this my jaw hits the ground in utter dismay. What do people think I have been doing all these years? If I wasn't relevant would my business have survived 12 years?
My advice is to not get caught up on these overused buzz words like 'trusted adviser' - your clients have been doing business with you because they like you and trust you.
Some truth serum here, staying relevant is not an easy feat. It would have suited me more to bury my head in the sand and continue providing yesteryear-type services and solutions, but I was not one to just sit on the sideline. In order to build and maintain a competitive advantage I needed to be part of the change, and I wanted to be at the forefront of using the latest small business accounting solutions and stay a step ahead.
Growing your practice and staying ahead of the pack is never without challenges. The biggest hurdle I faced in growing my practice was staffing. Although I had upskilled myself on all the accounting packages and major apps, I found there was a massive skills gap shortage in the market. Finding bookkeepers who were agnostic across QBO, Xero, Saasu, Reckon and MYOB was almost impossible; I now have a greater appreciation to those that choose to niche in one particular product as it does make it much easier to recruit, train and retain staff.
Let's be real here, technology in the accounting industry does not sit still for a day which means that today's bookkeeper needs to be a lifetime student learning new technology and skill sets.
As the owner of a growing bookkeeping firm, I find my role evolves more around training, supporting and leading my team. Further to that the challenge is how do I maintain this while also trying to grow a practice that no doubt sees me doing less billable work for every hour spent. It’s about knowing which hat I must wear and finding the right people to fill the right seats in the business and furthermore it’s about having the right pricing strategy and delivery model.
Value-based billing is how I do it! Value-based billing starts with re educating the clients - so I educated my clients that it was all in the value of the outcome, not the duration or frequency it took. We started to package up our services on an annual basis and included the cost of software, add-ons, client meetings, support, BAS preparation, etc. The concept of knowing that I was earning an income while being able to work on my business was a welcome change.
We recently increased our prices by 3 per cent. The fallout was losing one client, but the upside was two of them insisted they pay us more if we could guarantee faster turnaround times to their emails. It’s evident that some clients will value service over price and others will not. Although this started out as a price increase strategy, by default it ended up being an actual exercise in how our clients value us.
No one can accurately guarantee what lies ahead for the bookkeeping industry except we all know that machine learning, artificial intelligence (AI) will get better and become more reliable. We cannot hide behind this nor should we fear it.
There are several ways you can try to future-proof your bookkeeping business to ensure it remains relevant and agile:
Communication is essential
- Ensure you have a clear expectation of what your clients want from their accounting system and your services.
- It’s just as important to identify what you won’t do as well as what you will do.
- Be clear on the value that you will deliver using cloud technology.
- Highlight the benefits to them like real-time numbers, regular financial reporting, no messy backups, and instant updates to name a few.
- Maintain face-to-face client visits where possible, otherwise out of sight, out of mind.
- Use these meetings to review your client's results and attempt to get to know them better.
- Shout them a cup of coffee; everything is better over a beverage.
- Show a genuine interest in their business.
Know their numbers
- Get upfront, close and comfortable with their numbers.
- Identify areas of concern or acknowledge their wins when they have a big sales month.
- Provide your clients with reliable, readable and regular data.
- Look for numbers beyond the profit and loss, introduce non-financial KPIs that get them excited.
- Help them understand their key profit drivers and what the impact these have on their business.
Automation and innovation
- Start looking at your client’s business from a holistic approach, not just numbers.
- Identify areas of improvement for automation.
- Help them become a business of the future – innovation can be an improved process.
- Suggest a particular add-on that could assist them scale and grow.
- Educate your clients on the latest apps and tools that may benefit their business.
You have now worked hard to build a fantastic framework to engage with your clients but what guarantees do you have that they will stay with you?
Unfortunately, we don't have any!
My crystal ball tells me to expect the unexpected and be prepared.
Do you scale, compete or sell?
Traditionally a bookkeeper’s competition was that of another bookkeeper, but I can categorically say that in today's world we rarely lose clients to another bookkeeper.
Our biggest competitor is accountants that offer in-house bookkeeping services.
The cloud brings a revolving type of client.
Unfortunately, loyalty, morale, and ethics don’t come into consideration when they are price driven. Nothing is keeping them glued to us.
I cannot see this trend declining. As bookkeepers in practice, we need to consider the long-term effect this places on our business. It is more important that we now work ever so closely with accountants to ensure the client stays loyal to both the accountant and the bookkeeper.
I have already witnessed some bookkeepers sell their business to accounting firms where they are employed under an arrangement to manage the client base. I have also seen bookkeeping firms merge and buy others out.
It’s important to be mindful that we are all at different stages in our lifecycle. For some of us the timing is right to sell now and capitalise on the attractive deals being offered, or we choose to make every effort to ride the wave and be part of this exciting industry that will surely test our stamina and perseverance.
Lielette Calleja, director, All That Counts