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Guy, Author at The Latest on Accounting Tech for SMEs

About Guy

Tax Manager at UHY LLP

How Firms Can Cut Back on EOFY Admin with the Cloud

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End of financial year is always a busy time for accounting firms. However, the types of challenges a firm faces depends heavily on how much of the practice runs on cloud software.

A firm that moves its operations to the cloud will generally find it much faster to roll things over to the next year.

Conventional firms running their practice management and client accounting software on servers typically need to carry out back-ups, paper for engagements and checklists, updates of new software via disk or download. This creates higher risk, higher cost and just a general lag compared to using cloud-based systems.

A conventional firm is also behind the ball on efficiency; it lacks the ability to audit, digitally track actions and easily follow up any step taken. It’s pretty hard to track whether the postman has delivered your documents. And how many firms can monitor outgoing mail for engagement letters when they are stuck on Lotus Notes on an IBM 386?

We live in the age of the internet of things – even lightbulbs now connect to your wifi network. Yet accountants are still in the dark ages of paper because of a fear of change. Yet I bet they all use internet banking to check their bank balance.

The table below highlights the main differences at EOFY for a cloud versus non-cloud practice.

 

task Non-Cloud Cloud
Perform backups (practice management) Take a backup of everything before updating for next year’s server.(whether in private cloud or physically in the office) Cloud providers take back ups regularly so you don’t have to.
Roll over desktop software (practice management)

Take a back up before receiving the updated disk to install on the server.Then rollover your ledger files. This may take a while and you may have to restore backups and repeat.

Aren’t you lucky you pay your IT guy an hourly rate.

 There’s no upgrades to install for cloud products.You may still have tax sitting in a private cloud that you need to rollover though.
Send re-engagement letters

 

Managers or partners review clients’ previous fee for service engagements and the firm’s profit/loss based on time.

Then use an Excel spreadsheet to decide what the estimate will be for next year.
Alternatively, they just mark up by 5 percent.

The admin team then sends a survey (see below) and confirmation of next year’s engagement (if they send one at all).

 

 The review process still takes some time and a 5 percent increase may still be applied. Hopefully the partners look at the services to be provided and the fees to be agreed for the current year.Practice Ignition firms centralise this process and track when clients open their engagement letters, receive their comments, and have it all tied to workflow, invoicing and now payments in their back office.
Create annual checklist

 

Copy last year’s Word document and then print out to send with the re-engagement letter (above) to the client to sign off.

Then manually follow up answers and documents to be scanned in or filed in compactors awaiting the job commencement.

 You can create these in a cloud survey tool like Wufoo/Survey Monkey or Get SQRL and track the opens, replies and answers from clients.
Last minute company setups Paper forms from shelf company provider to be filled out and hopefully received within a week in a nice binder. Visit registeracompany.com.au or the like and create a company on the spot (and can even get the ABN instantly in some cases).
Review company performance

 

Print out timesheets or dump into excel from systems to manipulate and re-arrange to review profit and loss per client, productivity per staff member. Review WIP to balance/write off before the End of Financial Year.Hand to admin team to make the adjustments.

 Presently, the same.However, writing off WIP is now something that’s easy to do as you go along the journey in online practice management systems.

 

So, let’s break down the positives and negatives as I see them of moving to the cloud for EOFY.

 

Positives

  • No costs at year end (IT guy, mailouts and time)
  • Less admin time required to re-engage, do surveys etc. for your clients
  • Track all actions taken
  • Keep compliant and up to date more easily
  • No need to review your server capabilities

 

negatives

  • You may have to change the way you’re accustomed to working
  • Your IT guy may need to rethink his day job

 

Want to learn more about the future of cloud accounting and running your practice?

Practice Ignition is hosting a Future of Cloud Accounting event at their Sydney office tomorrow evening (26 June) with panelists from Intuit, Reckon, Crowe Horwath, Countplus and Beanstalk Accountants.

Guy Pearson is CEO of Practice Ignition, a software company that reduces the time and cost of managing your clients by tying all back-office actions to your engagement.

