The accounting industry is in a state of flux. The fact that I just attended a cloud accounting conference in San Francisco with more than 1,400 other accounting professionals shows where technological innovation is driving the industry.
Xerocon was an eye-opener for many in attendance. The keynotes and product showcases demonstrated that the Cloud is truly here, and those that don’t adapt will be left behind.
Here’s how Xerocon has changed how I view the accounting profession:
Reason No. 1
Undeniable proof that firms using Cloud accounting software grow
In his keynote, Xero CMO, Andy Lark, shared how firms that use Cloud accounting software are adding more businesses and seeing higher year-over-year revenue growth. This is something I’ve experienced first hand, but to see the data was affirming.
Back in 2011, I was a "traditional" bookkeeper working with desktop accounting software. I’d pack up my laptop and number pad, and drive through the L.A. traffic to visit my clients at their offices. When I got there, I’d mostly do what I think of now as historical record keeping – tasks such as manually keying-in bills and printing paper checks. I was billing my time on an hourly basis, so the amount of money I could make was limited by the number of hours I could work.
In late 2012, I switched to Xero. I was finally freed from the artificial constraint of the billable hour. The automated processes within Xero and the apps in the Xero Ecosystem meant that I was spending a fraction of the time on data entry that I’d had to spend in the past. Instead, I was overseeing the flow of information among accounting systems.
The time it took me to work on one client was halved — which was great. But it also presented a problem. Because I was billing hourly, I was set to earn half my usual fee, but for the same value of work. So I adapted.
I switched to billing my clients on a monthly fixed fee. I thought there might be resistance, but there wasn’t. My clients liked knowing what they could expect to be billed every month. It even attracted new clients who were tired of surprise bills. The end result was that I doubled my revenue without working any additional hours.
Reason No. 2
Advancements in machine learning will transform the traditional role of the accountant
My story is just one example of how, in the relative blink of an eye, technological advances can transform the job of an accounting professional. Automation and Cloud accounting ecosystems have nearly eliminated the data entry component of bookkeeping. We’re not entering bills because Xero partners such as Bill.com include data entry as a part of their service. We’re quickly approaching the era of “no-code accounting.”
But we don’t have to wait. Right now, there already are features such as Bank Rules in Xero that can completely automate the coding of nearly 80 percent to 90 percent of transactions for a typical client, once they’re set up. In the future, we won’t even have to configure them. Artificial intelligence will do that for us.
In the next five years, the role of the traditional bookkeeper will continue to evolve. We’ll see the bookkeeper transition to an information systems manager, someone who knows how the entire accounting ecosystem works and keeps it all flowing. Developing a more refined focus on customer service is what’s going to differentiate the bookkeepers who thrive in their jobs from those that don’t.
By scheduling time to talk to clients about their reports, reviewing payables and payroll, they can help their clients feel more in control of their finances and work toward becoming that trusted advisor that the small business owner needs.
Reason No. 3
Our small business clients are going to thrive thanks to the financial web
The continuing growth of the financial web, which incorporates a network of organizations sharing financial data, is going to open up the door to productivity and growth for our small business clients. And with that comes the opportunity for accountants and bookkeepers to offer higher level advisory services. Partnerships with financial institutions will enable the sharing of direct bank feeds into accounting software and vice versa.
Today, it’s cost prohibitive for a small business to get access to capital because they have to go through a lengthy, sometimes expensive process in order to satisfy a bank’s queries into the financial health of the business. In the future, a bank will be able to look into the financial information of a business and gather the assurance they need to automatically issue a line of credit.
There’s an array of alternative lending platforms that already are doing this, albeit, at quite a substantial interest rate. But once the larger financial institutions start doing the same, and offering the service at a competitive rate, that’s when we’ll see more of our clients succeed.
It’s an exciting time for the accounting industry, and while there is a lot of change to contend with, those who adapt will thrive.
Blake Oliver is an independent accountant, consultant and blogger specializing in cloud accounting technology. He's also a Xero Ambassador for the U.S. West Coast Region.