Why Accounting Software is Not the Real Threat to Your Firmby
Are you an accounting or tax professional worried about the automations, integrations, and “cloud-ified” technologies eating away your traditional and future revenue? This is a wake-up call.
Seriously. It is NOT accounting and tax software that are the threat to your revenue and existence. Here is something you may have seen in recent times (see below):
Or how about this:
Did you notice the “industries” covered? Do you have CLIENTS in those industries? If yes, you want to pay close attention. These (and many more) are the so-called “marketplaces” created by YOUR accounting software providers.
There is a new storm already in motion, it’s just that you have been, until today, looking at a more familiar storm. No, it is NOT just the “automated bank feeds” and “conversion of scanned receipts into data” that will reduce the work (and possibly revenue) at your firm. There is a far wider and dramatic “ground shifting” that is happening, probably in a stealth mode.
This is NOT a doomsday prediction. On the contrary, this is a facts-backed opportunity hint for accountants who want to ride the next wave of technological disruption.
Pay Close Attention to Technologies Your Clients Use
Let’s say you have a client in the nonprofit sector. Do you remember the name of the software that client uses to collect and account for donations received? You might be surprised to know that online donations now appear straight inside the accounting software of the organization, without the need to enter the details manually into the accounting software.
Most likely, you are not too keen or aware of technologies that your clients use to run their own day-to-day business processes. But, you need to start knowing and understanding the technology shifts happening in the industries/professions in which your clients operate.
- Payment processing is an enormous industry; the amount of money moved daily is simply gigantic. And hence, even a very small amount of fees levied on money movements makes huge business sense for technology players in the payments marketplace. And money movements ARISE from accounting transactions or RESULT into transactions recorded into the accounting systems.
- For many years, financial transactions went through data-paper-data-paper cycles (i.e., invoice entered into a system – printed and mailed/emailed to customer – customer entered it in her system – check printed and mailed – check data entered into the system, and so on). The “common data points” were always available. It is only NOW that diverse systems have started “talking” with each other. And accounting softwares are making the integrations easier (via open architecture, APIs, and cloud and Internet) to make “data” sharing far more possible and easier. It means the “manual work” at accounting firms, to record financial transactions into accounting software, WILL BE increasingly done by the software itself.
- Clients’ “business operations” software will be originate and deliver the transactions into accounting systems, potentially bypassing you, the accountant.
How it All Impacts Your Current Business Model?
It is, obviously, a stealth attack on the foundation of revenue generation for your practice. Your clients will NOT pay you anymore for the “work” that you do with your hands, but rather by the value and level of the service you provide.
They will come to you for leveraging your “knowledge” of accounting, finance, and taxes. But be forewarned: Even the industry-specific usual “business analytics” will be done by the new-age technologies.
It is NOT the efficiency or the productivity or the cost control on your own operations that will help you fight this stealth-onslaught on your revenue. Gone will be the days when you could gain competitive advantages by out-resourcing, outpacing, and out-knowing your competitors.
It is the SHIFT that you will do to create the services your clients will NEED in the future. The key will be to identify the “repetitive” processes at your firm that generate “business intelligence advisory insights” and know that such repetitive intelligence that you draw from the data will NOT generate revenue for you in future.
In short, the technological shift in the way your clients operate their business will change their habits and expectations.
What Can You Do?
- Interpret the data in the context of the dreams, desires, and fears of your clients; and
- Correlate it with accounting, finance, and tax knowledge you have; to
- Create and deliver tailored, intricate, and intimate path-guidance to your clients.
That will be your new business model. Observe closely, you’ll actually build upon your core competencies (i.e., accounting and tax knowledge and experience). It is just that what you “do” with your core competencies will change.
The shift is happening all across the entire technological ecosystem of each of your clients. Watch that space closely.