Why Subscriptions Are Not the Problem

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Like many others in the cloud accounting world, I’ve been watching the Oscar De Vries case – a dispute between a business and an accountant over unpaid fees – very closely. As we share offices with the firm Interactive Accounting, I’ve overheard the concerns of new clients about data ownership, a central concern that emerged from the De Vries saga.

Truth be told, though, many of these concerns can be handled by contracts and agreements. The accountant and client must agree on the answers to the following questions before they can begin working together.

  • Who owns what? (subscription, data, accountant’s work)
  • How do we deal with disputes?
  • How much am I paying for services?

In the De Vries case these questions hadn’t been resolved before the accountant started the work.

For example, De Vries spoke about a “$20k mistake” in moving his accounting data from MYOB to Xero. I know that the “$20k” was not just for the conversion. There would also be a large inventory setup (as required for a products company such as his) that was not mentioned in the article.

There was clearly a miscommunication and lack of documentation about the price, the method of dispute resolution and what was delivered. This is exactly why engagement letters are so important.

One of the reasons I set about creating Practice Ignition was a firm belief that agreed fees are the future of the accounting profession. This methodology would enable a clear scope, price and rights for both accountants and their clients. Why?

I hated dealing with debtor issues and arguments around price variances in my former career as an accountant.

Now, it’s not to say that a dispute will never arise for a firm that follows this methodology. But if executed correctly you will have a full legal audit trail. This significantly reduces the likelihood of miscommunication between accountant and client.

Best Practice for Client Engagement

Every firm should review their letters of engagement to make sure they never find themselves in the newspaper over a bad debt gone public. Here are some tips to follow best practice and minimise disputes.

  1. Have a custom engagement letter for each type of engagement (systems, accounting, bookkeeping etc.) that spells out your policy for privacy, ownership of data and terms of doing business.
  2. When you implement new software, make sure you have a set price and timeframe. That way you avoid a cost blow-out and both parties are aware of the dollars changing hands.
  3. Outline the exact scope of engagement. Don’t just say “set up of inventory system”.
  4. Make sure the client signs off on the terms before you start and there’s an audit trail of comments, edits, alterations so it will stand up in court.
  5. Get your engagement letters in a central hub for when the ICAA, CPA, IPA or other professional association comes to see you – or in the event you need to claim against professional indemnity insurance (heaven forbid). You need to have it ready to stay compliant.
  6. Don’t just use the standard. Start with the standard from your professional body and then overlay it with your language and have it checked off by your lawyer so it’s a binding contract.

Just do them. It’s a contract. It’s good business and it will protect you as much as it will protect your clients. Here are the full requirements as set out by the Accounting Professional and Ethical Standards Board.

Advice for Clients

What would you advise your clients to do? Read the contract. Check it with their lawyer. Make sure there’s no risk and perhaps get a reference from the accountant. In the event it all goes pear shaped, you are protected and know how to resolve any conflicts.

Don’t you think it’s time we did the same?

Surely in De Vries’ scenario there were no dispute resolution clauses so a stalemate existed which went public. In my opinion, ownership of the subscription is irrelevant as long as you’re guarded by your engagement letter or contract.

Guy Pearson is the CEO of Practice Ignition, an app that helps onboard clients, assign tasks and reduce debtors in accounting practices.

Crap In, Crap Out – Get Your Numbers Straight with Cloud Apps

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Do you think rubbish data helps you make good business decisions?

It’s not a trick question.

If you put crap data into your system, you’ll get crap data out. And you’ll make crappy business decisions. Always. There are no short cuts.

Remember – inputting good data will always take less time than unraveling bad decisions based on bad data.

Businesses tend to do a better job of inputting one type of data compared to others. For example, income is usually well documented and is confirmed by the client paying the invoice – so great care is taken.

But when it comes to money you’re paying out, it’s always last minute. So putting it into your accounting system seems like a waste of time, right?

Wrong. Extremely wrong.

There’s a host of inexpensive tools out there to help you scan, save, track and access past invoices. You can use these tools to:

  • Create rules based on individual suppliers;

  • Set up pre-coded invoices based on pre-existing rules and use these in your accounting system entry;

  • Ensure your invoices don’t physically degrade (faded handwriting or receipts, anyone?)

