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.
|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.
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.
- 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
- 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.