Much has been said and written about the death of compliance. From it will be totally automated and dead within 5 years or it will never happen, and everything in between.
However most accountants and bookkeepers react to this discussion with either total disdain or maybe with some interest but it is not really relevant at the moment. The reason I believe that this is the reaction is because everybody is busy now. So if we are all busy then the arguments about the future of compliance which is one that I have been hearing now for a ling time becomes less relevant.
But, just because we are all busy is not in my belief a reason to just dismiss out of hand the discussion.
I am not going to go into all of the technology changes. There have been numerous changes that have led to a huge amount of the accounting and bookkeeping function – just think Receipt Bank, Bank feeds, Cloud Accounting, etc etc. Often time though technology changes creep up on us.
Take for example the Frequent Flyer Card. A huge number of people have one in their possession. We take it for granted. But stop and consider the technology. We book our flight online, we check-in online, we check our bags at the airport using the card. That card then talks to the computer systems to know who has checked in, how many bags, the weight of the bags, which flight etc. From this it is communicated to the systems that determine how much fuel to be loaded on the plane, to the baggage handling computers etc. I could go on. The automation behind the Frequent Flyer card is incredible and seems to have crept up on us.
Technology changes can creep up on you in your accounting and bookkeeping firm. We see it happening but don’t stop and consider the ramifications to our business model.
We could discuss for hours the changes that technology has made and is making to the accounting and bookkeeping industry.
But lets have a look at the numbers. The numbers I am referring to are your numbers. The vast majority of firm are growing slowly. To get this growth firms are usually adding more clients. So on the face of it you could argue well the numbers are showing that whilst we are growing (even if the growth is slow) then everything is ok.
Lets digger a deeper though.
Here are some questions for you to look at in your firm :-
- What is your average fee per client
- How as that average fee per client changed in the last 5 years
- Strip out the advisory work (ie. anything that is not core compliance) and see what the fees are left. With this have a look how this has changed over the last 5 years (on a per client).
- Do a detailed 80 / 20 analysis and look at the composition
- What is the percentage of revenue from real business transformation services (I am not meaning standard advisory work but rather real monthly or quarterly business transformation).
The numbers that we are seeing from the surveys around the world are clear. The average fee is stagnant at best and slightly declining. There is increasing price pressure upon the compliance and linked services. What do your numbers say? I believe that compliance is not going to die but you have to embrace every last aspect of technology, automation and outsourcing to remain profitable in this service offering.
What Business Owners Want
You only have to spend a few minutes in Facebook groups or Linkedin groups were business owners are talking to realise that business owners are desperate for help to make informed decisions about their business. Unfortunately though, that few minutes in those groups will also make you realise that small business owners feel that an accountant or bookkeeper and can and will help them grow their business is something akin to a unicorn – a mythical beast.
This has to be our fault. Accountants and bookkeepers have allowed themselves to be bogged down in compliance work often time with clients they really don’t want to work with. In the process they are not focusing on their ideal clients and offering them these transformational services that business owners want.
If you cam across a business as a client who had these issues I am sure you would give them the clear advice – Identify your ideal client and work on solving their problems.
I believe that many accountants are reluctant to narrow the focus of what they do because that feels risky. But the present situation of working hard, not making enough, feeling the price pressure is not a good one either.
Business owners desperately want help to make smart decisions about growing their business, managing cashflow, and refine streamline processes.
The real question that needs to be answered is – What is the best business model for your accounting or bookkeeping firm?
No matter what is going to happen with compliance it is imperative that you start asking some detailed questions about your business. Some questions for you to consider are :-
- Who are your ideal clients that you will focus on?
- What problems are you going to solve for these clients?
- What products or services are you going to offer to these ideal clients?
- What systems and processes do you need to deliver these products?