Accelerating Past the Competition: A New Role for Smart Accounting Firms
Accountants don’t wear capes, or body-hugging spandex and while they may have thick-rimmed glasses, you certainly won’t see one flying alongside your plane or saving the world from an asteroid impact. But when a company is in trouble, it will be accountants, not Superman, who will save the day.
So erase the image of the bespectacled, tweed-wearing “bean counter” from your mind. These days, accountants are no longer blowing off dusty ledgers and scribbling numbers in columns and they’re certainly not just preparing accounts for the close of the financial year, either. Instead, they are looking into business strengths and weaknesses, cash flow, profits, risks and opportunities, and they now have the technology to give the needed insights to supercharge your efforts and help your company grow.
Thanks to cloud accounting services, data analytics, and a financial expertise, accounting firms can become the accelerators that both startups and small businesses need to take their companies to the next level. Unfortunately, this is not happening enough--accountants are not pushing their clients far enough.
Case in point: currently, businesses are “failing to capture $10 million in potential revenue” because they do not manage their data correctly, according to an Iron Mountain survey. It revealed that through well managed data processes, companies can expect to save on costs and monetize archives. Over 50% of the surveyed businesses saved “$1M or more...over the past year from risk mitigation and avoidance of litigation, with the top 21 percent reporting savings of more than $10M.”
In this rapidly shifting business environment - there are an estimated 100 million new startups opening their doors every year - there is an immense amount of potential to monetize data and save on costs. With up to 90% of startups predicted to fail, a strong financial backbone can be the difference between life and death.
While 30% of Fortune 500 company CEOs used to be accountants, for startups, the route to the chief’s chair is much more varied--and the top dog is often simply the founder. This means there is an inviting space in the market for an accounting firm that not only does the books, but actively provides business insight and takes the leap and becomes an accelerator.
The technology is already here to help businesses and accounting firms form this relationship and accounting firms need to take stock of this huge opportunity. Cloud-based accounting, for example, can improve business relationships if handled correctly, because it brings financial transparency, instant account information and convenience to the client. Clients can more effectively manage budgets against project scope, as well as keep track of sales, outgoings, and cash flow.
And through the automatization of traditional data-entry tasks, filing, and presentation of data, accountants have had a lot of administration taken off their plates. This frees up many of the hours accountants would spend inputting data into spreadsheets (up to 50% of the working week, according to Reddit).
Moreover, data analytics means that accounting firms are well placed to crunch unscalable mountains of data into new and valuable insights for their clients. By using analytics to identify and mitigate risks, highlighting positive and negative trends, and taking on a far more advisory role, the accountant transitions from simple functionary in a business, to a well-respected consultant or mentor.
So how do accounting firms become accelerators?
Success may be a many splendored thing, but it comes with its own challenges - and IRS audits are one of them. Small businesses and startups need a deeper understanding of their own books if they are to survive an official looking through their accounts. That’s where accounting firms as accelerators come in.
Passing on knowledge is a key part of the accelerator model, so by providing clients with education as well as insight, accountants can help clients better understand and manage their own financials.
When it comes to cash flow itself, it’s all very well knowing which checks have bounced and how much money is coming in and out, but if a CEO is unsure of how to react, the numbers become academic. By acting as consultant and offering true mentorship, accounting firms can become the CEO’s number one financial resource.
Leaders not only need to understand the numbers, they also need guidance if they are to understand the risks and opportunities these figures represent. Just like accelerators, accounting firms need to treat their clients as investments for the future.
It’s time to become the central pillar of new business and help clients rise above the competition!