The accounting industry is in upheaval due to the revolutionary nature of online accounting software. This upheaval is creating conflicts on a number of fronts among bookkeepers and accountants – and clients could suffer as a result.
In the late 1990s, software began to move to annual renewal fees and monthly subscriptions in return for compliance updates and new features. Somewhere in there, the intermediaries (accountants and bookkeepers and consultants and retailers) felt they should get a share of the annual fee paid to the software company.
This was the start of the trend around commissions, incentives and kickbacks. But it also raised another issue – who actually owns the client? Does the client using a particular accounting program belong to the software company or to the intermediary who introduced them to it?
It’s an issue exacerbating the existing tension between accountants and bookkeepers caused by subscription based access to software, proliferated by online accounting software providers. Some accountants see improvements such as a single ledger, automation of historic coding and easier financial reporting. They then mistakenly conclude they can do it all themselves and cut out everyone else (read, bookkeepers).
But there are different perceptions about how to best use accounting software. Too many accountants continue to think that accounting software is only used to code transactions into the chart of accounts so reports can be prepared. This is not the better view!
Some accountants and bookkeepers fail to realise that accounting software is also the BUSINESS OPERATING software. The software should be doing the business and the accounts just happen.
The ways accountants and bookkeepers use accounting software is different to business owners. A lot of confusion and frustration has been caused as these two usage models collide and overlap.
Software commissions and loyalty schemes are likely to stay because they are used to drive subscriptions. The subscription model has become the norm. Software companies want a recurring revenue stream to justify enormous valuations to investors.
What should an intermediary say to the client about the loyalty program or software company relationship?
Intermediaries should use their relationships with software companies as a sales/credibility tool! Show your expertise through membership of their programs and demonstrate to your clients your knowledge and connections.
If an accountant comes along and steals the commission trail on online accounting software from a bookkeeper, so what? Is it really secret commissions that impresses the business owners and management or keeps you in business?
But businesses should be and must be aware. Therefore tell the client about commissions, both yours and the accountant’s.
A version of this post appeared in the Institute of Certified Bookkeepers’ July newsletter.