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The biggest change in accountancy in a lifetime

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Thursday July 10, 2014 at 1:46pm
Yes, accountancy suddenly got very interesting. We are experiencing the biggest change in the industry in my lifetime. And this change brings substantial benefits to clients, enhancing their understanding of what is happening in their business.

The old accounting business model

With the advent of online accounting software the role of the accountant has changed. The traditional accounting business model was to receive the accounting records sometime after the year end. Take a month or so to prepare the accounts and then spend the entire accounting budget trying to sort out the mistakes, miss-postings and other errors prior to presenting the client with the financial results some 15 months or more after the financial year started.

The whole process was driven by the need for compliance with the tax and other regulatory authorities with little added value in terms of useful up-to-date financial information for the business manager. Accountants did prepare monthly management accounts but the process was time consuming and hence expensive for many companies.

The new world of online accounting

Online accounting has changed that by utilising new technologies and the time and hence cost savings they bring. We are Xero Accounting Software partners and so I only speak from the experience of using our chosen software, however I expect their competitors to offer similar features. Here’s how that software has revolutionised accounting:

Cloud based rather than server based: hosting the software in the cloud rather than on a server means anyone with a secure log-in can access all of the information from any location. As accountants we set up clients to see only what they want and use. For example, you can now check bank balances, profit and loss, monies owed and owing from a mobile phone or tablet.

Direct bank feeds: The bank transactions feed directly into the software. This has several advantages, the obvious one being the transactions do not have to be manually keyed in thus saving time and reducing errors. However, another benefit is that the software allows us to set up rules so that similar transactions are automated, once again speeding up the accounts preparation process.

Third party add-ons: Just like Apps on your mobile phone there are well respected add-ons for Xero, indeed because it is the market leader there are a lot of very good add-ons that we use for clients. For example, Receipt Bank converts all receipts into electronic transactions that are posted directly into Xero. Simply take a photo of your taxi receipt on your mobile phone using their App and it automatically gets saved and recorded in Xero.

Other add in’s include Workflow Max which allows the build-up of work in progress, Spotlight allows us as Accountants to produce monthly key performance indicators and show financial data in a more easily understood and comprehensible visual format. Simply Cashflow allows us to monitor cash flow within a client’s business with direct feeds from the bank and Xero which again drives down costs and makes the production of valuable information much faster.

We have now reached the stage where most new clients use Xero accounts thereby giving them meaningful monthly management information. In this way we help clients run profitable and successful businesses helped by us as their trusted advisors.

Andy Parker
Chartered Accountant, Solihull

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Parker Chartered Accountants and Financial Advisors is the trading name for PLW Advisors Ltd (Registered No. 10396831), and Parker Financial Planning LLP (Registered No. OC347027). Parker Financial Planning LLP is authorised and regulated by the Financial Conduct Authority. All companies are registered in England and Wales – registered office contact details here