I recently saw an article on how to create a “perfect firm” if you were setting it up from scratch. It had some good points in it but other than using the term “cloud accounting” it looked awfully like something out of the 1980’s. For all the staff and overheads it espoused a perfect firm should have, there was no mention of technology anywhere in the article.

For me the perfect firm is now technology based. Yep, cloud accounting is at the core of this. But creating a perfect firm means automating as many functions as possible. This reduces the amount of time spent on admin tasks and increases the hours available for working with clients.

Automating may not necessarily mean a fully automated process. It also includes semi-automating tasks which still provides savings in the labour component of the process.

When setting up Zerobooks.com our goal was to make the business global and scalable. We couldn’t do this if we had to respond manually to every query. Hence we have two developers on our team who work to improve the efficiencies within our processes. This makes life easier for both ourselves and our accounting partners globally.

 

How to start automating accounting

So where do you start if you want to truly automate your firm? A lot of firms think that by moving to a cloud solution and adding in a couple of add-ons they are “in the cloud”. That’s fine for the accounting functions but business is way more than that. There’s not much point investing in the front end if you then have manual processes in the back end chewing up your valuable time.

The one thing you can’t automate is the client relationship. Our industry is based on trust and the personal relationship is how our clients measure and value us. Anything that doesn’t come into the trust equation is open to automation. If we can free up time that is not valued by the client then we have more time to do the things they do value!

Here are some of my thoughts on setting up an automated practice from scratch.

The first step is obviously the client accounting function. Most firms have already adopted cloud accounting software with several options available. For me it’s Xero all the way. These guys are the leaders in cloud accounting in my opinion. Their practice-based solutions and tax offerings are the leaders in the Australian market.

The big advantage of Xero is that here are heaps of addons to help customise a solution, not only for an accounting practice but also for clients.  It also has a very open set of APIs which means that we can also design our own programs to grab data from or send data to Xero. That is how we reduce time-consuming, non-value adding tasks such as data entry and extraction.

Straight off the bat, add-ons such as Receipt Bank and Chaser are no-brainers. Receipt Bank offers the ability to semi-automate your accounts payable and reduce the number of hours spent entering supplier invoices.

Chaser automates the follow up of outstanding debtors. While Xero now offers the debtor reminders, Chaser offers a much higher level of flexibility for those clients or businesses where debtors and cashflow are major considerations in running their business.

Both the processes and tasks these addons eliminate are not part of the value-add or trust relationship and so can be automated.

 

Automating job management

There are several options when it comes to managing your jobs. We use Xero Practice Manager. Our developers have automated a number of other functions such as:

• Automatically creating and emailing usernames and passwords for any clients that request  login details
• Identifying if we have all details for a client recorded the first time they accept a job online. If they don’t, a pop-up window asks the client to enter data directly into Xero Practice Manager
• Identifying if we have a client’s credit card details. If not, an automatically generated email with a secure link is sent to the client with a request for the details

The client is going to have to give you this information anyway (usually via email). Why not get them to enter it directly into your practice management system and save the time of you re-entering it?

Preparing proposals and onboarding clients is a huge time user, especially if you are a fast growing firm. There are some off-the-shelf add-ons such as Practice Ignition which are great for a quick set-up and go for the majority of firms.

But sometimes there are needs that add-ons can’t deliver everything you need or are still in development.

We wanted a number of features that were unavailable so we developed our own package. The goal was to eliminate time in preparing proposals. We wanted to grow fast and to service accounting partners globally without having a 24-hour help desk.

We have automated our proposals so that any of our accounting partners can create and accept a fixed fee proposal online without any input from our team. From our partners’ perspective they get an answer immediately without waiting for us to get out of bed. And we are servicing the clients in the minimal time.

Another advantage is that if the proposal is not accepted we haven’t wasted valuable time preparing it.

In summary the starting points to automate your business would be:

1. Choose a cloud-based accounting platform to start working on a single ledger and automatically enter data entered from bank feeds
2. Automate non-value adding tasks such as data entry of suppliers’ invoices and debtor follow up by using add-ons such as Receipt Bank and Chaser
3. Look at ways to automate other data entry tasks such as client details by integrating web sites with Xero Practice Manager or your practice management solution
4. Automate (or at least semi-automate) preparation of proposals for new clients and reissue letters of engagement each year with Practice Ignition or a similar app
5. And if you can’t find an add-on to suit your needs then look at developing a customised solution. That will free up non-value adding time for more activities focused on the client relationship

From there you are on your way to what I would call a perfect practice. Just remember that these are only the first steps to developing an automated accounting business.