Plus, these systems have been given the thumbs up by the Australian Taxation Office.

If you run a small business there’s no excuse to say data entry is too hard. With a simple tool you can search your accounting program to access the original invoice whenever you need it.

Which payable system should you use?

Each payable system has its use case. There are quite a few cloud apps that help automate the payables process. Two popular systems used by our clients include Receipt Bank and Invitbox.

Receipt Bank is a great program for small business. You can send your receipts and accounts via post, email, smartphone app, Dropbox or upload them directly to the Receipt Bank website. Receipt Bank will extract the data and integrate it into your accounting software. This is the simplest and most cost-effective method for a business wasting time on its payables process.

Invitbox was designed for the hospitality industry. It enables line-by-line, field-by-field data recognition which is great for large, complex invoices with many components, from large suppliers. In short, you can split a SKU code, quantity, price-per-unit and total for each line, and Invitbox will automatically add it to your accounting program.

Typically, we see savings of 70 percent of time on data entry for payables when we put one of the above systems and a cloud accounting program such as Xero in together. We’ve even had clients change their payables officers into revenue generating assets rather than just performing administration.

Large companies with complex supplier invoicing have greater accuracy of data and focus more on the relationships with their suppliers. This can include managing their terms of trade, accurate stock receipt counts and syncing data with their inventory and accounting systems.

These systems are the biggest “no brainer” for the modern business. Accountants should be implementing these for every client to drastically reduce time spent on checking data integrity at year end or any other reporting date.

Accountants should make sure their clients are ahead of the curve, taking care of their business and that you are seen as the business advisor and champion of efficiency in processes.

Remember, accounting by definition is determining the most efficient allocation of scarce and limited resources.

A version of this post first appeared on the Interactive Accounting blog.

Image credit: GoneMovies (Trainspotting)

 

Why It’s Time to Ditch Attaché for the Cloud

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When businesses outgrew MYOB accounting software the next logical step was to move to a system like Attaché, an all-in-one management system. Attaché has a connected set of accounts, payroll, a customer management module (CRM) and some decent business intelligence built in. There are also further extensions like manufacturing and online ordering which can be turned on as required.

But despite these decent features, it’s still a desktop based system. That means it costs a lot of money to connect to other software in your business.

Also Attaché’s interface is not intuitive to use compared to modern programs. Plus there is a charge for everything – every module or feature, and consulting hours to implement them. Lots of little charges quickly add up.

But the biggest drawback is that a bookkeeper or accountant can’t use the system unless they have used Attaché before. Attaché is driven by customer records rather than a global menu system, which is now accepted as best practice for software.

Switched-on businesses are building solutions that copy the best bits of Attaché and connect them to a cloud accounting program such as Xero. This way they can create something much easier to use and a lot cheaper.

For example, if you run an inventory-based company, you can use cloud apps such as Tidy Stock, Trade Gecko or Unleashed to use a superior inventory management systems.

If customer management and sales automation (CRM) is crucial, Salesforce could be your saviour.

Or, with the money you save, you may even decide to build and maintain a bespoke solution. Connecting apps in the cloud is often free; paid cloud integration services such as OneSaas, Zapier and IFTTT can sync your data every hour or sooner for $35 a month.

Even medium size businesses can ditch their outdated ERPs systems such as Attaché and move to a suite of cloud programs. You’ll have real-time information via an online, connected, scalable and user-friendly system. No matter how good you think Attache is, it will never be any of those things. And that’s a huge drawback for a business in today’s competitive world.

In the past accountants stayed away from advising on technology because it was so complex to install, operate and maintain. But cloud-based business programs require only an internet browser and are typically very easy to use.

Ask your accountant to assess your business systems and workflows (and help you create them if there are none). They should provide advice on the best fit for your business processes and reporting requirements.

After all accounting by definition is to “provide advice to use scarce resources in the most efficient way”. And systems are a huge part of efficiency in the modern business.

A version of this post originally appeared on the Interactive Accounting blog. 

About D1

Digital First covers news and opinions on accounting technology and is read by tech-savvy accountants who understand the importance of technology in establishing competitive advantage.
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