Imagine the ability to receive instantaneous information to help your clients on the fly. Or better yet, help clients without them even knowing.
Welcome to the world of predictive accounting
There are a few firms that get this – such as Interactive Accounting, a full-service accounting firm that offers bookkeeping, tax, accounting and advisory. They also help with capital raising. But how do they do it … and can you do it too?
Lisa Callaghan is the managing director. She says that they’ve learned a lot by being a 100 percent cloud practice. And, they’re one of a handful of firms that I’ve seen that truly knows what it means to be connected. From a firm perspective, they are better able to plan, schedule, allocate staff and understand capacity.
Enjoy better client relationships
With real-time information, a small business can easily see what’s going on and identify problems immediately. And being able to review the same real-time data with a client who’s in another location blows them away. Lisa bases much of Interactive Accounting’s success on the cloud and the improved relationships it has enabled them to nurture.
Predictive accounting takes things a step further. Imagine having a high-growth inventory- based client with 30-day invoice terms – then being able to warn them six weeks ahead that all their working capital will be locked up in inventory and debtors. With this vital information, the accountant can proactively advise their client about the concern and help them with financing options.
Many times it’s hard for a CEO or business owner to admit that things aren’t going right. And some find it hard to ask for help. When the data is there for you, however, it’s easy to begin a simple and proactive conversation. Clients love it.
Embrace a new work style
How does Interactive Accounting do it? First of all, Lisa says her cloud practice is about more than just going paperless. "It's a work style," she says. "We use technology to do rapid response. Most of what we do is the software-as-a-service (SaaS) model. We still use a few desktop items, but even those are on a hosted desktop." Staff members bring their own devices – as long as they're Apple, to keep everything consistent. The firm doesn't even have a landline. But although it's based in Sydney, Australia, it can handle clients all over the world, and its model works just as well in the Northern Hemisphere.
A decision made five years ago proved key to the success of their business model. They decided to only work with businesses who were using true online accounting software (in Australia, it’s only Xero) or that were prepared to switch to Xero. This was important for two reasons. First: To be able to provide this kind of proactive service, they needed real-time access to client data. Second: If they want to streamline their internal process, they needed the firm and their clients to be using the same accounting platform. According to Lisa: “This completely eliminated the need to re-key data from their software to ours. This created one source of truth.”
Build ahead of the curve
The clients have been delighted with the way they work, says Lisa. "We branded ourselves as 'interactive' by name and nature. We made our mission and brand clear, and people saw from the beginning that our offering was different. Our mission is to build an innovative accounting services company ahead of the curve." She agreed this might not appeal to some potential clients who are a little more conservative.
But for a great many, the response has been: “This is exactly what I'm looking for," says Lisa. “They love working with us and many were frustrated with their previous accountant’s communication style and response times. We often hear: 'They couldn't keep up with us.' And now our clients are trying to keep up with us."
Indeed, Interactive has made "scalable" part of its mission statement, and that means for its clients as well as itself. "We've been drivers of change – using Xero, Receipt Bank and Bill.com. We're cutting down on data entry and helping clients get a sense of their cash-flow, scheduling calendar invites, and more."
“When you've got everything together, you're set for the future,” says Lisa. "We can scale so easily. Someone new joins the firm? It takes just 20 minutes to set up the new employee. No additional costs, no additional software.”
Interactive was not afraid ask itself the tough questions and ran with their answers. "Many firms are experiencing compliance-fee pressure and ask themselves: ‘How do I streamline costs and processes?’" says Lisa. “You basically have two options – you either outsource to countries with a lower labor cost or you use technology to make the process more efficient. Obviously, we specialize in the latter.”
Free up your day
The end result? “The system we’ve put in place has enabled our growth, and we’ve gained more clients than in the traditional way. I feel that my day is so much more efficient. I'm not bogged down in administration," says Lisa, followed by a pause. "I'm always creating value."
About the author:
Jamie Sutherland is president of Xero U.S.