Bookkeepers can add more clients thanks to efficiencies with cloud.
The future of bookkeeping is up in the air. Services usually carried out by bookkeepers are being supplemented by online accounting software, which uses bank feeds to automatically import transactions and a library of rules to quickly reconcile them.
The accounting profession appears divided between those who think cloud software will help bookkeepers become more efficient, take on more customers and run more profitable businesses, and those who believe the cloud will make bookkeepers irrelevant.
The bookkeeping industry is already in upheaval. The introduction of the Tax Agent Services Act in March 2010 made it illegal for Australian businesses to use a bookkeeper who wasn’t certified with the Tax Practitioners Board. Only 10,000 bookkeepers have certified; there are at least another 4,000 yet to follow suit.
While the Act defines a bookkeeper as a “BAS agent”, some entrepreneurial bookkeepers have started selling broader consulting services that explore the potential of other cloud software. How will the professionalisation of bookkeeping be affected by online accounting software? Will your future bookkeeper advise on your software portfolio too?
In the search for answers BoxFreeIT spoke to Rob Comelli, CEO of the Association of Accounting Technicians, a peak body for bookkeepers, financial administrators and assistant accountants which is supported by the three accounting associations. Comelli is an accountant himself who still practices as a consultant in mergers and acquisitions.
This is an edited transcript of the interview.
BoxFreeIT: What impact will automation of bank feeds and rule-based reconciliation have on the services that bookkeepers offer to SMEs?
Comelli: Online accounting will make the bookkeeping industry far more efficient. It is inevitable that that is the direction accounting will go. It puts together a system where the bookkeeper has access to accounting software 24 hours a day and can use their time to a much greater efficiency.
It’s at a lesser cost to the client. They don’t have to travel long distances to pick up information, it’s more efficient in terms of fuel costs. The cost of using that type of software is not prohibitive as it is based on a monthly subscription which is really cost effective. The software is continually updated and it doesn’t cost the bookkeeper any further expense.
Therefore it has to be a good thing for not only the bookkeeper but the client in terms of efficiency.
BoxFreeIT: Some accountants have commented on this website that automated bank feeds and rule-based reconciliation would in some cases eliminate the need for a bookkeeper.
Comelli: Definitely not. That to me doesn’t make sense. The use of the bookkeeper will last forever because people have to have a basic understanding of accounting to perform that function.
BoxFreeIT: But some argue that once online accounting software has been set up by a bookkeeper to automatically categorise transactions there’s less need for ongoing bookkeeping. What’s your response?
Comelli: I think we have to go back a step. There is a great demand for BAS services in this country. There are over two million small businesses that need the services of bookkeepers to get their books into order. The freeing up of bookkeepers’ time through efficiencies will mean that that a bookkeeper can service more clients. That’s going to increase productivity rather than put a bookkeeper out of a job.
BoxFreeIT: If cloud software lets bookkeepers take on more clients won’t that lead to more competition among bookkeepers?
Comelli: No. There are only about 10,000 registered BAS agents, and we’re waiting for 4,000 more to register. There’s not enough. We’re crying out for more people to get into the system and get themselves qualified and get the experience to service clients. As more bookkeepers come into the system the industry will be serviced properly.
BoxFreeIT: What potential is there for bookkeepers to expand the services they provide, such as recommending cloud software that works with online accounting software?
Comelli: As long as the bookkeeper doesn’t go past their restricted parameters within the legislation then all the services that come under the category of BAS services they can add on, and they’ll add them through the cloud more efficiently. It might be stock, it might be point-of-sale, or software to assist the client if they have a shop, for example.
BoxFreeIT: What else falls within that category – e-commerce?
Comelli: Anything that’s to do with an invoice or a sale or a payment via a tax invoice has an effect on a bookkeeper’s functionality. A BAS service involves accounts payable, receivable, payroll – all the things that make up basic accounting to the point of profit and loss and balance sheet. It’s more an efficiency role. They look at what the software can provide and give advice to the client as to the best way of recording their information.
BoxFreeIT: Can bookkeepers help clients improve their business by adding new cloud programs to their online accounting software? For example, by showing a furniture store how to start selling couches online by using eBay?
Comelli: That’s really not what their responsibility is. All they should do is highlight what technology is available and how best the client can use that technology within a BAS service. Not trying to make sales for the client, that’s totally different.
The definition of a BAS service is clearly identified in the Act and bookkeepers have to be careful that they stick within those guidelines. For two reasons; one, the law, and all BAS agents need professional indemnity cover, and the cover is quite specific in what they should and shouldn’t be doing. if they go beyond the scope they could have a problem down the track.
BoxFreeIT: So if you’re a bookkeeper then that’s an exclusive title that can’t be combined with a cloud consulting arm?
Comelli: They could do that but not call themselves a BAS agent. The BAS agent guidelines are quite strict and if they start doing consulting beyond that they would be caught up under a different piece of legislation.
They have to record the information in the best manner that they can, providing the best software availability options, but not to give advice on strategic growth.
Accountants are more in that type of arena where they give advice in terms of financial planning and looking at different avenues.
There is a fundamental difference between the two. The higher-end or more technical aspects of running a business are handled by the accountant. The basic day-to-day operational, recording of information and filing of information is done by the bookkeeper or BAS agent.
BoxFreeIT: What would a bookkeeper have to do to advise on strategic growth?
Comelli: They would have to go up to that next category and do the studies. The next step is a diploma, then an advanced diploma and then a degree. They’d have to register as a tax agent and there are a number of criteria they would have to meet within the legislation for tax agent registration.